Strong Income and Appreciation Boost Farmland Returns

The total return from farmland owned by pension funds rose during the first quarter of 2018, according to the National Council of Real Estate Investment Fiduciaries (NCREIF). The NCREIF index shows the total return for the first quarter was 1.32%, down from 2.93% last quarter, but up from 0.49% in the first quarter of 2017. The quarterly total return was composed of a 0.51% income return and appreciation of 0.81%.

First quarter income return for the Total Farmland Index was the highest registered for this time of year since 2015, when the first quarter income return was 0.82%. 

The total farmland annual return was 7.07% through the first quarter of 2018, compared to 6.15% for the year-ending first quarter 2017. 

Annual cropland performance topped permanent cropland in the first quarter. Quarterly returns for annual cropland marked 1.37%, while permanent cropland hit 1.25%. Permanent cropland underperformed on income, but outperformed on appreciation. Annual cropland performance was again dominated by its income return and modestly higher appreciation. For the trailing year, permanent cropland returned 9.52% versus to 5.24% for annual cropland. 

The NCREIF Index includes 735 farm properties totaling $8.7 billion of market value.
 

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