About Us

Peak Soil® Indexes (PSI) is a cutting-edge indexing boutique with a farmland focus. Its stated goal is “democratizing farmland™ with responsible financial innovation”. PSI believes financialization can only occur with market accepted farmland indexes.

Farmland continues to gain institutional and HNW investment recognition. However, access is hampered by restrictions and difficulties. Physical ownership is a hands-on, challenging venture. An investment fund takes over management responsibilities but requires a capital lock-up for a number of years. In either scenario, the commodity lacks liquidity, transparency, a spot price and has no risk transference capabilities. Still, physical farmland has been sought as a low volatility investment with attractive diversification benefits, and for some, a favorable asset to match vs. long-term liabilities.

Recent inflationary pressures have generated intense interest and demand for the commodity. Precious metals, particularly gold usually serve as the main sources for inflation protection. Yet, farmland has historically demonstrated to be a far superior inflation hedge. Unfortunately, access has been limited to those of means and with the ability to accept a long-term, illiquid, non-transparent investment.

Democratizing farmland levels the playing field, where an economic equivalent to physical ownership is available to all. A derived ETF or private investment fund can easily offer a proxy with liquidity, flexibility and transparency. With today’s inflationary concerns why shouldn’t all investors have access to protections that exceed what gold and other commodities can offer?

Rectifying the numerous investment hurdles and financializing the commodity starts with timely, accurate, structurally sound farmland indexes. Furthermore, the indexes need to provide investors a socially responsible alternative to a physical investment. PSI is at the forefront in this transformation, providing indexes with a defined purpose. The indexes are specifically constructed for the type of derivative development that satisfies our goal of “responsible, prudent financialization”.

The company’s early efforts started with the introduction of the “Peak Soil Iowa Transactional Farmland Value Index” in February 2015. Within two years, PSI followed with statewide indexes on Indiana, Wisconsin, Illinois and Minnesota farmland. Considering the importance of irrigation and pasture in Nebraska, PSI posted index valuations for irrigated cropland, dry cropland and pasture land. In 2016 the company released its first international index on Saskatchewan farmland.

While providing accurate transactional indexes that were gaining benchmark status, replication inefficiencies led to limited traction and necessitated PSI re-inventing itself. Effective 2018, PSI relaunched with a new commitment to the evolving use of artificial intelligence in the financial sector. Recognizing the limitations of transactional indexes, PSI veered off into AI derived indexes. Machine learning better allowed for the construction of liquid, replicable investment products with increased design flexibility. The firm now exclusively targets the growing demand for farmland through synthetically structured indexes for ETFs and private investment product use.

As of March, 2019, utilizing a proprietary recurrent neural net, the company developed the PSI 3i Synthetic Index. The “3i” simply refers to the incorporation of Iowa, Illinois and Indiana as one territory. At its core, the 3i index is a diversified basket of liquid futures, with the ambition of replicating farmland values for the three-state index. Machine learning identifies commodity inter-dependencies and relationships that are the drivers to physical farmland valuations.

The 3i index has shown to consistently track long-term farmland performance. The synthetic replication naturally adds an element of basis risk with slightly increased volatility. Nevertheless, liquidity can be gained with the 3i index exhibiting a historical monthly tracking error of only 2.6% and a MAPE of just 1.79% vs. physical farmland. In essence investors can obtain a liquid, transparent proxy for a modest increase in volatility.

PSI focuses on responsible index designs that maintain market integrity and preserve the cash marketplace as the determinant for valuations. Safe derivative development can occur with architecturally sound indexes. PSI is responding to investor preferences for access to the asset class, bringing farmland out of dark and into the transparent, liquid investment world. PSI indexes are the first step in financializing farmland.