With an estimated $3.8 trillion in total market capitalization, U.S. farmland is now on par with the commercial office market. Unlike stocks, it shows "zero correlation" to Wall Street volatility, says Craig Wichner, founder of Farmland LP. That combination of stability, long-term returns, and ecological benefits is attracting not only wealthy individuals but also some of the world's biggest corporations.

Microsoft became Farmland LP's largest institutional investor in September 2024, participating in the firm's Fund III, which aims to raise $250 million. So far, the fund has secured $110 million in equity commitments. The tech giant is motivated in part by the ability to purchase carbon emission credits generated by regenerative farming practices.

Farmland LP's growth and strategy

Founded in Larkspur, California, Farmland LP is now the 14th largest farmland manager in the U.S. and the nation's largest in organic and regenerative agriculture. The company focuses on acquisitions in Northern California, Oregon, and Washington, typically in the $50 million to $100 million range, and manages over 4,800 acres in its latest fund.

Farmland LP's model is akin to multi-tenant commercial real estate, but with crops. Instead of monoculture, its farms grow multiple high-margin products-blueberries, cherries, wine grapes, apples, almonds, hazelnuts, and herbs-on the same land. The company supplies major brands like Whole Foods Market, Costco, Procter & Gamble, Driscoll's, and Colgate-Palmolive.

Returns and resilience

According to the NCREIF Farmland Index, U.S. farmland has delivered an average annual return of 10.5% with "bond-like volatility," aided by low sector leverage-around 13% loan-to-value. During the 2008-2009 financial crisis, farmland values showed minimal decline while the S&P 500 lost nearly 58% from peak to trough.

A market with deep emotional ties

Beyond the numbers, farmland investments resonate on a personal level. Many investors share a multi-generational connection to agriculture, often recalling family farming roots. Tom Sullivan, Farmland LP's managing director, says this emotional appeal, combined with stable returns and sustainability benefits, creates a unique value proposition.

With the current environment favoring acquisitions and long-term demand for regenerative farming, Farmland LP expects to fully deploy its Fund III assets by 2026-and corporate interest like Microsoft's suggests the sector's growth potential is far from tapped.