While investors worry about rising interest rates, supply chains and an economic downturn, billionaires are even more worried. And they are flocking to a proven asset class to protect wealth: farmland.
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| Billionaire Jeff Bezos has accumulated 170,000 hectares of agricultural land. |
There are reasons why top billionaires around the world like Jeff Bezos and Bill Gates buying farmland.
According to Moneywise news site, before the divorce, billionaire couple Bill and Melinda Gates had accumulated about 98,000 hectares of agricultural land in less than a decade. Amazon Group founder and chairman, billionaire Jeff Bezos, has amassed 170,000 hectares in recent years.
Other notable farmland investors, including billionaire Ted Turner, Thomas Peterffy and more recently billionaire Mark Zuckerberg have also started to enter the market.
According to CNBC, private landowners also profit by using land in many ways.
Data from the United States Department of Agriculture shows that about 39 percent of the 370,000 hectares of farmland across the United States is leased to farmers. 80% of agricultural land leased is owned by landowners who do not grow their own crops.
“Farmers are also happy to rent land, because whether you’re young or old, it’s a business, isn’t it?” – Billionaire Thomas Peterffy, chairman of Interactive Brokers foreign exchange company and owner of 210,000ha of agricultural land, explains the land lease.
Individual investors can buy agricultural land and lease it back through real estate investment funds.
Gladstone Land (LAND) is one of the few companies with real estate investment trusts (REITs), specializing in trading agricultural land in the market. The company has more than 45.5 million hectares of agricultural land leased to experienced farmers. According to the company's latest report, the rate of land for rent reaches 100%.
Gladstone currently pays a 2.2% dividend.
Farmland Partners (FPI), another REIT, focuses on farmland across the United States. The company has more than 75,000 hectares in 19 states and manages more than 100 tenants growing 26 major commercial crops.
While the majority of its portfolio is farmland, the company also owns groundwater assets and grain processing facilities across its entire land assets. The stock offers a 1.7% dividend yield.
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