While institutional investment in agriculture has grown dramatically in recent years, it still represents only one-tenth of one percent of the estimated $1 trillion value of American farmland. Here are a few of the reasons the agricultural asset class holds significant potential for institutional investors.

(1) Agricultural investments offer the opportunity for strong appreciation coupled with competitive cash returns. In fact, investors who diversify their farmland portfolio to include permanent crops can earn outstanding cash returns.

(2) Agricultural assets support balance and diversification within a total portfolio. Agricultural investments have proven to be an effective hedge against inflation. Because agricultural returns correlate negatively with typical investments - including stocks and bonds - agricultural assets support balance and diversification within a total portfolio. There is also unusual flexibility within the asset class, which permits internal diversification by location, crop type, and operational arrangement.

(3) Dietary shifts related to the global economy. As global economies prosper and as disposable incomes improve, there will be a gradual dietary shift from staple foods, such as rice, to high-protein, value-added foods, such as meat. This movement up the food chain by a growing percentage of an ever-increasing world population will benefit the most efficient producers - and that ultimately means better returns for American farmers and farmland investors.

(4) As a natural resource, farmland can never be "overbuilt." In fact, conservation efforts and suburban development are actually reducing the supply of quality land available for food production.