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.

Current

2017 Q3 Hancock Farmland Investor, U.S. Farm Economy

U.S. farm sector profitability is expected to improve in 2017 for the first time in four years. USDA forecasts net cash income for 2017 at $96.9 billion (up 3.9% from 2016), while net farm income is forecasted at $63.2 billion (up 2.7% from 2016). Meanwhile, the farm sector debt-to-equity ratio is expected to move slightly upward from 14.49 in 2016 to 14.52 in 2017, largely driven by an increase in real estate debt.

Current

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.

Current

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.

Current

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.

Current

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%)

Current

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.

Current

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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