Dust storms are an extreme type of erosion that cause severe damage to farmland. Precious top soil is being dried out and blown away by high winds. Areas home to Australia’s best farmland, such as in the Murray-Darling Basin, are being affected.

Recently, Australian farmland has been a good investment because of its cheap price and high growth potential. Drought is an example why some farmland is certainly better than others, and also why farmland investments should be diversified.

Fertile topsoil can be 1-3 feet deep and when it runs out, it takes many years for it to replenish. Risk involved in owning farmland increases in areas that are prone to drought, or other natural disasters. One solution would be to diversify across different locations to try to minimize natural disaster risk.

US farmland has proven to be a strong investment over time. Cropland has yielded 12.5% per year over the past 20 years according to the USDA. Owning farmland will run risks, but to optimize potential returns on an investment of farmland requires diversifying the locations of farmland to minimize the risks.

- Colvin