October 24, 2014

Returns on investment in U.S. farmland have fallen to a four-year low with investors receiving 1.45% for the July – September period due to weaker farm incomes for the summer than expected and a decline in land price appreciation to 0.48%.  This marks the lowest returns since returns of 1.03% were posted for the same quarter in 2010.  Land values have fallen in the Lake States, the Pacific Northwest and in the South East.  Overall income returns were 0.97% – consistent with the previous quarter.  A survey by Creighton University support these findings with a report issued last week stating that U.S. land prices have been weakening at their fastest pace in nine years.  The best performing region according to the National Council of Real Estate Investment Fiduciaries (Ncreif) was the mountain region which focuses on the production of livestock and has been benefiting from low grain prices, which saw quarterly returns of 1.87%. Annual cropland outperformed permanent cropland with quarterly returns of 1.60% which is normal for this time of year, however its income of 0.92% was particularly low, being the third lowest quarterly income return for annual cropland since the index began.

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