Research

In-House Research Leads to Investment Success

Research plays a crucial role in all phases of our investment process from acquisitions to property management to dispositions. Our research publications are used to educate potential investors, while keeping our current clients informed of topics relevant to their portfolio.

All of our in-house research publications are accessible to the public.

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Hancock Farmland Research Brief: United States-Mexico-Canada Agreement

On September 30, terms of a comprehensive trade agreement among the US, Mexico and Canada were finalized. The new United States-Mexico-Canada Agreement (USMCA) culminates an extended year-long period of negotiations to update the North American Trade Agreement (NAFTA). The new agreement retains many of the core elements and structure of NAFTA, with the most prominent changes focused on: trade in cars, new policies on labor and environmental standards, intellectual property protections, and some digital trade provisions. The most impactful changes for the farm sector in the new agreement were the expansion of US access to Canadian dairy and poultry markets, and an equalization in terms of trade for grains between Canada and the US. The agreement is targeted to be signed by the three participating countries before the end of November, possibly at the G20 summit in Buenos Aires, Argentina, and all three countries would then still need to ratify the agreement. Congress will probably not address ratification until 2019, after the mid-term elections, and since the approval process will take time, most of the new USMCA provisions won’t go into effect until 2020.

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September 2018, Hancock Farmland Investor: The Investable Farmland Universe: 172 Million Hectares, Valued at $1.5 Trillion

Understanding the overall size, structure and geographic distribution of global farmland suitable for institutional investors is necessary information for the evaluation of how various farmland investments fit in an overall portfolio of investments. The Hancock Natural Resource Group (HNRG) conducted an inventory of global investable farmland, quantifying the value of regional investable farmland to be $1.5 trillion as of May 2018. For the U.S., the available data allowed a more granular analysis which broke out and quantified the area and value for row and permanent crops.

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August 2018, Hancock Farmland Research Note: Tariffs and Their Impact on US Agricultural Trade

In recent months, trade with China, Canada, Mexico and the EU has been a dominant and recurring story in the mainstream media. The Trump Administration has identified trade imbalances as a key component of their agenda, with notable frustrations around NAFTA, China and the EU. At various points, certain products with these trade partners have become flashpoints for public comments and threats from all sides. The Trump Administration has announced and implemented certain trade measures designed to weaken Chinese and Mexican competitiveness in a variety of import markets, particularly the steel and aluminum industries. In turn, China and Mexico have imposed tariffs or other restrictions on US products, including agricultural products. Mexico and China represent the US’ second and fourth largest trade agricultural trade partners, responsible for around 28% of the value of US agricultural exports1, on average, over the past five years. Any restrictions on US access to the Chinese and Mexican markets will have impacts on US farmland markets. This document identifies the agricultural commodities most at risk, and outlines Hancock Agricultural Investment Group’s (HAIG’s) view on the possible outcomes.

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May 2018, Hancock Farmland Investor: 2018 USDA Prospective Plantings Report: Corn and Soybean Acreage Down and Wheat, Cotton and Rice Up

Cotton, Rice and Wheat Expected to be Favored over Corn and Soybeans Due to Profitability in 2017
Farmers tend to make planting decisions based on the profitability of the previous year’s crop and market expectations headed into the upcoming crop year.
Rice up 230,000 acres (+9.3%)
Cotton up 860,000 acres (+6.8%)
Wheat up 1.33 million acres (+2.9%)
Soybean down 1.16 million acres (-1.3%)
Corn down 2.14 million acres (-2.4%)

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April 2018, Hancock Farmland Research Brief: Update on Potential Tariff Impacts of U.S. Agriculture

In recent weeks, trade with China has been a dominant story in the mainstream media. President Trump has long identified trade imbalances as a key component of his agenda, with notable frustrations around the North American Free Trade Agreement as well as trade relations with China, South Korea and the European Union. While NAFTA is actively being discussed, President Trump recently announced certain trade measures designed to weaken Chinese competitiveness in a variety of import markets, particularly the steel and aluminum industries. In turn, China has threatened to impose tariffs or other restrictions on US products, which could include agricultural products. China is the largest export market for US agricultural products, and is responsible for an average of 23% of US agricultural exports over the last five years. Anything that restricted access to the Chinese markets would likely be felt in the US farmland market. This document identifies the commodities most at risk, and outlines HAIG’s view as to the impact on the farmland market generally and our client portfolios more specifically.

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Hancock Farmland Research Brief, 2017 Tax Reform: Implications for Agriculture and Farmland Investments

The potential impacts for U.S. farmland owners of the federal tax reform signed into law at the end of 2017 should, in general, be favorable. The reduction in the corporate and individual tax rates is likely to lead to more disposable income for U.S. consumers and businesses to spend on food and agricultural products, increasing domestic demand, and potentially leading to rising prices. However, the tax bill is likely to lead to higher domestic inflation, which could place pressure on the Fed to increase interest rates at a faster clip. This could have the impact of strengthening the USD versus other agricultural producing countries’ currencies, which would impact U.S. exports negatively. Overall, the boost in domestic demand is likely to outpace the reduction of U.S. competitiveness in the export market, and the U.S. farmland market is likely to benefit from tax reform, at least in the short term.

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