The Ultimate Inflation Hedge Isn’t Gold. It’s Dirt.

---

• Farmland may not grab headlines, but it’s quietly delivered stock-like returns with bond-like calm for over three decades.
• Technology is steadily transforming agriculture, and savvy investors are starting to take notice.
• As global food demand surges and arable land becomes increasingly scarce, this overlooked asset is emerging as a powerful hedge against inflation and volatility.

There’s a revolution happening beneath our feet.

As investors chase the next big thing, from AI to biotech to space exploration, some are turning their attention to something far older and more essential: farmland.

It doesn’t make headlines. It won’t 5x this year. But it’s produced steady, inflation-resistant returns for decades. And according to Artem Milinchuk, founder of FarmTogether and a longtime investor in natural assets, it’s one of the most underappreciated opportunities in the modern portfolio. Let’s unpack why.

We Always Have to Eat

Let's start with the obvious: Humans will always need food. Until we become AI-powered avatars living on Mars, we’ll need calories from crops, fruits, and nuts grown on Earth. That food can only be produced on one finite resource: arable land.

This simple fact underpins the entire investment case. Farmland is a valuable asset, indeed, but also a productive and life-sustaining one. Unlike tech stocks, whose future value depends on market sentiment or product adoption, the demand for farmland is baked into the human condition. That makes it one of the few assets where long-term demand is virtually guaranteed.

The Numbers Are Boring, In a Good Way

From 1992 through 2024, U.S. farmland returned about 10.15% annually, according to the NCREIF Farmland Index. That’s only slightly below the S&P 500’s return of 10.5% over the same period, but with far less volatility (6.8% vs. 17%). 

What does that mean in plain English? It implies that farmland delivered equity-like returns with bond-like calm. The Sharpe ratio, one of the most used measures of risk-adjusted return, was 1.09 for farmland, compared to 0.44 for stocks. In investing, where most things are either high-return/high-risk or low-return/low-risk, that combination is rare. But let’s not forget that the “low vol” may be a result of less mark-to-market, like we see in Private Equity.

“Farmland Is What Gold Thinks It Is”

Gold is often touted as an inflation hedge, but its track record is mixed. In fact, many investors buy gold not as a true hedge, but as insurance against tail risks like geopolitical collapse or currency devaluation. Farmland, on the other hand, is inflation itself.

Food prices are a core component of the Consumer Price Index. When inflation rises, so does the value of the crops produced by farmland. And as input costs like fertilizer and fuel go up, those costs are often passed on to buyers, not absorbed by the farmer.

Historically, farmland has done exceptionally well in high-inflation periods. It’s tangible, productive, and scarce, three qualities that make it one of the most substantial real assets available.

The Portfolio You Can’t Trade

Farmland is illiquid by design. You can’t buy and sell it at the click of a button. But that may be one of its greatest strengths. When markets crash, liquidity is a double-edged sword. The ability to sell instantly becomes the temptation to sell irrationally. Farmland doesn’t give you that option.

It’s what behavioral economists would call a “commitment device.” You invest for the long haul. In return, you avoid panic selling, headline-driven trades, and the urge to time the market. That’s not to say farmland is immune from risk. Drought, tariffs, crop failures, and price swings all exist. However, the long-term thesis remains unchanged, and illiquidity serves as a psychological moat, keeping investors focused on what truly matters.

A $3.5 Trillion Market, 99% Untapped

Here’s a staggering stat: The U.S. farmland market is worth around $3.5 trillion. Yet institutional and high-net-worth investors have barely scratched the surface, with less than $50 billion in allocated capital, roughly 1% of the total.

Compare that to real estate or private equity, where institutional capital is not only welcomed but dominant. Why the gap? Historically, farmland has been challenging to access. Deals were fragmented, opaque, and often required deep agricultural expertise. That’s starting to change.

Firms like FarmTogether are building platforms that allow investors to access high-quality farmland through syndicates, funds, and structured offerings. New technologies, including satellite imagery, drone-based monitoring, and AI-driven underwriting, are making it easier to evaluate deals at scale. The door is finally open.

Structural Tailwinds Are Blowing

Demographics matter. In the U.S., the average age of a farmer is nearing 60. In the next 20 years, more than two-thirds of all U.S. farmland is expected to change hands.

That transition will be equally structural as it will be generational. Children of farmers aren’t always keen to continue the work. Some prefer city life, and others want to diversify their financial holdings. Many are selling.

That creates opportunity: land is coming to market, and buyers who can offer creative capital, especially those who understand the long-term economics of farming, are in a unique position to benefit. Meanwhile, global food demand is expected to increase by 70% over the next 25 years, driven by both population growth and shifting diets in emerging economies. 

At the same time, we’re losing farmland due to urbanization, rezoning, and climate stress. In the past few decades alone, the U.S. has lost over 50 million acres, an area equivalent to several small states.

The situation at hand: Rising demand and shrinking supply. 

Tech Is Quietly Transforming the Field

Investors often overlook agriculture when they think about technological progress, but farming today is a far cry from the romanticized image of a tractor and a straw hat.

Drones monitor crop health and optimize spraying. AI models analyze hundreds of pages of land title documents in seconds, smart irrigation systems use predictive algorithms to conserve water, and self-driving harvesters are already in play.

For investors, this means higher yields, more efficiency, and better data for underwriting risk. For farmers, it means a more scalable, sustainable business.

Technology won’t eliminate the complex realities of farming, but it’s reshaping how the business is run and who can participate in it.

Different Structures, Different Risks

Farmland investments can be structured in a few ways.

• Fixed lease: A farmer rents the land at a set rate. This is the lowest risk and offers steady (but capped) income.
• Revenue share: The investor earns a portion of the farm’s revenue. More variable, but potentially more rewarding.
• Direct operation: The investor takes on full P&L exposure: higher upside, higher downside.

Think of it like real estate: some investors seek long-term rental income, while others aim for exposure to development risk and potential appreciation. The key is understanding your risk tolerance and diversifying across various crop types, geographies, and structures.

What to Ask Before You Invest

If you’re considering farmland, start with the basics:

1. Who is managing the land? Experience matters. Farmland is operationally intensive and deeply local.
2. What kind of crops and structures are involved? Different crops have different risk profiles and timelines.
3. Where is the water? In places like California, water rights are everything. Sound underwriting includes drought scenario planning.
4. How long is the hold period? Most deals target 8–10 years. If you need liquidity sooner, this may not be the right fit.
5. What are the fees? Expect some combination of acquisition fees, management fees, and possibly performance-based carry.

And remember: if the answer sounds too good to be true, it probably is.

Amid Endless Uncertainty, This One's Simple

Howard Marks likes to say that risk is not about what you know, but what you don’t. It’s the future we can’t see, not the past we can analyze, that causes the most damage.

That’s why assets with inherent certainty, like food production, deserve attention. Especially when they’re scarce, uncorrelated, and backed by thousands of years of human necessity. Of course, you don’t have to swing for the fences. Sometimes, owning a small piece of the world that grows food is enough.

To many, farmland is simply a bet on fundamentals. Make sure you go and check out this valuable resource about farmland investing.

---

This is based on an episode of Top Traders Unplugged, a bi-weekly podcast with the most interesting and experienced investors, economists, traders and thought leaders in the world. Sign up for our Newsletter or subscribe on your preferred podcast platform so that you don't miss out on future episodes.