Research - JANUARY 23, 2013

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U.S. farmland sector has strong return in fourth quarter

by Sara Kassabian

During fourth quarter 2012, U.S. farmland had a strong rate of return, exceeding its income return from fourth quarter 2011, according to the NCREIF Farmland Index, released by the National Council of Real Estate Investment Fiduciaries.

Farmland recorded returns of 9.56 percent in fourth quarter 2012, compared with 3.58 percent in fourth quarter 2011 and 4.37 percent in fourth quarter 2010. Fourth quarter 2012's return marks the highest quarterly return for the farmland sector since 2006, when fourth quarter returns were at 11.55 percent.

Fourth quarter 2012 total returns were split between 5.27 percent appreciation and 4.29 percent income. Income and appreciation returns are routinely highest in the fourth quarter due to the harvest of many crops at this time of year. This causes higher income returns, and reappraisal of farmland properties results in higher appreciation returns.

"The 201

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