Some investors who have an interest or passion for farming may choose to invest in agriculture actively by owning the land and farming it themselves. While this method of investing in agriculture is by far the most time-intensive and requires substantial knowledge of how to properly farm land, it presents a unique opportunity to reap the financial benefits of agriculture while pursuing alternative farming practices such as regenerative agriculture or a smaller-scale sustainable agriculture operation.
In many rural or farming areas, smaller parcels of depleted land -- which many larger farming operations will overlook -- can be purchased for pennies on the dollar. The farmer can heal the land using sustainable development practices, in turn opening up the potential to help reverse climate change by sequestering carbon, leading to a higher crop yield than traditional farming operations.
An alternative to farming the land directly is buying the land and renting it to a farmer. According to the USDA, 39% of farmland is rented. It's a hands-off way to invest in farmland and agriculture without having to do the actual farming yourself. This allows the landowner to pay down the mortgage on the farmland while enabling the farmer access to land without having to come up with the money to purchase it. They are typically longer leases, meaning they offer a stable and low-risk way to invest.
Historically, the price of food increases over time, which means it can be an effective hedge against inflation and provides a safety net against the growing trend of food insecurity in our global economy. As with any investment, due diligence and a proper understanding of what you're investing in are critical. You may wish to consult with a real estate agent in the local market, an accountant, or an attorney after doing your initial research to get more detailed information on the specific implications of the agriculture investment you're interested in.