Key Takeaways
- • Daniel Bacon, vice-president of investments at Area One Farms, told the Canadian Investment Review's 2026 Endowment & Foundation Investment Forum that farmland offers institutional investors protection from current market conditions.
- • Bacon cited historical return volatility of about 5 per cent for Canadian farmland, a negative 0.2 correlation with bonds and a negative 0.4 correlation with equities.
- • Institutional allocations to farmland typically target 5 per cent, according to Bacon, while farmland appreciation is running at a 10 per cent annual rate.
- • Joelle Faulkner, founder and CEO of Area One Farms, said climate change is extending growing seasons but also creating volatile periods for farmers.
- • Area One Farms has returned about 40,000 acres of former recreation land to agricultural production and offers farmers a 10-year partnership with a pathway to buy out 50 per cent or more of the land base.
Summary
Daniel Bacon, vice-president of investments at Area One Farms, presented the case for farmland as an alternative asset class during a session at the Canadian Investment Review's 2026 Endowment & Foundation Investment Forum. He said Canadian farmland, like infrastructure and real estate, is not driven by public market sentiment or gross domestic product trends, and cited a historical return volatility of about five per cent.
Bacon attributed the low volatility to farmland's ownership structure, which is primarily held by actual farmers, who set land prices based on expected future income and prior-year cash earnings. He also said farmland provides inflation protection because food prices are tied to the profit margins of agricultural assets. According to Bacon, farmland has a negative 0.2 correlation with bonds and a negative 0.4 correlation with equities, supporting its diversification value. As endowments and foundations grow more familiar with alternatives, their allocations to farmland typically target five per cent, he said.
Bacon said farmland is experiencing a 10 per cent annual rise in appreciation, driven by improved crop productivity, the shift toward higher-value crops such as corn and soybeans, global population growth and longer growing seasons linked to climate change.
Joelle Faulkner, founder and chief executive officer of Area One Farms, cautioned that climate change can extend growing conditions but also creates volatile periods for farmers. Under the firm's structure, Area One helps farmers with multiple children who want to join the family business buy out land from farmers who cannot pass their operations to the next generation. The firm also conducts land reclamation, returning historically farmed land that had fallen into disuse, usually as recreation ground, to production. Faulkner said the firm has brought about 40,000 acres back into agriculture. Farmers enter a 10-year partnership term with the firm, at the end of which they typically buy out 50 per cent or more of the land base.
Bacon attributed the low volatility to farmland's ownership structure, which is primarily held by actual farmers, who set land prices based on expected future income and prior-year cash earnings. He also said farmland provides inflation protection because food prices are tied to the profit margins of agricultural assets. According to Bacon, farmland has a negative 0.2 correlation with bonds and a negative 0.4 correlation with equities, supporting its diversification value. As endowments and foundations grow more familiar with alternatives, their allocations to farmland typically target five per cent, he said.
Bacon said farmland is experiencing a 10 per cent annual rise in appreciation, driven by improved crop productivity, the shift toward higher-value crops such as corn and soybeans, global population growth and longer growing seasons linked to climate change.
Joelle Faulkner, founder and chief executive officer of Area One Farms, cautioned that climate change can extend growing conditions but also creates volatile periods for farmers. Under the firm's structure, Area One helps farmers with multiple children who want to join the family business buy out land from farmers who cannot pass their operations to the next generation. The firm also conducts land reclamation, returning historically farmed land that had fallen into disuse, usually as recreation ground, to production. Faulkner said the firm has brought about 40,000 acres back into agriculture. Farmers enter a 10-year partnership term with the firm, at the end of which they typically buy out 50 per cent or more of the land base.
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