Returns on U.S. farmland are finally slowing
U.S. farmland has been growing profits for investors by the bushel. Until the most recent quarter, that is.
The NCREIF Farmland Index reports third quarter 2014 produced the lowest quarterly return since third quarter 2010. The total return for the quarter was 1.45 percent, comprised of 0.48 percent appreciation and 0.97 percent income return. This was below total returns of 2.94 percent for third quarter 2013 and 1.73 percent for second quarter 2014.
The agricultural sector has posted a track record of positive returns and consistent growth since investment analysts started measuring its performance in 1990. In 1998, the index included 427 properties and was valued at $916 million. Today, the index comprises almost 623 properties valued at more than $4 billion.
The index’s rolling four-quarter return is an impressive 15.48 percent, with 7.98 percent attributed to appreciation and 7.18 percent to income. For the past five to 10 years, farmland has exceeded eve