From floridarealtors.org
Investors are flocking to farmland again, hoping to capitalize on what they view as a temporary slump in the agriculture industry that has pushed down land prices in some areas of the country, The Wall Street Journal reports.
Pension plans, hedge funds and mom-and-pop investors are all reportedly increasing their interest in farmland as an investment.
One of the biggest recent waves of cropland investments by institutional investors has come from the financial services company TIAA-CREF, which announced that it raised $3 billion for its second global farmland-investment partnership. That partnership encompasses investments in North America, South America and Australia.
In addition, several public-stock offerings have packaged their properties as real estate investment trusts, which opens the door to greater investments in farmland.
Farmland capital values have increased an average of 4.6 percent annually since 1990, according to data from the National Council of Real Estate Investment Fiduciaries. When adding in the income that the land generates, the return has averaged 11.8 percent.
For most of the past decade, farmland values have been soaring in the Midwest, but lately have cooled due to a three-year slump in grain and soybean prices. Notably, average farmland values fell 9 percent last year in Iowa, which is the largest corn producer, and values in Illinois, the largest soybean producer, reportedly fell 1 percent to 3 percent.
The decrease in values is sparking an opportunity for investors, says Paul Pittman, chief executive of Farmland Partners and a former investment banker.