For investors seeking stable returns amid the volatility caused by escalating tariff regimes, a strategic focus on assets exhibiting resilience against geopolitical headwinds is required. Nature-based investments – specifically, high-quality farmland producing consumer staples like food and beverage products – emerges as a compelling defensive anchor for portfolios, in our view. The core value drivers for farmland are linked to biological growth, land productivity and the fundamental, inelastic demand for nutrition. Historically, farmland has demonstrated resilience by delivering consistent, positive returns even during periods of economic stress and market downturns.

This is shown by analysis from the Association of Canadian Pension Management (ACPM), drawing on data from sources like the NCREIF Farmland Property Index, which found that farmland investments have historically exhibited low volatility and a track record of strong, often double-digit, long-term average annual returns. The ACPM further concludes that farmland acts as an effective inflation hedge, with both land values, rental income, and agricultural output tending to rise alongside broader price increases in the economy. Furthermore, its low or negative correlation with traditional asset classes provides significant portfolio diversification benefits¹.

The essential nature of food and beverages ensures relatively inelastic demand, insulating the asset class from severe demand shocks. For example, a research paper² on the price elasticity of coffee in 22 European countries concluded that each demonstrated inelastic price demand for coffee. Twelve countries, and the European Union (EU) overall, show perfect inelastic price demand, meaning negative real elasticity. 

The same paper concludes that low-quality coffee is not of interest to EU consumers, who prefer excellent, rare, healthy products. Within coffee value chains, a shift in production to regenerative, nature-based production can therefore provide a higher quality, healthier, organic alternative grown from a carbon sink that supports biodiversity and which offers an exclusive story about origin.
 

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