Exploring Farmland Investment: Loyd & Co's Strategic Move in the Asset Class
Loyd & Co. Team · June 2025 · Article
Farmland is among the oldest investable assets in the world — and one of the least understood by institutional capital. Here is why we made it a deliberate allocation, and how we underwrite it.
The Oldest Asset, Repriced
Farmland is a productive real asset: it generates income from what it grows, and it appreciates as an asset whose supply cannot be manufactured. Arable land per person declines every year as population grows and as productive acres are lost to degradation and development. The demand curve — food — is the least discretionary in the global economy.
And yet, relative to its fundamentals, farmland remains under-owned by institutional capital. It is fragmented, operationally demanding, and unforgiving of naive ownership. Those are exactly the characteristics that deter casual capital and reward disciplined, long-term owners.
Why Now
The case for farmland has strengthened for reasons that will not reverse on any investor's timetable. Input costs and logistics have repriced proximity to demand. Water constraints have repriced rights to it. Food security has moved from a policy abstraction to a board-level topic. Each force raises the value of well-located, well-watered, well-operated land.
Meanwhile inflation remains the dominant risk to financial portfolios, and few assets pass inflation through as directly as farmland: crop revenues rise with prices, and the land beneath the crops rises with them. As an allocation, it does the work that many nominal assets cannot.
"Land does not produce headlines. It produces food, income, and permanence — in that order, every year."
The Return Profile
Farmland returns arrive in two streams: annual income from cash rents or crop shares, and long-term appreciation of the land itself. The income stream is modest but remarkably stable; the appreciation stream has historically been steady and largely uncorrelated with public equities.
The combination matters more than either component. In a portfolio built to endure cycles, an asset that produces income through every macro environment, hedges inflation structurally, and does not mark to a public tape is worth its allocation cost. This is not a trading position. It is ballast that pays.
How We Underwrite Land
A farmland allocation is only as good as its diligence. We underwrite five factors before any parcel enters the portfolio: soil quality and productive history; water — rights, reliability, and cost; climate durability of the location; the quality of the operator, whether tenant or manager; and proximity to the demand and infrastructure that carry the crop to market.
We also underwrite stewardship. Sustainable practice — soil health, water management, and rotation discipline — is not a concession to values; it is protection of the asset's productive capacity, which is the asset. Land farmed well compounds. Land farmed for this year's yield does not.
A Holding for Generations
Farmland rewards the horizon our clients actually have. Families and institutions do not need liquidity every quarter; they need their capital to be productive for decades, to withstand the cycles that break paper portfolios, and to mean something when it is passed on.
That is why farmland sits in our strategic allocation and in the portfolios we build for family office clients. It is the kind of asset our firm was assembled around: real, income-producing, permanent, and better held by owners who intend to hold it.
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