HOLLANDALE, MINN. - Marc Schober likes to say that farmland is the new gold, a hot investment that offers protection from the whims of the stock market.

In fact, it's better than gold, the 25-year-old explains, tromping through a muddy field near Albert Lea that he's vetting for potential East Coast buyers. Cropland pays you money to hold it, he says. Gold bars don't produce anything, and you can't charge rent on them.

That type of bullish thinking has investors of every stripe flocking to farmland, plowing money into dirt from Australia to Brazil to the U.S. heartland. Compared to the volatile stock market and the feeble returns from bonds, farmland offers booming cash rents that have made it something of an "it" investment.

Schober's investors, some of whom are "Wall Street guys that run securities funds," see farmland as a hedge against inflation, he explains. "They're extremely turned on to the return profile -- it's such a steady increase."

Brian Briggeman, a former Kansas City Federal Reserve Bank economist now at Kansas State University, estimates that about a quarter of farmland buyers in Kansas and elsewhere are now investors, or non-operator buyers of some sort. How many are Wall Street-type players is impossible to say.

Even in Minnesota, which restricts institutional ownership of farmland, out-of-state investors are flexing their muscle, according to auctioneers, land brokers and assessors.

"There's absolutely been an uptick," said Glen Fladeboe, co-owner of Willmar-based Fladeboe Auctions, which is doing a brisk business in land sales. "We're seeing them as players in the market now. Demand for farmland is just huge."

The entrance of new money has fed fears of an asset bubble, although most see investors as more of a symptom than a driver of high prices.

Paul Magnuson, a 50-year-old investment manager from Dallas, likes farms so much that he bought five over the past two years -- one for each of his children. Two farms are in Minnesota.

He found them through Farmers National Co., a large Omaha-based farm management company that has amassed 5,000 farms in 24 states. It manages the properties for non-operating landowners, corporate owners and investors such as Magnuson.

His farms include 240 acres in Faribault County and 150 in Freeborn County that he rents to farmers growing corn and soybeans.

Magnuson's day job is managing mutual funds for a unit of insurance giant Allianz. But he was born in a small town in Nebraska, he explains, and his father grew up on a farm. He wants to pass on some of that heritage to his children. Plus, he thought the farmland was the soundest investment he could make.

Over the past decade, U.S. farmland has returned an average of 15.5 percent a year, according to a widely watched index from the National Council of Real Estate Investment Fiduciaries. That compares with about 4.1 percent for the Standard & Poor's 500 stock index and about 1.8 percent for 90-day government bonds.

Gold? About 19 percent.

Magnuson worries about inflation. "I want to be able to give something to my children that the central banks of the world can't replicate," he said. "I see that the demand for food incrementally grows each year, and I don't know about the supply of farm ground coming on."

Just how many outside investors are buying Minnesota farmland isn't exactly clear. The state Department of Agriculture estimates that about 185 of the 4,700 business entities certified to own farmland in Minnesota have an out-of-state address. Blue Earth's county assessor studied its own database of property owners at the request of the Star Tribune and determined that about 4 percent of the tax statements on that southern Minnesota county's farm land are mailed to out-of-state addresses.

Farmers eager to expand their holdings are still the bulk of the buyers in Minnesota, said Steven Taff, an economist at the University of Minnesota.

Briggeman, the Kansas State University economist, said he's curious about what role out-of-state investors might be playing.

"That's kind of the research question I have right now," Briggeman said.

Looking out for the land?

Investor interest in farmland is not new in Minnesota. Affluent retirees and others with money to invest have long seen farms as a good long-term bet. But traditionally the investors have either lived in the state or had a family connection.

Not everyone is thrilled about the new breed of investors making a pure financial play. George Boody, head of the Land Stewardship Project in Minneapolis, said he's worried that "the Wall Street shareholder model" focuses too heavily on wringing profits from the land.

The new owners are more likely to overlook important concerns for rural communities, Boody said. These include the need for crop diversity -- not just commodity corn for animal feed or ethanol -- and the necessity of conserving wildlife habitat and buffers to help filter water draining into polluted rivers.