Annual Cropland Outperforms Permanent Cropland in Second Quarter 2021 as NCREIF Releases Second Quarter 2021 Farmland Index
The National Council of Real Estate Investment Fiduciaries (NCREIF) has released the second quarter 2021 results of the NCREIF Farmland Index. The total return for the second quarter was 1.47%, up from 0.86% the previous quarter. The quarterly total return was comprised of 0.60% income return and appreciation of 0.86%.
Second quarter income return for the Total Farmland Index was 2 basis points higher than last year when the second quarter income return was 0.58%. Farmland values were up in the second quarter, with annual cropland posting appreciating 1.42% and permanent cropland appreciating 0.03%, after registering mixed results in Q1 2021 of 0.59% and -0.71% respectively.
Rolling 4-Quarter Total Returns
Annual cropland outperformed in the second quarter with quarterly total returns of 2.20% for annual cropland and 0.36% for permanent cropland. Annual cropland outperformed on appreciation for the quarter, with annual cropland appreciation of 1.42% versus permanent cropland appreciation of 0.03%. Annual cropland also outperformed on income for the quarter, with annual cropland income return of 0.78% versus permanent cropland income return of 0.34%. Over the trailing four quarters, annual cropland returned 6.57%, compared to 2.56% for permanent cropland.
Rolling 4-Quarter Annual Cropland Returns
All ten NCREIF regions registered positive total returns in the second quarter. The Northern Plains (4.90%), Pacific Northwest (4.03%), and Corn Belt (3.84%) led regional performance for the quarter, while the Pacific West (0.21%), Mountain (0.86%), and Appalachian (0.90%) regions lagged on regional performance for the quarter. All ten regions posted positive income for the quarter, led by the Southeast (1.94%), Southern Plains (0.98%), and Mountain (0.88%) regions.
Rolling 4-Quarter Permanent Cropland Returns
The NCREIF Farmland Index consists of 1,224 investment-grade farm properties, totaling $13.17 billion of market value. These farm properties are comprised of 937 annual cropland properties and 287 permanent cropland properties. The index includes 382 properties in the Corn Belt, 254 in the Pacific West, 143 in the Delta States, 121 in the Lake States, 100 in the Pacific Northwest, 89 in the Mountain States, 64 in the Southeast, 41 in the Northern Plains, 21 in the Southern Plains, and 7 in the Appalachian Region. The index includes data provided by the following firms: Farmland Opportunity, Cottonwood Ag Management, Gladstone Land, Hancock Agricultural Investment Group, Prudential Agricultural Investments, UBS Farmland Investors, US Agriculture, and Westchester. This data enhances the ability of institutional investors to price the risk of farmland investments across the United States.