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NCREIF Farmland Property Index Released

Led by Annual Cropland, NCREIF Farmland Index Total Returns Accelerate Higher in Q1 2022

The National Council of Real Estate Investment Fiduciaries (“NCREIF”) released the 2022 NCREIF Farmland Index (“NFI”) first quarter and full year results for the trailing four quarters. The NFI added 24 properties in Q1 2022 bringing the total property count up to 1,284 and a new record market value of $14.4 billion.  In Q1 2022, the total market value of the annual cropland sub-index was $8.73 billion accounting for 61% of the NFI’s total market value while the remaining $5.70 billion was in permanent cropland. The permanent crop index was further divided by management type between directly operated and leased with directly operated permanent crop properties representing $4.19 billion (74%) and leased permanent crop properties accounting for $1.51 billion (26%).

Regionally, the NFI continues to be dominated by the Pacific West (40%) and followed by the Delta States (19%) and the Corn Belt Region (12%). The other 29% is represented by the Mountain (8%), Pacific Northwest (7%), Southeast (5%), Lake States (4%), Southern Plains (2%), Northern Plains (2%), Appalachian (1%), and Other (<1%).

Total Farmland Returns

In Q1 2022, the NFI’s total returns continued the recent trajectory upwards to new highs by generating total returns of 9.73%, consisting of 3.82% income and 5.75% appreciation returns over the last four quarters. Annual cropland returns accelerated higher with a 14.12% annual return driven by strong appreciation at 10.23%. Conversely, permanent cropland continued its sideways trend only posting a 3.34% total return over the previous four quarters. The NFI’s Rolling 4-Quarter total returns are the highest since December 2015 and the annual cropland Rolling 4-Quarter total are the highest since December 2013. Permanent cropland Rolling 4-Quarter total returns have not had multiple quarters of sub-4% annual returns since the early 2000’s.

Rolling 4-Quarter Total Returns

Annual Cropland Subindex

The annual cropland category generated total Rolling 4-Quarter returns of 14.12%.  This represented a 2.75x increase in the total return compared to the Rolling 4-Quarter from March 2021 of 5.14%. Annual cropland in Corn Belt, Northern Plains, Lake States, Pacific Northwest, and Northern Plains all exceeded 10% total returns over the past four quarters. The NFI’s annual cropland subindex has never had a negative annual total, income, or appreciation return since inception in Q4 1990.

  • From a regional standpoint, total returns in over the past four quarters spanned 27.66% in the Corn Belt to 6.05% in the Southeast. The Northern Plains also exceeded an annual total return of 20%. The outsized returns were driven by appreciation that began to increase in Q2 of 2021.
  • Total income returns for the past four quarters ranged from 4.25% in the Southeast to 3.32% in the Delta. As shown in the chart below, the income returns for annual cropland have been stable for 20 years despite varying levels of appreciation.
  • Total appreciation returnsin past four quarters ranged from a high of 23.74% in the Corn Belt region to a low of 1.74% in the Southeast Region.

Rolling 4-Quarter Annual Cropland Returns

Permanent Cropland Subindex

The permanent cropland sub-index generated total Rolling 4-Quarter returns of 3.34%. This is only modestly higher than the Rolling 4-Quarter from March 2021 of 2.45%. Over the last four quarters, the permanent crop subindex has generated a 4.13% income return and -0.77% capital return. The permanent crop subindex total and income returns are the lowest since the early 2000’s. The capital component is in the third period of negative consecutive Rolling 4-Quarter returns since 2000.

As the chart indicates below, permanent crop returns are more volatile than annual crop returns and have generated significantly higher and lower returns over time compared to the annual cropland subindex.

Rolling 4-Quarter Permanent Cropland Returns

Permanent Cropland Commodities and Management Types

When looking at the specific commodities and management types of permanent crops, pistachios stand out both in terms of the highest annual returns of the past four quarters at 10.20%. Almonds, on the other hand, generated the lowest total return over the last year coming in at negative 2.54%. Consistent with the broader permanent crop subindex, both management types (Directly Operated and Leased) have generated lower returns in the One- and Five-Year time periods compared to the Ten-Year. Permanent crop farms that were leased have outperformed directly operated farms in both the One- and Five-Year periods but trail over the Ten-Year.  

The NCREIF Farmland Index includes data provided by the following firms: Prudential Agricultural Investments, Hancock Agricultural Investments, Westchester Group Investment Management, UBS Farmland Investors LLC, Gladstone Land Corporation, US Agriculture, Cottonwood Ag Management, and Farmland Opportunity.

Press Release