The Ultimate Hard Asset: American Farmland and The 300-Year Water Supply Hidden Underneath It | Chris Morris LandFund Partners

Episode Summary

Executive Summary: Chris Morris of Land Fund Partners argues U.S. Mid-South row-crop farmland is a rare alternative asset with low correlations, strong cash-flow growth, and structural tailwinds from water scarcity, protein demand, energy transitions, and aging farmer succession. He says Land Fund’s disciplined, local-partner model has produced mid-teen net returns while the fund remains focused solely on farmland.

Main Topics: Farmland as an institutional alternative asset (Priority: 5/5): Morris frames farmland as a still-underserved asset class owned mostly by families, with very few institutional managers. He says it offers diversification benefits that traditional portfolios and many private assets don’t. Why the Mid-South is attractive (Priority: 5/5): The firm focuses on Arkansas, Mississippi, and Louisiana because of abundant groundwater, irrigated acreage, lower land prices than the Midwest, crop diversity, and strong local relationships. Water scarcity and future water rights (Priority: 5/5): Water is central to the thesis: the Mississippi Alluvial Aquifer gives the region long-term water security today, but Morris expects water rights to become more valuable over time as scarcity rises elsewhere and data centers add demand. Income drivers and optionality on farmland (Priority: 4/5): Returns come from farm rents, appreciation, and add-on revenue streams such as mineral rights, hunting, recreation, water rights, and solar option payments. Morris emphasizes farmland’s multiple monetization layers. Protein demand, global food security, and commodity trends (Priority: 4/5): Growing global wealth increases protein consumption, which raises demand for feed grains. Morris links this to stronger long-term demand for row crops and U.S. farmland productivity. Technology, regenerative farming, and productivity gains (Priority: 4/5): GPS-guided tractors, AI, robotics, and better seed technology are improving farm efficiency and margins. Morris says revenue per acre has compounded steadily and could keep rising. Farmer economics, subsidies, and risk management (Priority: 3/5): Morris explains the capital stack, operating loans, crop insurance, and USDA support programs that reduce downside for farmers and stabilize lease payments to landowners.

Key Arguments: Farmland is under-owned institutionally, so professional managers can still capture inefficiencies in a large market dominated by families and owner-operators. US row-crop farmland has very low correlation to equities, especially the S&P 500 and NASDAQ, making it useful for portfolio diversification. The Mid-South offers superior value because land is much cheaper than the Midwest while yields are competitive, especially when water access and crop optionality are included. Water is a hidden option embedded in farmland; current pricing does not fully reflect future scarcity or the potential value of groundwater rights. Global GDP growth increases protein consumption, and feed grains benefit because animal protein requires multiple times more grain than direct plant consumption. Farmland cash flow can grow through higher rents, larger and more efficient farm blocks, technology adoption, and non-farming uses like solar leases. Local partnerships and selling to aging owners with no succession plan make the strategy socially defensible and economically practical rather than predatory. Government support programs and crop insurance cap farmer downside, which indirectly supports rental income and land values. Land Fund is intentionally staying specialized in farmland because focus helps maintain returns and avoids strategy drift.

Data Points: Assets under management: over $400 million - Land Fund’s farmland portfolio size Fund performance: mid-teen net returns - Stated return profile for the firm Evergreen fund inception: October 2021 - Launch date for the evergreen soil enrichment fund Correlation to S&P 500: slight negative correlation - 30-year correlation of U.S. row crop farmland to equities Correlation to NASDAQ: even stronger negative correlation - 30-year farmland correlation versus tech stocks Correlation to 10-year Treasuries: almost no correlation - 30-year farmland correlation versus bond benchmark Farmer average age: 59 years old - Used to support the succession-planning thesis Global water stress: 6 billion+ of 8 billion people - UN report cited on water scarcity Farm rent in Mid-South: about $250 per acre annually - Typical cash rent in the region Solar lease first-year rent: about $1,400 per acre - Example of solar option/lease economics Solar option payment: $50 to $100 per acre - Upfront option revenue even if the lease is not executed Groundwater availability estimate: over 300 years - Land Fund’s estimate for the Mississippi Alluvial Aquifer Portfolio irrigated share: 93% irrigated and growing - Land Fund’s Mid-South farmland base Land price in Mid-South: $7,000 to $8,000 per acre - Top-quality irrigated farmland valuation in the region High-quality Midwest land price: around $15,000 per acre - Comparable Midwestern farmland pricing Record Midwest sales: close to $20,000 per acre or higher - Top-end benchmark for high-quality Midwest land Corn yields in three primary states: 180 to 205 bushels per acre - Average yields in Arkansas, Mississippi, and Louisiana Illinois irrigated corn yields: 220 to 240 bushels per acre - Comparison used to highlight valuation disparity Revenue CAGR per acre: over 6% - Steady compound growth rate in the evergreen fund New farm acquisition pace: $50 million to $100 million per year - Capacity to add farmland at current strategy scale Typical small farm size: as small as 100 acres - Lower end of target transaction size Average deal size: $4 million to $5 million per transaction - Typical transaction size for Land Fund Farmer water registration fee: $10 per well per year - Example from Arkansas groundwater access rules Price loss coverage floor increase: 20% - Increase referenced in the recent farm bill Crop insurance coverage: 65% free baseline coverage - Government-subsidized downside protection for farmers Ad hoc support payments: $12 billion to $14 billion - Recent additional assistance cited for farmers Utility scale demand from data centers: 8 million households - Estimated energy demand in the three main states versus 4 million households in the region

Pivotal Quotes: "We think that will look like more professional management and ownership of farmland assets, and then partnering with really great local farmers to actually operate those farms." — Chris Morris: Describing the long-term institutionalization of farmland ownership "If you and I own tracts of land next to each other and you put a straw on the ground and extract all the gas, you know, what about me, right?" — Chris Morris: Explaining why groundwater rights may eventually need clearer pricing and legal rules "We don't have big corporate farming interests that we lease the land to. They're all, you know, real people and smart business people that we work with to lease the farms." — Chris Morris: Addressing concerns that farmland investing is predatory or community-hostile

Implications: Farmland may become a more mainstream portfolio diversifier as water, food security, and energy demand reshape agricultural economics. The Mid-South could re-rate if water rights and technology gains are better priced in.