It's little wonder that yield-starved pension funds and other investors are investing in farmland.
That's because farmland, a hard asset, produces high returns and, unlike other hard assets such as precious metals, provides investors annual income from crop sales.
The National Council of Real Estate Investment Fiduciaries (NCREIF) compiles data on the total returns (income and capital gains) on farmland purchased for investment purchases, primarily by pension funds looking for income and diversification.
In 2012, the annualized total return on investment farmland was 18.58%.
The NCREIF has data going back to 1992. Since then, the highest annualized total return was 33.90% in 2005 while the lowest annualized total return was 2.02% in 2001. Over the 20-year period from 1992 to 2012, the average annual total return was 11.83%.
And sharply higher prices for major agricultural commodities such as corn, wheat and soybeans have increased annual investment income for anyone investing in farmland.
Legendary hedge fund manager Jim Rogers has been buying farmland in Australia for a private fund.
"It's the farmers, the producers, who are going to be in the captain's seat when the prices go through the roof," he told The Australian Financial Review back in 2011.
"The world has got a serious food problem," Rogers told Time magazine. "The only real way to solve it is to draw more people back to agriculture."
But is this rush toward investing in farmland now creating a huge bubble?
investing in farmland stocks vs etfs
Why Jim Rogers is Investing in Farmland
Legendary Wall Street trader and best-selling author Jim Rogers recently offered this unconventional advice: If you want to get rich, you should be investing in farmland.
Don't laugh. Rogers is good at what he does. Really good.
Together with George Soros, he founded the Quantum Fund in the 1970s and posted returns of 4,200% over 10 years. Rogers retired in 1980 at the age of 37, but is still active as a private investor.
Back in 1999, Jim Rogers recommended gold when it was trading at $252 and silver at $4. You know what happened after that.
Now Rogers thinks investing in farmland will pay off in a big way.
"It's the farmers, the producers, who are going to be in the captain's seat when the prices go through the roof," he told The Australian Financial Review.
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