Farmland has long been considered a safe and reliable asset class, particularly during times of economic crisis, given its low levels of correlation to other asset classes. When trying to navigate the current crisis, investors are looking for alternative sources of income and farmland could be added to the list of potential investments given its properties as a diversifier and stable source of returns.
The inflation-hedge characteristics of farmland are another consideration for investors. With food security moving up the agenda of governments and potential for further supply chain disruption, the risks of food shortage and resulting food price-driven inflation are in play. Even with consumer consumption habits changing as global lockdown measures around the world have forced people to transition to home cooking and away from dining out, farmland returns are not expected to alter significantly.
Alongside the benefits farmland offers to portfolios given the impact of the coronavirus pandemic, there are further long-term benefits to investing in farmland in addition to technology-driven productivity gains and the associated influence on farmland returns.