Your hard-earned money doesn’t have to sit in a savings account with a compounded interest of next to nothing. And now, with inflation of 7.6% just last July, it’s more important than ever to find a place for your money to grow and to mitigate risk against rising costs.
Real estate is, of course, a prime example of an investment that has historically outpaced inflation. But a particular asset class within real estate often overlooked is farmland.
Farmland has always been a solid investment, and with farmland in central Alberta being some of the most productive in the world, it’s a great place to start investing today.
The Benefits of Farmland Investments
1. Farmland Values Have Increased Steadily
The average price of farmland continues to rise through the years. According to Statista, the value per acre of farmland for sale in Central Alberta has increased to $3,164 in 2021 from $3,009 in 2020, which is way higher than the $1,514 price back in 2010. The factors contributing to this long-term trend are varied and complex, but they can be boiled down to two main drivers: population growth and technological advancement.
As the world’s population continues to grow, the demand for food will only increase. This will put upward pressure on prices for all agricultural products that farmlands supply. At the same time, technological advances have increased farmers’ productivity and made farming more efficient. Farmland values are likely to keep getting higher as demand for food increases and farmers get better at producing it.
2. Farmland Is a Limited Resource
There are many reasons why farmland is a wise investment, but chief among them is that there’s only so much land to go around. Unlike stocks or commodities, which can be produced in unlimited quantities, farmland is a finite resource. There are only limited acres of land available for farming, which means that demand will always exceed supply.
One of the reasons that farmland values continue to spike is that land is becoming increasingly valuable as development pressures increase. Because urban areas continue to expand, they encroach on rural areas, taking up land that has traditionally been used for farming. With the advent of industrialization, there is less land that can be used for agriculture, further driving up farmland prices.
With this said, farmland is not subject to the same economic forces that can cause other investments to fluctuate wildly in value. That makes it a great place to park your money if you want to earn a steady return on your investment. Farmlands offer investors stability and security that other investments may not provide.
3. Investing in Farmland Can Help Diversify Your Investment Portfolio
Farmland is a unique asset class that is not correlated with the stock market or other traditional investments, making it an ideal way to diversify your portfolio. It offers many benefits, including the potential for high returns and protection from volatility. With careful research and due diligence, investing in farmland can be a smart way to secure your financial future.
Plus, farmland prices tend to go up when inflation goes up, making it a good hedge against the drawbacks of inflation. This makes sense because when the cost of living increases, so does the cost of food. And since farmland is a key input in food production, its value usually rises along with inflation.
4. Farmland is a Tangible Asset
When you own farmland, you have a physical property that you can pass down to future generations. You can walk on the land and feel the soil beneath your shoes. You can lead your livestock to graze on a pasture. You can see the crops growing and harvest them in due time. Everything is right there before your eyes, and you can touch them rather than just read some words on a contract.
Aside from its physical features, farmland is also considered a “real asset” because its value is not directly impacted by inflationary pressures like stocks and bonds can be. Since it is tangible, it can be used as collateral for loans or sold if necessary. This makes it an ideal way to secure your wealth over the long term.
5. Investing in Farmland Can Help Diversify Your Investment Portfolio You Can Generate Income From Farmland Through Leasing or Selling Farm Products
Farmland owners have many options for generating income from their property. If you’re not inclined to farm but still want to make money from your land, you can lease it to farmers or make it a venue for occasions and recreational activities. But if you’re willing to put in the work yourself or hire workers, you can sell products you procure from your farm.
When you grow crops and breed livestock, you can get eggs, milk, meat, fruits, wheat, and vegetables. You can even value-add some of these products by turning them into jams, jellies, or baked pastries. They can also be processed into dry or refrigerated goods like flour and sugar or sausages and hams. If you have a large area with plenty of trees, you can offer firewood and timber as well.
Whichever means you choose in earning, you must first consider what would work best for you and your farm. With the right management, it can provide you with a steady stream of earnings for decades.
Find the Farmland You Need
Purchasing farmland by yourself can be a difficult endeavor. The process is complicated, time-consuming, and financially draining.
However, you can count on us to make everything easier and faster.
We at Hansen Land Brokers are committed to helping you find the perfect farmland for sale in Central Alberta that meets your preferences. Whether you’re a first-time buyer or an experienced investor, we can guide you through the buying process from start to finish. View our listings or get in touch with us today to learn more about our services.