5 Best Farmland ETFs (And 2 REITs) To Buy In 2022

One of the major consequences of the Russia/Ukraine conflict is the sudden lack of arable farmland. Ukraine, one of the world’s biggest exporters of wheat, corn, and barley, has more arable farmland than any country in Europe and may not be able to participate in the spring planting season. Learn about how investing in farmland can benefit the world and your portfolio.

David Dierking   Updated April 4th, 2022

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Should you invest in farmland ETFs?

Regardless of the economic environment, people need to eat. That gives the farming and agriculture industry a steady level of demand. As the global population grows, the demand for food will only grow with it.

We’ve seen firsthand the importance of farmland throughout 2022. Russia and Ukraine are major world producers and exporters of grains and agriculture products. Russia’s invasion of Ukraine has sent food prices soaring as consumers worry about supply shortages. The relative scarcity of arable land has brought renewed attention to farmland as an investment.

The best farmland ETFs and REITs

Unfortunately, there are no pure-play farmland ETFs available. That means investors need to seek alternatives closely tied to farming instead. The best way to invest in farmland is to buy a farm, but that’s unfeasible for most people (though there are some options). Investing in the stocks of agriculture companies is one way. Funds that invest in agricultural commodities are another.

The best options for farmland exposure include many structures and strategies. The ETF industry doesn’t currently offer a fund with direct farmland investments, so we’ll also look at a pair of real estate investment trusts (REITs) that do.

Farmland ETF and REIT list

  • Invesco DB Agriculture Fund (DBA)
  • VanEck Agribusiness ETF (MOO)
  • iShares MSCI Global Agriculture Producers ETF (VEGI)
  • Teucrium Agriculture Fund (TAGS)
  • iShares Series B Bloomberg Livestock Subindex Total Return ETN (COW)
  • Farmland Partners (FPI)
  • Gladstone Land Corporation (LAND)
Fund / TickerHoldingsTypeExpense RatioAssets ($m)2022 Performance
Invesco DB Agriculture Fund (DBA)Wheat, corn, soybeans, sugar, coffee, cocoa, cattle, etc.ETF0.93%1,88811%
VanEck Agribusiness ETF (MOO)Animal health, aquaculture, fishing, agricultural productsETF0.55%1,72110%
iShares MSCI Global Agriculture Producers ETF (VEGI)Fertilizers, agricultural chemicals, farm machinery, and moreETF0.39%20916%
Teucrium Agriculture Fund (TAGS)Wheat, corn, soybeans, and sugarETF0.18%2921%
iShares Series B Bloomberg Livestock Subindex Total Return ETN (COW)LivestockETN0.45%226%
Farmland Partners (FPI)
FarmlandREIT-66716%
Gladstone Land Corporation (LAND)FarmlandREIT-12908%

As of 3/31/2022

Learn more about each option.

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Invesco DB Agriculture Fund (DBA)

  • Investments: wheat, corn, soybeans, sugar, coffee, cocoa, livestock
  • Expense ratio: 0.93%

DBA is the largest fund in the ETF marketplace that focuses solely on agricultural commodities. It tracks a rules-based index composed of futures contracts on some of the most liquid and widely traded agricultural commodities, including wheat, corn, soybeans, sugar, live cattle, and coffee. In terms of diversity, DBA might be the best choice available. It’s a large fund and highly liquid but comes with the highest expense ratio.

If you’re looking for direct investment in farmland, DBA won’t offer it, but it offers exposure to just about every product that land can offer. Wheat and corn, DBA’s two largest holdings, have experienced some of the largest gains in 2022, but the diversified nature of the fund has resulted in more modest returns.

iShares MSCI Global Agriculture Producers ETF (VEGI)

  • Investments: fertilizers, agricultural chemicals, farm machinery, and more
  • Expense ratio: 0.39%

VEGI is an equity ETF that offers exposure to companies that produce fertilizers, agricultural chemicals, farm machinery, and more. It has an MSCI ESG Fund Rating of “AA” making it a good option for ESG investors looking for farmland exposure. VEGI has nearly half of its portfolio invested in overseas companies and is one of just two stock funds listed here. If you’re considering sticking with equities in this space, this is one of the better options available.

Portfolio concentration is a concern. The fund is invested entirely in materials, industrials, and consumer staples stocks. It also has nearly 50% of managed assets invested in just five companies – Deere, Nutrien, Archer Daniels Midland, Corteva, and Mosaic. Deere alone accounts for a whopping 19% of the portfolio. That presents some idiosyncratic risks that may be avoidable with more diversified products.

VanEck Agribusiness ETF (MOO)

  • Investments: animal health, aquaculture, fishing, and the trading of agricultural products
  • Expense ratio: 0.55%

With over $1.7 billion in assets, MOO is a large stock fund that invests in a global portfolio of large-cap companies involved in animal health, aquaculture, fishing, and the trading of agricultural products. MOO has a 48% portfolio overlap with VEGI but is tilted more heavily into the healthcare sector. It includes Bayer, Zoetis, and Idexx Laboratories as some of its top holdings.

