Following the Money: Why are Billionaires Buying Farmland and You Should Be Too (2024)

FAQs

Following the Money: Why are Billionaires Buying Farmland and You Should Be Too? ›

Hedge against inflation. As inflation climbs, many investments can plummet in value. Farmland, on the other hand, has seen its value increase during inflationary periods, making it an effective hedge against rising prices. This cushion can be particularly valuable to those with an ultra-high net worth.

The transfer of wealth from one generation to the next, known as the great wealth transfer, is driving billionaires to invest in land in the United States. This provides a means for them to preserve their wealth for their heirs and secure their financial future.

Among the most recognizable landowners from the Top 100 list are Jeff Bezos (420,000), Bill Gates (275,000), and Taylor Sheridan (265,000).

Bill Gates, co-founder of Microsoft, is not just a tech mogul and philanthropist. He's also the largest private owner of farmland in the United States, holding an impressive 275,000 acres across the country. You might be wondering why one of the world's richest men is so interested in farmland.

The Emmersons became America's largest landowners in 2021 when they acquired 175,000 acres in Oregon from Seneca Timber Company. With that acquisition, the Emmersons surpassed Liberty Media chairman John Malone's 2,200,000 acres.

Canada largest foreign investor

As of 2022, Chinese entities and individuals owned about 349,000 acres of U.S. agricultural land, which is less than 1% of all U.S. agriculture land held by foreign persons, according to the most recent USDA data.

Billionaires buying farmland isn't a trend. It's a strategy for financial security and resilience. Agricultural land is an asset class that yields strong returns, stays stable in the face of market turbulence and adds a unique layer of diversification.

For instance, in the 20 years to 2020, farmland in the United States produced average returns of 12.2 percent, according to AcreTrader, an investing platform for land. Compare that to the average annual return of 10 percent for the Standard & Poor's 500 index over long periods.

China owns 384,000 acres of American agricultural land. That's a 30% increase just since 2019. And on top of that, they own land near an air force base in North Dakota.

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What are the benefits of owning farmland? By owning farmland, you can earn a stable income with a low-risk appetite. The farmland investment also looks after your earnings through capital appreciation, portfolio diversification, tax benefits, and protection against inflation.

Flannery Associates has been grabbing plots of land in Solano County, about 60 miles from San Francisco, for the past five years. The company has spent about $800 million to purchase tens of thousands of acres of farmland with the support of tech billionaires, including Marc Andreessen and Laurene Powell Jobs.

Around the world, farmers are walking away from lands that were once cultivated or grazed because those lands have been “farmed out.” The causes range from damaging agricultural practices to desertification, from lack of market access to migration, and from higher cost of cultivation to lower productivity gains.

The short answer is yes, investing in real estate can make you a millionaire. Of course, like anything worth having in life, this will take some work and dedication.

The land can be used for a variety of purposes such as agriculture, mining, logging & much more. The increase in land value, therefore, depends on the presence of resources and purposes it can be used for.