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.


November 2017, Hancock Farmland Research Brief: The Risk of Catastrophic Loss on Farmland Can Be Mitigated by Active Management and Portfolio Diversification

In 2017, farmland properties in Texas, Florida, and California experienced significant casualty loss from hurricanes and fires. In Texas and Florida, Hurricane Harvey and Hurricane Irma were accompanied by high winds, torrential downpours, and catastrophic flooding during harvest season. In California, unusually severe fires in Napa and Sonoma counties destroyed numerous acres of farmland. This research brief examines the impacts of these catastrophic event on a global farmland portfolio and discusses strategies to mitigate the risk of casualty losses.


2017 Q2 Hancock Farmland Investor, Optimized Diversification in Farmland Portfolios Can Produce Higher Returns and Lower Risk

Based on the historical performance of eight crop types in the NCREIF Farmland Index, we demonstrated how farmland portfolios can be optimized to most efficiently deliver targeted expected returns or targeted levels of expected risk. Farmland portfolios often contain a mix of crop types. Some properties produce annual row crops such as corn, soybeans, rice, cotton, and wheat. Other properties are comprised of orchards and vineyards that produce so-called permanent crops such as almonds, pistachios, walnuts, and wine grapes. Optimal diversification among these different crop types can be used to design portfolios that deliver the highest
expected returns for a targeted level of expected risk, or the lowest expected risk for a targeted expected return.


2017 Q1, Hancock Farmland Investor, 2017 USDA Prospective Plantings Report: Corn and Wheat Acreage Shifts to Soybeans and Cotton

Cotton acreage up 2.1 million acres (20.8%)
Soybean acreage up 6.1 million acres (7.3%)
Corn acreage down 4 million acres (-4.3%)
Wheat acreage down 4.1 million acres (-8.2%)
Rice acreage down 0.5 million acres (-16.5%)


2016 Q4, Hancock Farmland Investor: 2016 Farmland Investment Performance

U.S. farmland properties returned 7.1 percent in 2016, 326 bps below 2015 returns and continued the downward correction that began in 2014. U.S. private farmland investment returns fell 326 bps from 2015 and over 500 bps since 2014, largely driven by three factors: commodity prices, farmland values and on-farm profitability. Four consecutive years of strong production have led to increased ending inventories of crops in the U.S. and declining prices. The significant decline in commodity prices has led to lower on-farm cash receipts (revenues), which, in turn, has led to a decline in on-farm profitability, despite a decline in production costs. The drop in commodity prices and on-farm profitability has led to a decrease in farmland values. As a result of these three factors, farmland operating income returns have declined from 7.9% in 2014 to 5.2% in 2016 (270 bps), while land appreciation returns have dropped 4.5% in 2014 to 1.9% in 2016 (260 bps).


2016 Q3, Hancock Farmland Investor: U.S. Farm Economy

U.S. farm sector profitability is forecast to decline for the third consecutive year. USDA forecasts net cash farm income for 2016 at $90.1 billion (down 14.6% from 2015), while net farm income is forecast at $66.9 billion, down 17.2% from 2015. If realized, 2016 net farm income would be the lowest since 2009. Meanwhile, farm sector equity is forecast to decline 3.1% from 2015 to $2.5 trillion, farm sector assets are expected to decline 2.1% and farmland debt is forecast to rise 5.2% from 2015, pushing farm sector debt-to-asset and debt-to-equity higher.


November 2016, Research Brief: Donald Trump’s Election and Its Impact on the Global Agricultural Markets

Donald Trump was elected president and the Republican Party took control of both the Senate and the House of Representatives on November 8, 2016. The election results feel very similar to Brexit in terms of polls underestimating how far voters were willing to go to express their frustration and anger. With a full sweep, Trump may face fewer obstacles in pushing through his agenda. As with any candidate, it is difficult to parse out what a candidate says they will do versus what they will try to implement. This election is no different, but nevertheless, a high degree of policy uncertainty exists. The markets do not like uncertainty- as we saw in the initial Asian and European market responses to Trump’s victory.


2016 Q2, Hancock Farmland Investor: Farmland and Timberland: Working Together in a Mixed Asset Portfolio

Farmland and timberland assets have been used and tracked as components of institutional portfolios for over two decades, providing historically strong performance, low to moderate risk, and favorable diversification characteristics. In general, farmland and timberland have been managed separately and not in an integrated fashion. Yet, both farmland and timberland are income generating and land appreciation investment vehicles with biological growth components, offering comparable risk-adjusted returns and inflation protection. Evaluating and structuring coordinated investments in these two natural resources has the potential of generating operational efficiencies and augmenting the risk-reducing diversification of a broader portfolio. This article provides a comparison of the risk-return profile of a combined farmland/timberland vehicle together with commercial real estate and other financial assets. Further, we compare performance results over the past twenty-five years for pure farmland and pure timberland to a pro-forma combined timberland/farmland vehicle.


2016 Q1, Hancock Farmland Investor: 2016 USDA Prospective Plantings Report: Potential Impact on the U.S. Farm Economy

Higher expected corn plantings in 2016/17 are projected to boost corn production to a new record. The increase in acreage is expected to place additional downward pressure on corn prices in 2016/17. In its March 31 Prospective Plantings report, the USDA surprised many analysts by projecting corn acreage to increase 6% over the 2015/16 crop year despite poor economics and low prices for corn over the past year.


February 2016 White Paper: Farmland Returns, Gauging the Impact of Rising Interest Rates

Farmland assets have delivered consistently strong returns over the past two decades. Private institutional investment in farmland delivered an average annualized return of 12.4 percent, while row and permanent crops generated average annualized returns of 11.4 percent and 12.8 percent, respectively over the past twenty years (1996 – 2015). In the six years following the Global Financial Crisis, investments in farmland outperformed timberland investments, the S&P 500, Small Cap Stocks, Corporate Bonds, and Long-term Government Bonds, generating average annualized returns of 14.8 percent for the period 2010-2015 (Figure 1). These strong returns on farmland assets coincide with an extended period of low interest rates and the Federal Reserve’s unprecedented accommodative monetary policy following the Global Financial Crisis.

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