Over long time periods, farmland has been one of the best-performing asset classes in history. It has outperformed the returns of residential REITs, the S&P 500, Gold, Treasuries, and most other major asset classes:

Here is another study of farmland returns, comparing them over a different time period:

You will note that farmland is not just more rewarding, it is also a lot safer. Farmland investors have achieved above average returns with below average risk.

You will also note that the above returns are unleveraged. Returns would have been even better when leverage is applied.

We are not making any more land, but its product (food) is absolutely necessary to the survival and prosperity of our society.

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Moreover, its need is only growing over time as the population gets larger and there are more mouths to feed.

Because farmland is absolutely necessary to human life, regardless of how the economy is performing, its income and value also remain fairly stable when investing in the right farms.

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And in a way, it is also black-swan resistant.

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Let's take the invasion of Ukraine as an example. When Russia began its invasion of Ukraine, most risky assets dropped in value. This is because the war causes great uncertainty and inflation in energy and food prices. Suddenly, people are fearing that we could be at the door steps of a third world war, and besides, the economic damage is significant.

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But one asset class has kept appreciating and it is farmland.

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But you could go back in history and study other black swans as well.

The great financial crisis of 2008-2009 caused almost all assets to crash in value, but farmland remained stable and kept on rising in the following years.

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Same for the dot-com bubble and crash of 2000 and countless other crises in history. Burry is bearish and sees significant risks in today's world and that explains why he is so eager to own a lot of farmland to protect himself.

The amount of productive farmland with good infrastructure and water access is limited and declining each year due to urban development, global warming, and other issues.

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Yet, the demand for food is constantly rising due to two main reasons.

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The population is rising rapidly and expected to reach ~10 billion by 2050:

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Secondly, the middle class is growing even faster in emerging countries, and as people get richer, they typically switch to higher quality diets, which increases the need for farmland.

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As long as the global population continues to rise and increasingly many get out of poverty in emerging countries, then there will be growing demand for food, and the limited supply of farmland will continue to grow in value in the long run.

The terms “solar farm” and “wind farm” could not more perfectly demonstrate the inevitable pairing of renewable energy and agriculture as uses of land.

Although harvesting the sun and wind for distribution through the electric grid is far from a traditional agricultural practice, farmland is typically the anticipated location for a utility-scale wind and solar facility. Farm owners are leasing their land to these installations adding to the farm net cash flow and additionally, farm owners receive revenue for each kilowatt of power produced.

Technology is poised to revolutionize American farming, making operations more profitable and sustainable in the long term. Precision agriculture, powered by data analytics, GPS, and drones, allows farmers to monitor crops and soil conditions in real-time, optimizing irrigation, fertilization, and pest management. This reduces waste, lowers costs, and boosts yields. Additionally, automation in planting, harvesting, and machinery maintenance can significantly reduce labor costs and improve efficiency. Advanced genetic engineering and crop breeding techniques promise more resilient and higher-yielding plants, helping to mitigate the effects of changing temperatures and unpredictable weather patterns. With better access to data and smart tools, farmers can make informed decisions that improve sustainability and profitability, ensuring their operations are more resilient and competitive in the global market. These advancements not only improve bottom lines but also ensure that American farms can thrive for generations to come, even in the face of increasing environmental challenges and shifting market demands.

Transporting water is impractical for both political and physical reasons, so buying up water rights is not something we do. Food is the way to invest in water. That is, grow food in water-rich areas and transport it for sale in water-poor areas within the US and globally.

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This is the method for redistributing water that is least contentious, and ultimately profitable, which will ensure that this redistribution is sustainable. A bottle of wine takes over 400 bottles of water to produce — the water embedded in food is what we find the best way to invest in water.

Soil carbon capture or sequestration happens when plants capture and store, or “sequester,” atmospheric CO2 in the soil.

In this market, farmers or ranchers can sell a carbon credit to investors for every metric ton of carbon that their land sequesters.

The carbon market creates new revenue streams for farmers that were not there before. This incentivizes them to transition to sustainable farming practices and adopt regenerative agriculture.

• On the buyer side, companies, governments, and other entities buy carbon credits for around $15–$20/ton of carbon to offset their own emissions.

This can be done voluntarily (as offsets) to meet their emissions reduction goals. Or farmers can sell credits to entities in the regulatory market (cap-and-trade system) with reductions mandated by laws.