FAYETTEVILLE, Ark. (RFD News) — About a third of U.S. farmland is owned by non-operators, making agricultural land a popular investment.
Rob Moore with AcreTrader told AgInfo.net that investors need to be realistic about potential returns, especially given the current farm economy.
“If you just silo American farmland, you should expect IRRs in the mid to high single digits. I think for investors, when they’re presented that product, honestly, again, this is a risk-adjusted return. The cash flow off of particularly row crop farmland in the United States in today’s interest rate environment, nobody’s coming here for the cash flow, and I think that’s good. I think in 2020 and 2021, there were a lot of people that got into the asset class saying, man, the return here, the cash return is really interesting to me, and the appreciation is the bonus. I think that’s not only disingenuous, it also does a disservice to the farmers and the industry at large.”
Moore said the focus should not be on the cash flow of the farmer and believes farmland investors need to understand the risks before buying.
