Soil as an Asset Class: Why Investors Are Buying Dirt
Bill Gates is the largest private farmland owner in the United States. He owns roughly 275,000 acres spread across
Bill Gates is the largest private farmland owner in the United States. He owns roughly 275,000 acres spread across 19 states, growing corn, soybeans, and potatoes. When asked why, he says the same thing every time: it is a good investment. No grand scheme. No conspiracy. Just dirt that pays.
That answer bothers some people. It should intrigue everyone else.
Something shifted after 2008
The financial crisis did a lot of damage. But one of its lesser-discussed effects was the way it changed what serious investors decided to do next. When equities, bonds, and commercial real estate all fell together, the traditional playbook for protecting capital stopped working. Investors began hunting for assets that did not move with markets, generated real income, and sat on top of something that could not be replicated.
Farmland checked every box. Between 2005 and 2020, the number of funds globally dedicated to farmland investing grew from 19 to 166. Not because of a trend cycle. Because the math was hard to argue with.
Soil as an asset class had been sitting quietly for generations, owned by farming families and largely ignored by finance. That began to change in the early 2000s, accelerated sharply after 2008, and has been gaining institutional momentum ever since. The asset did not change. The people looking at it did.
What the returns actually look like
Here is the part that tends to surprise people. From 1992 to 2024, US farmland delivered annualised returns of around 10 percent. The S&P 500 returned roughly the same over the same period. So far, nothing remarkable.
Then you look at the volatility. Farmland’s was about 5 percent. The S&P 500’s was nearly 18 percent. Same return, a third of the risk. In 2008, while the S&P 500 fell 37 percent, farmland appreciated 16 percent. During the inflation surge of 2020 to 2022, when both stocks and bonds had a rough stretch, farmland returned over 9 percent annually. It does not just compete with equities on returns. It tends to hold its ground precisely when equities cannot.
Australia tells a similar story. According to the Bendigo Bank Agribusiness 2025 report, the national median price per hectare of farmland hit a record $10,231 in 2024, the eleventh consecutive year of growth. Over the past decade, the national median price has tripled, compounding at 11.6 percent per year. Over twenty years, the average annual appreciation has been 8.4 percent. The Canadian pension fund Alberta Investment Management Corp took notice and put down $300 million in 2023 to acquire a major cattle portfolio in Western Australia. Foreign institutions are not buying Australian dirt for sentimental reasons.
The returns come from three places. First, cash rent, where a landowner leases to a farmer at a fixed rate per acre, collecting predictable income the way a commercial landlord would. Second, revenue-sharing arrangements that offer more upside in strong production years. Third, and most powerfully over time, appreciation. Average US farm real estate was valued at $4,170 per acre in 2025, up 4.2 percent on the prior year. Between 1940 and 2015, the average price of US farmland increased sixfold, before accounting for any income earned along the way.
The layer most investors have not priced in yet
Carbon credits are where soil as an asset class starts to get genuinely interesting from a business perspective.
Healthy soil sequesters carbon. That means a well-managed farm is not just producing crops. It is producing a tradeable environmental commodity that corporations are increasingly paying to access. The global carbon credit market for agriculture, forestry, and land use was valued at $7.51 billion in 2025 and is on course for $26.35 billion by 2030. For landowners who qualify, this is an additional revenue stream sitting on top of everything the land already generates.
This is where regenerative agriculture becomes financially relevant, not just ethically interesting.
Regenerative farming means rebuilding soil health rather than depleting it. Cover crops, reduced tillage, managed grazing, crop rotation. These practices increase the organic matter in the ground, which improves yields, cuts input costs, and pulls carbon from the atmosphere into the soil. Farmers who do this can have their sequestration independently verified and sell the resulting credits to companies offsetting their emissions.
The corporate demand for those credits is real and growing fast. Nestlé has committed over CHF 1.2 billion to source half its priority agricultural materials from regenerative farms by 2030. PepsiCo is putting $216 million toward transitioning seven million acres. These are not sustainability reports. They are procurement commitments with price premiums flowing toward farmers who moved early. The regenerative agriculture market itself was valued at around $9.2 billion in 2025 and is expected to double by 2030 as food companies race to lock in verified supply chains.
For landowners, the logic is becoming difficult to ignore. A farm that generates crop income, appreciates in value, leases reliably, and produces verified carbon credits is a fundamentally different business case from what farmland looked like twenty years ago.
How it stacks up against the alternatives
The standard portfolio is built on stocks and bonds. The problem is that in recent years, both have moved more closely together, weakening the diversification argument for holding both. Farmland breaks that correlation. From 1970 to 2024, it moved largely in the opposite direction from financial markets. When things got bad, it held ground. That is not just a performance characteristic. It is a structural feature that portfolio managers are starting to value explicitly.
The main trade-off is liquidity. You cannot sell farmland on a Tuesday morning because you are nervous. Transactions take months, entry costs are significant, and managing agricultural land requires operational knowledge most investors do not have. For those reasons, most institutional exposure comes through specialised funds or farmland REITs like Farmland Partners and Gladstone Land Corp, which trade publicly and lower the barrier to entry considerably. The growth in those vehicles is itself a signal of where the market is heading.
The bigger picture
Food consumption globally is projected to rise by 50 to 70 percent by 2050 as populations grow and middle-class diets shift toward more resource-intensive food. At the same time, arable land is being lost to urbanisation, soil degradation, and climate disruption. More demand, less supply, finite resource. The long-term direction of farmland values is not especially difficult to forecast.
Climate pressure adds a dimension that conventional asset pricing has not fully caught up with. Farms with healthier, better-managed soil will weather extreme weather conditions more effectively than conventionally farmed land. That resilience has a financial value. So does the carbon those soils store, the water they retain, and the biodiversity they support. These are not soft benefits. They are increasingly quantifiable, increasingly tradeable, and increasingly priced.
Soil as an asset class is not a new idea. It is an old idea that the financial system took a long time to formalise. The families who held farmland for generations already understood what the spreadsheets are now confirming. The ground produces. It holds. It does not panic.
Gates figured it out early. The institutions are catching up. The question now is who gets in before the rest of the market does too.
Sources
- FarmTogether. Farmland vs The S&P 500.
- Kiplinger. The Investment Case for Farmland.
- Investor Strategy News. Are Super Funds Missing Out on Farmland?
- Globe Newswire. Carbon Credit for Agriculture, Forestry, and Land Use Market Report 2026.
- Carbon Credits. AgreenaCarbon and the Regenerative Agriculture Market.
