The role of U.S. farmland in real estate portfolios

Farmland is seen as a long-term investment that receives investor attention in many countries and potentially provides added value in a mixed-asset portfolio. Using the National Council of Real Estate Investment Fiduciaries (NCREIF) farmland series, this paper analyses the risk-adjusted performance and portfolio diversification benefits of farmland in the United States over the 1984-2006 period. Recent years have seen significantly enhanced returns for U.S. farmland, with a slight reduction in risk; however, there has been some loss of portfolio diversification benefits for farmland with stocks and real estate.