13 September, 2022
Why Buying Farmland in Illinois is a Smart Investment
Despite the pandemic, farmland values rose in 2020 and are predicted to continue to grow. The strong demand for food commodities and low-interest rates has increased farmland competition, driving prices. Farming is an appealing option for investors looking for a wise long-term investment. In addition to the potential for appreciation, farmland offers several other advantages. With values expected to continue to rise in the coming years, investing in farmland is smart for those looking to secure their financial future.
Farmland Value Determining Factors
The value of farmland is determined by several factors, including location, productivity, and the availability of water resources. Generally, areas with high populations and limited agricultural land tend to increase the most significant farmland values. This is due to simple economics – as demand for food increases so does farmland’s value. Another factor impacting farmland values is the price of other assets, such as stocks and real estate. When these prices are high, investors often consider farmland a more stable investment. As a result, farmland values can be volatile, rising and falling with changes in the broader economy. However, over the long term, farmland has proven valuable and likely to continue to appreciate.
Reasons for investing in farmland in Illinois
High demands in food
According to a recent study, most farms are relatively small, operating on just 7 percent of all agricultural land. Of that seven percent, most are already used to grow crops or support livestock. As the population continues to grow, so makes the demand for food. This increase in demand puts pressure on the limited amount of land available for farming, driving up land values. Whether you plan to farm the land, rent it out to someone else, or sell it in the future, investing in agricultural land is a smart financial move. With the right location and management, your investment will continue to appreciate as the demand for food continues to rise.
Inflation can be hedged by investing in farmland
Farmland has historically been a very stable investment, even during high inflation. While the price of other assets such as stocks and bonds may fluctuate wildly in response to changes in the inflation rate, farmland values have remained relatively stable. This is because farmland is a basic necessity – people will always need to grow food, no matter how high prices climb. As a result, farmland is an excellent hedge against inflationary pressures. In addition, farmland is a very limited resource – there is only so much land available for farming, making it a scarce commodity. When demand for farmland increases but supply remains static, prices will rise. This makes farmland an ideal investment for those looking to protect their purchasing power during periods of high inflation.
Excellent source of passive income
Farmland is an excellent way to earn passive income. It can provide you with a steady stream of rental income and can appreciate over time. Farmland can also be used to grow crops or to graze livestock, providing you with an additional source of income. In addition, farmland can be a great place to relax and enjoy the outdoors. By owning your farmland, you can have a place to go on weekends and holidays, where you can get away from the hustle and bustle of city life. Best of all, farmland is usually located in rural areas, making it a great way to invest in real estate without dealing with the noise and traffic of urban areas.
A perfect way to diversify your portfolio
Farmland is an attractive asset for portfolio diversification. While it is not highly correlated with stocks and bonds, it positively correlates with commercial real estate. This provides investors with stability during volatile markets and enhances risk-adjusted returns. Farmland also offers many other benefits, including inflation protection, tax advantages, and the potential for capital appreciation. For these reasons, farmland is an increasingly popular investment for institutional and individual investors.
Final thoughts
The farmland values have been rising in Southern Illinois and are predicted to continue in the coming years. This is excellent news for farmers and investors looking for a long-term, wise investment. If you are interested in investing in farmland, our Midwest Farm And Land Co. team can help you find the right opportunity in Southern Illinois. Contact us today to learn more about how we can assist you.
References:
https://www.fao.org/
https://www.kmaland.com/
https://www.agweb.com/
