Wall Street Advisor Talks Up Farmland As An Investment

Published on: 08:42AM May 20, 2011

Mike Walsten

Here's another Wall Street investment/advisor type talking up ownership in farmland. His main focus is that farmland is the current buzz word for hedge funds. There's some interesting observations in the piece. But most curious to me is his reference to a presentation by Yale professor and hedge fund investor Robert Shiller. Based on the comments, it sounds like Shiller was positive about farmland as an investment. You'll recall that it was not too long ago that Shiller (author of the phrase "irrational exuberance" in a book by the same name) was talking up farmland as his dark-horse candidate for the next bubble. Click here and here for those items.

The attention by the investment community, and especially the hot money hedge fund crowd, is a little disquieting for long-term land bulls. That industry represents a massive potential influx of demand and cash into the land market, which could become a problem since the farmland market is illiquid and available supplies are limited. A massive rush by this crowd to own U.S. farmland could create a bubble rather quickly. Currently, farmers remain the dominant buyers, frequently elbowing investors (most of which are not hedge funds) aside. And, these farmer buyers are predominantly using cash rather than debt to fund their purchases. As long as that is the case, that should help reduce (but not eliminate) the risks of over-inflating the farmland market.

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