It’s a great time to buy farmland, but it’s a great time to sell it, too

As I write this, American diplomats are dealing with the awkward situation of Chinese dissident Chen Guangcheng, who got crossways with Chinese authorities and took temporary asylum in the U.S. embassy.

So what does that have to do with farmland? Not much — at least, not directly. Neither does North Korea’s recent missile test. Or the advance of the U.S. stock market. Or tensions in the Mideast.

Yet, these are only a few of thousands of seemingly peripheral factors that, on a given day, could have a significant impact on farmland prices.

Let me make one thing clear: I’ve been bullish on farmland as an investment for decades, and I still am. A majority of my investment portfolio consists of farmland, and I’m still looking for more to buy. Still, when you have a lot riding on one asset — or one industry — it’s a good idea to at least remember that we live in a big, uncertain world where lots of things can happen to upset our plans.

Right now, most of us are sitting pretty on our portfolios of farmland. I plan to keep right on sitting, and I like knowing that if I were to decide to sell some of my farmland right now, I’d probably be able to get record prices for it.

But I also know that a day may come when that won’t be the case. And that’s the factor I think some farmers and investors are overlooking. Sure, I think it’s a great time to buy farmland. But for those who have substantial paper profits, it may also be a great time to sell some holdings and diversify a bit. If there’s anything on the horizon that will create a need for the money you have invested in farmland — such as college, a marriage or a retirement — it’s worth considering.

I’ve built my case for months — and years — based on factors we can see at work in the marketplace, including China’s soaring demand for American farm products, the poor returns on CDs and other money-market instruments, the growth in biofuels and other factors. But it’s good to remember that the biggest upheavals often result from events we could never predict.

Who saw the 9/11 attacks coming? Or the credit collapse of 2007?

Even without a crystal ball, we can see possibilities that could make a mess of things. Throw in the possibilities we can’t imagine and we begin to see that our world is less stable than we like to think.

High oil prices put a drag on farm income, and with investor returns dipping well below the 3 percent level, there’s less room for error than there was five years ago.

Even news that is otherwise good can hurt us. Those of us who favor farmland as an investment like to point out that the stock market’s returns simply don’t justify the risk of the market’s volatility. But let’s remember that we’re coming off a miserable decade for stocks, when returns were hammered by the 911 attacks and the credit crises. But stocks have shown life in the past three years, and a major bull market could divert investment dollars away from farmland and back into equities.

I don’t worry too much about what Congress will cook up with the new Farm Bill, because I think today’s agriculture market is strong enough to shake off whatever the politicians are likely to throw at it. But as Mark Twain used to say, “No Man’s life liberty or property is safe while the legislature is in session.”