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Farmland is an attractive long-term investment, offering not just current income and capital appreciation, but also reliable diversification and a valuable hedge against inflation. Its performance is negatively correlated with traditional asset classes, which means it can help stabilise portfolios during volatile market periods. Those with an allocation to agricultural land have often seen less volatility and positive returns that offset losses elsewhere.
Current Income
Crop farmland has historically produced consistent cash income, typically between 4% and 10%. This is in addition to any capital appreciation.
Capital Appreciation
A major portion of farmland returns comes from appreciation in value. As demand for food rises and arable land becomes increasingly scarce, farmland tends to appreciate in value.
Over the past 20 years, farmland in the Southern Cone—primarily Argentina, Brazil, Paraguay, Uruguay, and Chile—has delivered consistently positive returns, both in capital appreciation and agricultural output.
The region’s central position in global commodity markets has driven this performance. Southern Cone countries represent approximately 46% of the world’s soybean-planted area and account for more than 50% of global soybean production. Similarly, these nations contribute substantial shares of global corn, wheat, and sorghum production.
Improvement in yields, driven by advancements in biotechnology (such as the adoption of genetically modified crops) and agricultural practices, has been particularly significant. For example, soybean yields in countries like Paraguay increased by 48% over the last decade, while a parallel boom occurred in Uruguay, marked by a dramatic expansion of crop areas. Argentina, Paraguay and Brazil have also seen notable increases in land under cultivation and productivity, supported by the expansion of their agricultural frontiers.
Export growth has been another positive outcome. The agricultural and agri-food sector’s commercial surplus in the Southern Cone reached $107 billion, nearly six times higher than in 2000. This growth has been supported by strong demand from Asia and improvements in market access, generating wealth and stability for farmland owners and investors in the region.
Inflation Hedge
Farmland is strongly correlated with inflation, making it a classic inflation hedge. Unlike other hard assets such as gold, it also generates positive cash flow. This makes farmland particularly appealing in times of high inflation, which can result from either deliberate policy or unintended government actions.
Diversification Benefits
With a negative correlation to most traditional assets, such as stocks and bonds, and a relatively low correlation with commercial real estate and farmland, it can serve as a portfolio anchor, improving its risk-adjusted return.
Strategic Advantage in Latin America
Given today’s elevated geopolitical risks and the increased threat of war in the Northern Hemisphere, acquiring farmland in Latin America has become a particularly prudent choice. Not only do these regions offer attractive returns and a positive long-term macroeconomic outlook, but they also provide an alternative to assets exposed to uncertainties in the Northern Hemisphere.
As a result, countries such as Argentina, Chile, Paraguay, and Uruguay offer compelling opportunities for direct farmland purchases, managed investments, and farm development.
We leverage relationships with some of the most skilled and respected farm administrators in South America to offer investors a range of farmland investment options. This not only enables the pursuit of higher short-term returns but also positions investors for longer-term stability and growth in a less volatile geopolitical environment.
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Founded in 2004, GTSA began as a single office in Buenos Aires. Since then, it has grown into a vibrant regional network, providing professional real estate marketing services to clients in AR, BR, CL, PY, PE, and UY.
