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Farmland’s inflation-hedging characteristics

Manulife Investment Management
Weiyi Zhang, Ph.D., Associate Director, Agricultural Economist

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A of different crop types’ performance in an inflationary environment.

Key takeaways:

  • Farmland demonstrated its inflation-hedging potential by producing positive inflation-adjusted real returns over the past two years: The correlation between inflation and farmland returns remains dynamic.
  • cost categories markedly increased, but higher prices and stable output led to record-setting total U.S. farm revenue, despite high inflation.
  • Crop types are affected by inflation differently due to varied structures of production cost components: In 2022, row crops fared better than select permanent crops, with a number of market factors determining crop-specific financial performance.
  • Unlike other asset classes whose value may depreciate over time, farmland can retain its value, and with inflationary pressures forecast to ease, the outlook for farmland investors remains bright.

The full article is available to read here.

Image courtesy of Manulife Investment Management

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