Farmland is not a niche idea. It is, as Bruere frames it, a convergence of scarcity, productivity, and permanence that sits at the intersection of several forces institutional allocators have spent years chasing: inflation sensitivity, low equity correlation, and durable cash flow. The paper, titled "Farmland Fundamentals: Understanding the Asset Class," is the first installment in a broader series aimed at family offices, and it earns its place as foundational reading.
The structural setup is unambiguous. Only approximately 16% of U.S. land is considered suitable for agriculture. Globally, the figure drops to roughly 10%. Against that fixed supply, global population is heading toward 9.8 billion by 2050. Bruere makes the point plainly: "Technology can improve efficiency and productivity, but it cannot replace the underlying need for productive land." That is the bedrock thesis, and everything else in the paper builds on it.
Income First, but Appreciation Does the Heavy Lifting
Farmland returns flow from two sources: current income through leasing arrangements and long-term appreciation in land values. The income side operates much like commercial real estate, with three primary lease structures carrying meaningfully different risk profiles.
Fixed cash rent dominates, accounting for roughly 72% of leased farmland according to USDA estimates. The landowner receives a contracted per-acre rate regardless of crop yields or commodity prices, making it the lowest-risk structure from an income standpoint. Crop share agreements, representing approximately 18% of lease structures, shift the owner into a more direct participation role, sharing both production expenses and harvested output with the operator on a roughly 50/50 basis. Custom farming agreements sit at the highest-exposure end, with the landowner retaining full crop ownership while hiring an operator for a fixed fee, introducing the greatest variability but also the greatest upside participation.
The appreciation story, however, is what separates farmland from other income-generating real assets. Average U.S. farmland appreciation has historically run at approximately 5.94% annually, and critically, drawdowns have been shallower and less frequent than those observed in most traditional asset classes. Farmland cap rates have historically trended below many forms of commercial real estate, Bruere notes, "reflecting the market's emphasis on long-term appreciation, capital preservation, and the scarcity of high-quality productive land."
Annual vs. Permanent Cropland: A Risk Trade-Off Worth Understanding
Not all farmland is equivalent. Bruere draws a clear distinction between annual cropland (corn, soybeans, wheat, cotton, barley) and permanent cropland (almonds, pistachios, wine grapes, citrus, avocados). According to NCREIF data, permanent cropland has generated annualized returns of approximately 9.9% since 1991, narrowly ahead of the 9.8% produced by annual cropland. But permanent crops carry a materially different risk profile. Biological recovery risk is the key variable: if an orange grove is destroyed, replacement trees may take seven to ten years to return to full production. Annual cropland resets each season.
The divergence in volatility between the two categories has been considerable, as Figure 4 in the report illustrates. For advisors helping clients evaluate farmland exposure, this distinction is consequential.
The Three-Forces Framework
Bruere organizes the valuation discussion around three interconnected drivers: income, inflation, and interest rates. Farm profitability is heavily commodity-price sensitive, though farmland values themselves move gradually, given that only approximately 1-2% of U.S. farmland transacts annually. Inflation linkage is structural: commodity prices, replacement costs, and the intrinsic value of scarce productive land all tend to rise in inflationary environments. On interest rates, Bruere acknowledges the direct pressure rising rates create on cap rates and buyer purchasing power, while noting that farmland has historically demonstrated greater stability than other real estate sectors in rising-rate environments due to modest leverage levels and essential-use demand.
Beyond traditional income, Bruere identifies embedded optionality as an underappreciated value driver: renewable energy development, carbon sequestration programs, battery storage, and data center proximity are increasingly creating additional appreciation premiums that extend well beyond agricultural economics.
Five Key Takeaways for Advisors and Investors
1 Farmland generates returns through both current income (leasing) and long-term land appreciation, with appreciation historically representing the larger total return contributor at approximately 5.94% annually.
2 Fixed cash rent leases offer the lowest income risk; crop share and custom farming structures increase variability but also upside participation.
3 Annual and permanent cropland carry similar long-run return profiles but meaningfully different volatility, with permanent crops subject to multi-year biological recovery risk.
4 Farmland's inflation sensitivity is structural, not incidental, driven by commodity prices, replacement costs, and fixed land supply.
5 Embedded optionality (energy, carbon, development) creates additional value pathways that are increasingly material in certain geographies.
Footnote: Bruere, Steve. "Farmland Fundamentals: Understanding the Asset Class." Farmland and Family Capital: A Strategic Playbook for Family Offices. Peoples Company, 9 June 2026. PeoplesCompany.com.
