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> Average is probably 10 hrs of work a week

> closer to $60k profit on that 40 acre farm

> Food prices go up during inflation, so my farm is worth more

> my loan will be easier to pay off from the production and be worth more when I sell

> I can work a full-time job besides the 2 week harvest season

Jesus Christ, I’m sorry to say this but you are in for a rude, violent awakening. Best of luck.

>Another important factor for me, was the protection from inflation. Food prices go up during inflation, so my farm is worth more.

this is a moot point because literally any other thing you invest it (short of maybe government bonds) protect you from inflation.

Not quite. Stocks, gold, Bitcoin, a house you live in (not rent) don’t produce anything (unless your stock has a dividend).

You want something that produces.

Say I buy $300k worth of gold, 10% inflation hits and there’s no change in demand and its now worth $330k.

Say I buy a $300k farm. 10% inflation hits and there’s no change in demand. It’s now worth $330k... but the value of production of said farm is also up 10%.

This makes an opportunity. If I take a loan on my farm in year 1, I can buy a larger farm (say on 3% interest). If inflation hits I can pay down that farm loan at an ever increasing rate. This allows someone to leverage the inflation and debt to make larger purchases.

It protects your INCOME from inflation. Not just your investments.

What you're describing isn't specific to farms. If you take out a fixed-rate loan, you'll benefit from increases to inflation (since it makes the inflation-adjusted interest rate lower). This is true whether you use that loan to buy a farm, a house, gold, et cetera.

Other than the loan, it makes sense to work in real dollars (inflation adjusted) not nominal dollars (non-inflation adjusted). In real dollars, you $300k farm doesn't change in value and your income also doesn't change. In real dollars, gold (in your example) also doesn't change.

Gold is a poor and weird investment for a variety of reasons, but it's not like farms are magically better than other asset classes (like regular old stocks).

Perhaps I'm deeply misinformed, but as a hedge against a modest amount of regular inflation, stocks generally perform quite well over the long term - especially when compared against other asset categories.

You’re not misinformed. This is kind of a weird thread.

Generally, if you want to hedge against inflation, you buy anything but dollars. If you want a very safe hedge against inflation you buy US government bonds. They are considered the lowest default bond, and as such will generally be priced at expected inflation. Next up, if you want about 1% above inflation (and the associated risk) you go with corporate bonds. And if you want about 3%, and more risk, you go with stocks.

Generally you should know the higher the interest the greater the risk. Some of the risk is short term risk, like not being able to liquidate. Some of the risk is longer term, like a company becoming insolvent.

To get good returns from the stock market, you need diversity, and long time lines, and growing companies. Else luck.

>Stocks, gold, Bitcoin, a house you live in (not rent) don’t produce anything (unless your stock has a dividend).

Houses: https://en.wikipedia.org/wiki/Imputed_rent

Stocks: You're literally owning a share of a corporation that produces stuff. Producing a dividend (or buybacks) isn't guaranteed, but that isn't that much different than owning a farm, which can also fail to produce a profit (if costs exceed expenses).

Perhaps you missed "a house you live in (not rent)"

I agree with the idea renting a home would be similar to a farm. The whole thing is you have to generate an income from the asset.

Stocks are, as you mentioned, kind of similar - but IMO not precisely the same. Often companies have expenses that also inflate, so it's more similar to gold or holding something static. When you own the means of production it's a tad different. Personally, I'd consider stocks somewhere in-between. Better than gold, less good than production your own.

However, owning a farm or means of production does come with more risk.

>Perhaps you missed "a house you live in (not rent)"

It's not giving you cash every month, but it's saving you from having to pay rent, which is effectively the same thing. This is what imputed rent is.

>Stocks are, as you mentioned, kind of similar - but IMO not precisely the same. Often companies have expenses that also inflate, so it's more similar to gold or holding something static.

and farms don't? You need to buy fuel, fertilizer/feed, equipment, all of which inflate. There's also the opportunity cost of your labor, which also inflates.

There also exists a much simpler way to see the equivalence between the two: what's the difference between owning a farm, and owning a share in a corporation that operates a farm?

What you are missing is that a farm is an amazing hedge against hyperinflation because hyperinflation is generally what happens when there is a shortage of food and the government keeps issuing money that exceeds the production capacity of the nation, namely to import food from other nations.

Since you are producing your own food you obviously get something to eat before anyone else and you only have to sell your surplus. The only problem with owning a farm as a hedge against hyperinflation is the government may be highly corrupt and repossess all farms and thus cause a food shortage that way. Something you won't own during a crisis may not be a good hedge after all.

Even if the stock doesn't have a dividend, the stock rises to reflect when the company produces value.

