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Investors show confidence in ag

Published on October 29, 2010 3:01AM

Last changed on November 26, 2010 7:20AM


Large pension funds and other institutional investors are increasingly putting their bet on the farm.

They are buying cropland and vineyards. Experts say agricultural assets provide a hedge against inflation. Investors can sink their money into farmground, rent it out and make more than they can with a bank certificate of deposit that yields 1 to 2 percent.

John Knipe, a Boise-based real estate agent specializing in farm and ranch properties, has a client who has listed a portion of his large farm. The client wants to lease the land back, and is willing to guarantee the buyer a 5 percent annual return for five to 10 years.

The California Public Employees' Retirement System, or CalPERS, has been investing in agricultural land since 2002. It partnered with Premier Pacific Vineyards to buy and develop high-end vineyard properties in California, Oregon and Washington. It now has a $156 million stake in two vineyard funds. CalPERS' ag investment is relatively small when compared to its total real estate holdings worth $15 billion in a $205 billion portfolio.

"The idea was to branch out and give us more breadth in our program," CalPERS spokesman Clark McKinley said.

Agricultural assets are a stable investment. They produce food and fiber, tangible products that have value in their own right. Each day all but a tiny portion of the 320 million people in America eat two or three times. And they intend to keep doing so for the foreseeable future.

Some people see these investments as proof that corporate interests control agriculture. The facts don't support that. Ninety-eight percent of farms in the United States are family-owned and -operated.

The smart money sees opportunity on the farm. That should make those families all the more confident about their own futures.


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