Link to full article here Old MacDonald had a farm … and it worth’s more today than ever before. That’s definitely a boon for Old MacDonald, but it might pose a risk for investors who are just now thinking about putting money into farmland, experts say. “I think investors have become a little too bullish about farmland,” says Justin Gardner, assistant professor of agribusiness at Middle Tennessee State University. “Right now, commodity prices are high, and that means that farmland values are also high. Investors would be paying a premium for farmland.” Investors generate a total return on farmland from two sources: the revenue the land produces – either through rental payments from farmer tenants or crops – and appreciation of the underlying farmland. Farmland is an asset class that is not directly correlated to stocks and bonds, and fans say it is significantly less volatile and even offers a currency hedge as foreign countries choose to import American crops because the value of the dollar makes them cheaper. Of course, farmland is an illiquid investment. Investors can gain exposure to the asset class by purchasing farmland directly or investing in farmland-based funds. They can also invest in mutual funds and ETFs that invest in commodities such as corn, soybeans and wheat, but, in doing so, investors will not get the benefit of land price appreciation. Farmland values have surged over the last decade due to a combination of high commodity prices and low interest rates. At the same time, demand for leased farmland has driven up rental rates, which makes farmland more valuable overall. Consider this: From 2000...
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