Being from Iowa and having worked in the fields and trading futures as a teenager, I always keep an eye on the agricultural economy. Farmland had a good return last year according to the Federal Reserve.
Good farmland was up 8-16% according to this report from the Chicago Fed.
Farmland is usually purchased as a function of cash yield. I know what you are thinking, what a novel but dated concept in real estate: yield based pricing. I have a feeling it may come back into vogue :) Even if Moody's will rate it AAA, please don't buy a Farmland CDO it will only encourage more silly securitization and things have been bubblicious enough thank you.
There are of course federal crop subsidies which skew the economic output of the land which drives the cash rent and thus the effective yield, so caveat emptor. If you want to talk with someone about Farmland, the good people at Hertz Farm Management know a thing or two about it. They even manage a few acres down in Brazil. Ask for Dick Pringnitz. Full disclosure: my family owns a few acres back in Iowa and have for over a century, probably won't be selling anytime soon.
Farmland is an investment, not a trade. A lot of people don't know it, but one of the most crazy speculative bubbles in the late 20's was Farmland. This post isn't a buy or sell recommendation, just a highlight. Here is an excerpt from a lawyers letter posted by Dr. Housing Bubble.
“The boom period of the last years of the World War and the extremely inflationary period of 1919 and 1920 were like the Bubble and the Tulip Craze in
in their effect upon the general public. Farm prices shot sky high almost over night. The town barber and the small-town merchant bought and sold options until every town square was a real estate exchange. Bankers and lawyers, doctors and ministers left their offices and clients and drove pell mell over the country to procure options and contracts upon this farm and that, paying a few hundred dollars down and expecting to sell the rights before the following March brought settlement day. Not to be in the game marked one as an old fogy, while paper profits were pyramided and Cadillac cars and pleasure trips to the cities took the place of Fords and Sunday afternoon picnics. Everyone then maintained that there was only a little land as fertile as the fields of Mississippi, Illinois, Iowa and Minnesota and everyone sought to get his part before it was all gone. Like gold, it was limited in extent and of great potential value. Prices skyrocketed from $100 to $250 and $400 per acre without regard to the producing power of the land."
The next major issue in the financial markets will most likely be flawed CDS netting leading to a bit of a banking issue. None of this is new under the sun. My recommendation is to get educated / jaded by studying human behaviour and also reading Kindelberger's Manias, Panics and Crashes.