Do agricultural land returns on investment compare favorably to U.S. stock market returns?

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How does agricultural crop land compare for return on investment to the United States stock market return on investment over time periods of at least 20 years?


Agricultural land returns on investment do compare favorably to U.S. stock market returns over longer time horizons.  Bruce Sherrick, an economist with the University of Illinois, summarized the relationships among farmland returns, other investment opportunities, and inflation (available at ).  Table 2 of the report shows the return statistics for farmland, stocks, bonds, and gold, along with two measures of inflation over the period 1970 to 2019.  The annual average return on farmland exceeds the average returns for stocks, bonds, and gold and outpaces inflation.  The variability of farmland returns is less than that for stocks, other real estate, and gold, but more than that for bonds.  Farmland returns are positively correlated with inflation and negatively correlated with stock returns over the 50 year horizon.

Answered by:
Dr. Chad Hart
Last updated on March 13, 2023