MOO is a large and liquid fund, but it is more expensive than VEGI. The overweight in the healthcare sector has cost it some performance this year, but MOO has modestly outperformed VEGI since the latter’s launch ten years ago.

Teucrium Agriculture Fund (TAGS)

  • Investments: wheat, corn, soybeans, and sugar
  • Expense ratio: 0.18%

TAGS could be considered most similar to DBA, but it focuses on equal investments in just four commodities – wheat, corn, soybeans, and sugar. While it’s less diverse, these commodities are used throughout the global economy for food, animal feed, fuel, starch, paper, and plastic. It’s got the best performance year-to-date among the products on this list, but it’s also very small, potentially making trading more challenging. Its expense ratio of 0.18% is quite attractive, however.

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0.25%

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Minimum

$100

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Fees

$3-$5 / month

Minimum

$5

Work with human advisors

Fees

0.49%-0.89%

Minimum

$100,000

iShares Series B Bloomberg Livestock Subindex Total Return ETN (COW)

  • Investments: livestock
  • Expense ratio: 0.45%

COW tracks an index that consists of futures contracts on two livestock commodities – lean hogs and live cattle. Many investors look at grains when considering alternatives to direct farmland investment. Although not all investors support investing in livestock from the sustainability perspective, livestock presents a unique opportunity that has a low correlation with other asset classes and can reduce overall portfolio risk. However, COW hasn’t proven to be quite as lucrative as grains throughout 2022.

COW is the only exchange-traded note on this list. ETNs differ from ETFs in that they are debt securities, not funds. That means they can be affected by the credit risk of the issuer. COW’s 0.45% expense is reasonable, but it’s thinly traded. That can make high trading costs and illiquidity an issue for investors.

Farmland Partners (FPI)

  • Investments: farmland

While ETFs don’t currently offer direct farmland investment, some REITs do. FPI is an internally managed, publicly-traded real estate company that owns and seeks to acquire high-quality farmland throughout North America, addressing the global demand for food, feed, fiber, and fuel. Farmland Partners owns approximately 160,000 acres in 17 states all across the country. This land is farmed by over 100 tenants who grow 26 major commercial crops.

Like many REITs, FPI offers investors a steady income stream. It’s been making quarterly dividend payments for the past seven years, currently set at $0.05 per share. At current share prices, that translates to an annualized yield of 1.5%.

Gladstone Land Corporation (LAND)

  • Investments: farmland

LAND is another REIT that owns high-quality farms and farm-related properties. They are leased to tenants with a strong operating history and deep farming resources. LAND’s portfolio has a total fair value of approximately $1.5 billion and is actively seeking other farm properties to purchase across the United States. LAND currently consists of 164 farms comprising approximately 113,000 total acres across 15 states.

If you’re an income seeker, LAND offers a high yield and consistent payment history along with the investment in farmland. Except for a modest reduction during the COVID pandemic, LAND has consistently paid a $0.07 per share monthly distribution over the past decade. That computes to a 6.6% yield.

How have farmland ETFs performed?

Naturally, the performance of these ETFs has depended on what they’ve invested in. In 2022, wheat and corn performed the best, and the Teucrium Agriculture Fund (TAGS) returned 21%. Other top performers were VEGI, which invests in agriculture stocks, and Farmland Partners (FPI), the farmland REIT. COW has not done so well, returning only 6%.

The outlook for these products will depend on which asset classes lead. If we’re entering another commodities supercycle spurred by high inflation, the agricultural funds could do well. MOO and VEGI will be heavily dependent on how the stock market performs. LAND and FPI will perform based on the success of their portfolios.

Direct farmland investing: alternatives to farmland ETFs

More recently, you can also invest in farmland directly through agriculture investing platforms. These platforms let you buy stakes in parcels of farmland at a much lower minimum investment than if you dealt with the owners directly. Farmland investing platforms buy attractive parcels of land and handle all of the administrative and legal work.

AcreTrader is one such platform. It scours the landscape for the most attractive opportunities, rejecting 99% of potential investments. It sets a target return of 7-9% annually, including farmland value appreciation and 3-5% cash yield each year. Its minimum investments generally start at around $15,000, and it charges a 0.75% management fee. You can read the review of AcreTrader here.

Other options include FarmTogetherHarvest Returns, and the Iroquois REIT.

💰 Takeaway

Farmland is becoming a great investment opportunity that has gotten a lot of visibility over the past several months. The war in Ukraine has highlighted the need for a healthy global food supply chain. Farmland has the potential for solid returns and portfolio risk reduction while doing good for the world.

NOT INVESTMENT ADVICE. The content is for informational purposes only; you should not construe any such information as investment advice.

🔔 Did you know that you can also invest in grains like wheat and corn? Check out the top wheat, corn and soybeans funds.

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