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Global markets have similar dynamics when it comes to share. A key reason why small farms give reinvest- ment short shrift is due to an aging farmer population. Reinvestment into farm operations tends to decrease as operators age; the average U.S. farmer is now in his or her late 50s. AGING OWNER BASE Against that backdrop, investment horizons for smaller farms are fairly dim, particularly when up against the need for incremental investment to upgrade infra- structure or introduce irrigation or innovative tech- nologies and processes into farm operations. Many small firms lack the resources to invest in innovative technologies designed to improve efficiencies with regard to planting, harvesting, planning and water usage. Adding insult to injury, those who do invest in sophisticated, digital machinery face again huge costs when new machinery breaks down, and it's unlikely to be replaced. Inadequate investments often prove counterproductive: Lower levels of property invest- ment can translate into lower productivity and have a deleterious impact on overall property value — both in the near and longer term. Taken together, the trends present an interesting opportunity for private investors who have a keen understanding of the lower end of the farming sector and see untapped value among smaller farms rather than dormant businesses hopelessly behind the curve. Like any financial undertaking, investors must possess a deep and specialized knowledge of the market to increase odds for success. It's quite possible the current downward pressure on operating margins — particularly those faced by operators who lack scale — could spur these owners to consider monetizing their most valuable asset, land, through the exploration of a sale. But an out-and-out sale of the property is not the only option for investors. Rather than selling to an agricultural conglomerate in an age of increasing consolidation in the sector, investors can become partners with these farmers and help to pre- serve the small, family-farm nature of U.S. agriculture. ey can also acquire a significant chunk of the business so they don't have to incur all the risk. Patient inves- tors can be nicely rewarded for implementing property improvements that can boost productive capacity at the farm level. SEEDS OF OPPORTUNITY is is the proverbial win-win strategy: Having both a willing seller and a viable path to property improvement are critical components for making these transactions work for both parties. Regard- less of what you think about the potential increase in long-term agricultural demand, the opportunity for investing in the farming sector stems from near- er-term global dynamics. In a market environment in which property improve- ments and potentially attractive acquisition pricing can provide a solid return on investment, how you handi- cap increasing demand for agricultural commodities is an additional — although not essential — reason for investing in small farms. Investors have to be careful not to get bogged down by the politics now gripping the nation's farming sector due to the skirmish over tariffs. Rather, serious investors have to keep their eyes peeled on the potential upside many small farms possess. For those who are willing to plow through, there are ample reasons for investing in this asset class. Jim Gasperoni is co-head of real assets at Aberdeen Standard Investments. 27 REALASSETS ADVISER | D E C E M B E R 2 0 1 8