Investing in agricultural land
Investing in land can be profitable and offer long-term returns. The average farmland values in Europe continue to rise, making it an attractive investment. Property investments are also recession-proof, making them a good portfolio diversifier. After all, land stays in high demand as the global population keeps growing.
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Why invest in farmland?
Land can be a stable and safe investment, especially if you want to protect your money from inflation or spread your investment risks. As a physical asset, it is less affected by changes in the economy.
Farmland needs little maintenance but still holds strong collateral value. Even when prices fall, land usually keeps a base value and can be sold for a fair price. Because land is limited and the demand for food and housing keeps growing, agricultural land often increases in value over time.
Returns of land assets
Buying farmland can be a profitable investment, but returns differ strongly per region. In Western Europe, prices rise more slowly due to high efficiency and modern farming techniques. In Central and Eastern Europe, however, land values have risen more quickly in the past years.
Farmland can also offer a steady income. For example, exchange listed companies that own farmland pay dividends to investors from rent income. Crowdfunding platforms also offer income through loan repayments from farmers. In this way, farm investing can lead to long-term growth and potential capital gains.
Invest via InSoil or LANDE, in crowdfunding projects in the agricultural sector. Or check EstateGuru for property-secured real estate loans across Europe. Investing involves risks. You can lose your investment.
Risks of agricultural investments
Although farming industries are generally stable, but funding a business always brings operational risks. This can involve the financial health of the farmer, but also weather conditions that affect crop production. In Europe, these risks are partly reduced because the European Union gives farmers financial support to help maintain stable food production.
Second, the price of land and agricultural products can change. The value of a plot may fall below the price you paid. Lower demand for certain crops or supply issues can also cause prices to fluctuate. Finally, farmland is not a very liquid investment. It usually works best if you plan to hold it for at least five years. Unlike the stock market, farmland prices change more slowly. However, if you invest through farming stocks or ETNs, you can buy and sell more easily.
Farmland is mostly a long-term investment.
How to invest in land
There are different ways to invest in land. You can buy a plot yourself, but you can also invest in online or financial products that give you exposure to land or agriculture. Some of these are available through crowdfunding, while others are offered on the stock market.
Crowdfunding land loans
A more direct way of investing in European agriculture is through farmland crowdfunding platforms, which allow investors to pool their money and invest in specific agricultural projects. Here, you can fund farmers looking to buy more acreage or livestock, for example. With crowdfunding, you will typically fund a business loan. In return, you will receive regular loan repayments as well as interest. This means it can be a source of regular income as well.
Farmland crowdfunding is a more direct investment.
Crowdfunding platforms for agricultural land
Some European crowdfunding sites that are specialized in farmland are:
A European crowdfunding platform focused on the agricultural sector, active in the Baltic States, Poland, Bulgaria, and Portugal. It finances working capital, machinery, and sustainability projects, such as CO₂ reduction. Investors earn an average annual return of over 12%.
- focus on agriculture
- loans secured by land or equipment
- sustainable and eco-friendly projects
- auto-invest feature
- secondary market
- ECSP license (Lithuania)
Latvian crowdfunding platform Lande offers you the opportunity to invest in the agricultural sector. Farmers collect funding through projects to purchase land or livestock. The annual interest is up to 14% for investors.
With LandEx, you can invest in a plot of farmland. The Estonian platform offers loan contracts with variable interests, so that the value depends on the price of the asset and the investors benefit from the full increase of the asset value. The loan investment is backed by a mortgage.
investing through the stock market
Another way to invest in land is through the stock market. This can include buying shares in public companies in the farming sector, but you can also invest in farmland directly or in land-based commodities like timber or wheat. This is possible through financial products such as ETFs, REITs, and ETNs. These products give you indirect access to the value of land or agriculture, often with lower costs and more flexibility than owning land yourself.
Agriculture stocks and REITs
You can buy shares in public companies in the farming sector. These may be food producers, or companies that work with fertilizers, seeds, equipment, transport or distribution. Examples of well-known agriculture stocks include John Deere, Archer Daniels Midland, Corteva Agriscience, Nutrien, FMC Corporation, Tyson Foods, and AGCO.
You can also invest in Real Estate Investment Trusts (REITs) that focus on farmland. These companies buy and manage land, and earn income from renting it out to farmers. Investors receive dividends from this rental income. Regular stocks may offer more price growth over time, but farmland REITs often pay higher dividends.
Open an account directly with a large European broker such as eToro, known for its beginner-friendly platform, or DEGIRO, which is popular for its low trading fees. Investing involves risks. You can lose your investment.
Mutual funds and ETFs
If you want to spread your risk even further, you can invest in Exchange Traded Funds (ETFs). These follow an index of farming companies or land-based products such as timber, wheat or sugar. ETFs are low in cost because they are usually not actively managed. Some track one type of product, others follow a mix of agricultural assets.
You can also choose mutual funds that invest in European agriculture. Like ETFs, they spread your money across companies or products. But because mutual funds are often actively managed, the fees are usually higher than with ETFs.
ETFs track farming companies or commodities.
Derivatives (ETNs)
You can also invest through online platforms that offer Exchange Traded Notes (ETNs). ETNs are a type of derivative: loans that follow the value of farmland or an index. You do not own the land itself, but your investment follows its value. ETNs can be traded like regular stocks. Your return comes from the price difference between buying and selling.
