The Corn Belt is ideal for the private or smaller scale investor. It offers scale and the ability to aggregate land investments to create large farming units. The states of Illinois, Indiana and Ohio present the best opportunities.

Our case study is a 420-acre farm which is well situated within the Corn Belt, benefiting from the class A soils and relatively little climatic volatility that is typical of the US Midwest. Businesses tend to be mixed cropping focusing on corn and soybean production.

The region has seen significant capital growth in land values over the past twenty years, which is illustrated in this case study. The long term gains in asset performance (see Graph 8) are primarily the result of crop yield productivity due to adoption of technology such as hybrid seeds and highly mechanised production. This gain over time is capitalised into the land value despite short to medium term commodity price volatility.

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^{Source: John Cottingham - Argricultural Investment Associates}

Increasing crop yield has been a key driver in the performance of this investment.

With a 15-year average annual capital growth rate of 8.4% and income return of 3% per annum, the agricultural portfolio has been a sound investment over the long term. However, recent performance of the past five year both in terms of capital growth and income return of 15.4 % and 3.7% respectively per annum clearly shows the benefits of the productivity gains. This reinforces the fact that investing in farming should be viewed as a long term investment to ride out the cycle of price volatility and maximise the capital investment in realising productive gains.

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