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In the realm of agricultural investments, almond and pistachio farmland has emerged as a high-value potential investment option, offering a unique opportunity within the U.S. farmland landscape. Let's explore why these crops stand out and why they make strategic additions to your investment portfolio.
Solid Historical Performance
Over the past two decades on average, almonds and pistachios have outperformed other asset classes like public stocks, commodity agriculture crops, and even private equity.
Almonds' Remarkable Rise: US per capita consumption of almonds has grown by 3x in the last 20 years, and consumption in emerging markets is growing quickly too driven by a growing middle class. Meanwhile, in California where 80% of the world’s almonds are grown, production has gone from one billion pounds per year in the early 2000s to more than 2.5 billion pounds in each of the last three crop years.
Pistachios–The Green Gold Rush: Similarly, pistachios, once a niche tree nut, have witnessed explosive growth in popularity. U.S. pistachio production has increased nearly 5x since the early 2000s to over 1 billion pounds per year to support a similar increase in US per capita consumption. Their appeal, owing to health benefits and versatile applications, has made them a global snacking and ingredient sensation.
Strong Returns: These trends have driven combined average annual returns for almond and pistachio farmland in the US to 14-20% over the last 10-20 years.
Strong Long-Term Supply-Demand Profiles
The attractiveness of almonds and pistachios extends beyond historical trends due to promising long-term supply-demand profiles:
Supply Limitations: Almonds and pistachios both require very specific climates with growing conditions that are present in very limited geographies around the world (namely parts of California, Turkey, Iran, Australia and the European Mediterranean). With climate change driving hotter, drier summers and warmer winters, supply growth for both crops is limited, and some existing growing regions are expected to have steadily decreasing yields.
Demand Growth: Demand for these crops, on the other hand, benefits from a number of major tailwinds in the food space: healthy and plant-based snacking, alternative protein consumption, and a growing middle class in emerging markets demanding more diverse foods. For example, if China and India’s per capita almond consumption grows to even one-fourth of US levels in the coming years, global demand would grow nearly 30%, approximately one billion pounds.
These promising dynamics make the long-term case for almond and pistachio returns very compelling, even considering the occasional short-term challenges driven by pricing cyclicality and isolated weather events.
Diversification with a Focus
Investing in almonds and pistachios enables portfolio diversification through farmland while specifically targeting specialty crops with some of the highest value potential in the asset class. Returns are driven by two primary components:
Crop Cash Flows: Both almonds and pistachios yield crops through annual harvests, providing investors with regular distributions.
Underlying Farmland Appreciation: US almonds and pistachios are grown on some of the highest-value farmland in the world in the Central Valley of California. As the dynamics of climate change and a growing global population play out, high-quality farmland is expected to continue to appreciate in value, as it has done consistently for decades.
Having the long-term stability of the underlying farmland complemented by the strong cash flow potential (10-14% annual cash yield at long-term average pricing levels) of each year’s crop drives a win-win situation for one’s portfolio.
Gold Leaf Farming: Cultivating Long-Term Value
As you contemplate diversifying your investment portfolio, consider the potential of almonds and pistachios within U.S. farmland. Their impressive historical performance coupled with robust macro trends position these crops as prudent choices for long-term capital investors.
Reach out to Gold Leaf Farming at investors@goldleaf.ag to learn more about why investing in specialty crop farmland could be a strong alternative investment option for your portfolio. Gold Leaf Farming LP, the firm’s primary investment vehicle, provides investors with immediate access to a diversified portfolio of almond and pistachio farms across California.
Sources: USDA Economic Research Data, Nuts & Dried Fruits Statistical Yearbook, 2023 NCREIF Farmland Index
