Investing in Agriculture as an Asset Class

There has been massive investment in agricultural assets including farmland, handling and trading, technology, fertilizer, and others. Studies about investing in farmlands have been extensive, but have limited focus on investing IN non-farmland agricultural assets. This paper analyzes the role of farmland and other agricultural investments in class-specific portfolios. We use the Copula-VaR and Copula-VaR with restrictions methods to find, compare, and contrast the optimal portfolio compositions among US farmlands, classified agricultural equities, and grain futures. The results illustrate that farmland is attractive as an investment. However, as risk tolerance is increased, a shift to other agricultural assets would potentially bring higher returns.