The other inflating asset is the $500k real estate. Here in the midwest, 40-acre farms a few dozen miles away from cities are constantly being converted into 40-unit residential housing complexes that sell at $500k/unit. Zillow and comps in my neighborhood say that my 50-year-old suburban ranch, which I bought 5 years ago, is worth more than double what I paid for it.

Buy the farm at $500k, sell it for $1M in a few years to another farmer or a developer, and you'd make double the profit of the cow farm itself. Or spend $200/square (which is itself insane) to build houses on it for a total of $24M and, if current trends continue, sell them all at $1M each for $16M profit.

With that insane real estate market status, the cows and lumber at $60k/year are almost a moo point. It's like a cow's opinion, you know, it just doesn't matter. It's "moo".

Not that the current real estate bubble isn't guaranteed not to pop. But there are a lot of powerful people and institutions which are highly incentivized to pretend it's not a bubble and make every effort to keep it from popping, so I think it's unlikely to do so.

This isn't a bad gamble if don't mind running the farm if the bet doesn't pay off.

How on earth can you not know why those things protect you from inflation? Precisely because they are productive investments that return money in the future and that future money is higher, precisely because of inflation.

The mechanism that protects a stock and a farm from inflation is exactly the same which is why it's not a moot point, it's the entire reason why we have inflation as a policy goal. You're supposed to go out there, work and expand your business, hire people and make the economy productive again!

Couldn’t you feed a family high quality food for a few decades with $500k? This seems like a lot of effort if you aren’t planning on making a profit.

That’s fair, but two posits

(1) you can’t really get high quality food outside a lot of sourcing and effort. As an example, I grow purple green beans that taste better than any green bean I’ve every bought. You may be able to get that particular green bean from a specialty shop, but I’m doing this with 30 different plants on 1-2 acres. I can harvest and eat the plants the same day as well (which has far more nutrition).

(2) I shouldn’t have said no profit, I do have a plan to make it profitable. But that’s not the primary goal, nor would it be my primary job. I’m a software engineer by trade and can work remote easily. Further, I can later sell the farm and equipment. It’s likely I’ll make a profit there as well.

I'm in a fairly similar situation, albeit on a smaller scale (6 acres) and I do this for reasons you already mentioned (nutrition, inflation hedge) plus climate change. I have years of experience growing veggies in my backyard and I agree, it takes a lot of money to get the same quality food elsewhere, and some specialties are out of reach. It's also a lot of fun.

I'm also planning for retirement in the 2030s and I'm trying to funnel my software engineering money into a small productive farm/market garden that produces enough to make a small profit and hire some help when needed. I haven't found a good way to offset my initial investment costs as a beginning farmer against my regular income from my main job, but I just started to learn more about Schedule F Profit/Loss from farming. Any pointers on what to read or CPA recommendations are highly appreciated.

Greetings from Hardiness Zone 6, which I assume will turn into Zone 7 within my lifetime.

Frankly, while I've bailed hay, grown my own food, etc. I'm also unfamiliar with this scale - just decided to go for it.

I already have someone willing to harvest for me and split the profits 50/50. I'm offering them a 30(me)/70(them) split on the condition they teach me to run their equipment, explain what they know, etc. There's not really a guide on starting a farm, you need to find someone who knows and work with them.

I also have family members in the cattle industry, construction and one family member specializing in maintaining prairie land. Speaking with them I am working to figure out the best way to maintain and improve the farm. For instance, I have a cabin on the property from the civil war period; we're going to repair it and put a new roof on etc.

> you can’t really get high quality food outside a lot of sourcing and effort

To be fair, this is very dependent upon the region you live in. I live in a suburban area bordering on farmland, and so I can get piles of really good quality foods at my local farmer's market every weekend. There's farms naturally raising grass fed beef, as well. And a couple people that go out to the Pacific and catch fish and then sell it at the same farmer's market.

I imagine that's a bit of a luxury in some places, for sure, but I'd bet it's not that uncommon, either.

That's assuming it's their money to begin with (I'd assume it's a loan). With those numbers it takes about a decade to make it back — perhaps more with capital costs. That doesn't sound bad at all? What were you expecting?

I don’t know. It just seems inefficient to me. Farming is not enjoyable work for most people who do it so the whole plan just reminds me of Marie Antoinette’s peasant role play hobby.

That $500K doesn't disappear. In a few decades the farm can be sold and you can get your money back (depending on changes in land prices).

But farms across the nation are failing and conglomerating. It just seems like he's investing in horses after the Model T has been released.

These conglomerating farms are exactly the reason for the lower quality food the poster is talking about. If the trend you identify continues then the relative scarcity of high quality food will rise.

Best of luck. I think you are about to get a very rude and brutal awakening when your dreams meet reality. Part of my family had the same dream and ideals. It nearly destroyed them.