By Alexander Davis, Harvest Returns Intern
In 2023, many athletes have looked to agriculture to invest their earnings and secure their financial future. In January, over 20 athletes led by Cincinnati Bengals quarterback Joe Burrow and Boston Celtics forward Blake Griffin purchased a 104 acre farm in Iowa through an athlete investment program, Patricof Co. These athletes sought to invest in agriculture both to support American farms and farmers, as well as investing in a sustainable and safe asset with historically reliable returns.
Investing in farmland isn’t a new concept, with farmland investing having consistent annual returns and being a low-volatility asset. Despite this, however, farmland investing was often overlooked in the past and has only recently begun gaining more traction.
According to AgAmerica Director of Business Development Pat Spinosa,“We are losing land every single day, and that is an asset that continues to appreciate year-over-year. So not only is it a necessity for the country, but it’s also a good investment.” Spinosa recently interviewed Buffalo Bills quarterback Josh Allen on his podcast, Like a Farmer, to discuss the subject. Both private investors and companies are looking to purchase farmland, and even international investors are seeking American land.
Pro athletes have also taken an interest in animal protein investments, especially when produced with regenerative methods. Superbowl MVP and Bills’ line backer Von Miller studied poultry science at Texas A&M University and owns an organic chicken farm in Texas.
Why Invest In Agriculture?
There are a variety of reasons for potential investors to consider a farm or a ranch for their next investment.
Consistent Returns:
Farmland investments offer a consistent rate of return, averaging 10.74% since 1991. Compared to most other assets, farmland is extremely low-volatility, such as in Q1 of 2020, farmland values decreased by only 0.1% while the stock market decreased by 19.8%.
Rising Values:
In recent years, from 2021-2022, land values rose by 12.4% and cash rent for cropland rose by 5%. Demand for animal protein is higher than ever and continues to grow as populations around the world become more wealthy.
Diversification and Low Recession Risk:
Agriculture investments are a great asset to diversify an investment portfolio. Historically, farmland values have remained uncorrelated to many popular assets, such as real estate, stocks, and bonds. They’ve even avoided significant drops in value in past recessions. Additionally, many athletes and investors want to make a positive impact on American agriculture, farmers, and even the environment. Investing offers a productive and lucrative manner of doing so.
A past struggle with farmland investing has been the barrier to entry. Buying enough land to farm costs a significant amount, and properly utilizing the land is difficult for uninformed investors. Fortunately for investors, in the last 15 years significant advancements have been made in farming investing, with platforms like Harvest Returns making the industry more accessible to average investors.