March

Market Volatility Makes Farmland Look Like a Better Investment Than Ever

By Scott Steffes

Almost every time I check the news lately, I see people’s IRAs and life savings melting at an alarming rate. The volatility of stocks can be scary, especially when you watch your assets drop 8 and 10 percent in a single day. As I write, the S&P 500 is down 27% and that’s an index of the blue chip stocks people look to for steadiness.

Those numbers will be different by the time you read this, because that’s how things are. Up and down 1,000 points or more on the Dow.

Of course, equities have had a good run for more than a decade, and they’ll bounce back in time. But today’s extreme volatility of stocks and bonds makes me appreciate even more the steady returns of farmland.

Farmers and land investors continue to make solid, steady returns in the 3% range, while also enjoying the long-term appreciation of their land. Sure, some years are harder than others, and farmers have had a lot of challenges with weather and commodity prices. But anyone who owns farmland understands that it is a long-term investment, and as long as people have to eat, there will always be demand for what we produce. We learn to tighten our belts in lean years and prepare for inevitable challenges. But we persevere.

The steady returns and appreciation of farmland are more attractive than ever at a time when investors find fewer havens from extreme volatility. CD rates are generally under two percent, and short-term treasuries are a half of one percent or less.

For all these reasons, I am proud of the role we play in using auctions to provide an efficient process for landowners to realize their investments and for others to obtain land for what I think is one of the best and most honorable jobs in the world -- farming.