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After Bill Gates moved on from his role at Microsoft, the company he founded, he shifted his focus to philanthropic efforts with the Bill and Melinda Gates Foundation, providing billions of dollars of capital to noteworthy projects every year.

With a net worth of $105.8 billion, according to Forbes, Gates’ portfolio is widely diversified. There’s his Microsoft (MSFT) stock, of course, but that accounts for just around $13 billion, according to sites that directly track his public investments. The rest of his fortune is spread out among a number of private interests, such as accumulating U.S. farmland.

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Recent estimates are that Bill Gates owns around 270,000 acres of farmland around the United States. Gates himself has said in a recent Reddit AMA that he owns roughly 1/4000 of all farmland in the U.S. Given there are more than 893 million acres of farmland in the U.S., this number appears to be roughly correct.

For instance, over the past six years Gates has reportedly spent roughly $113 million purchasing Nebraska farmland and now owns about 20,000 acres in that state alone.

But the question is: why is Bill Gates investing so heavily in this asset class? Here’s what to consider when it comes to investing in farmland.

Investing directly in farmland

Farmland is a broad asset class that refers to acreage that can be farmed. It’s an attractive investment for those looking to hedge against inflationary periods. According to a 2023 article from Nasdaq, the value of farmland has been shown to rise alongside inflation, with the value of U.S. farmland hitting 10.2% in 2022 at a time when the average inflation rate was 8%.

The thing about investing in physical farmland is the price tags associated with large farms (or even small to medium-sized farms) can be massive. These are also assets that aren’t as easy to get financing for, particularly for investors and those without direct farming expertise.

The USDA and other organizations do provide programs for individuals to purchase farmland, but for all intents and purposes, this asset class is one that’s reserved for accredited investors.