Returns to Farm Real Estate Revisited

Abstract

Abstract Barry's research on farm real estate returns suggests that when farm assets are viewed as a part of the nation's wealth portfolio, returns are not persistently low, as is commonly asserted in policy debates. This paper extends Barry's research by explicitly accounting for the effects of uncertain inflation, using a broader market proxy, and lengthening the sample period. The results suggest farm real estate offers only slight (not substantial) premiums above those for systematic risk, contributes little systematic risk to a well‐diversified portfolio, and exhibits substantial risk due to uncertain inflation.