Farmland investments returned 18.1% in 2004, up from 9.7% in 2003, according to the NCREIF Farmland index.
These returns are starting to draw the attention of pension plan investors, said Jeffrey A. Conrad, president, Hancock Agricultural Investment Group, Boston.
The Lumina Foundation for Education, Indianapolis, recently targeted 15% of its more than $1 billion in total assets to real assets, which includes agricultural lands. The Alaska State Pension Investment Board, Juneau, which has 3% of its $14 billion in assets allocated to "other" investments, including agriculture, has UBS AgriVest LLC and Hancock each managing $100 million in agricultural investments. The $182.9 billion California Public Employees' Retirement System is investing $200 million to buy pasture and other raw farmland.
Hancock Agricultural manages $549 million in assets and commitments for nine institutional clients. In 2004, Hancock Agricultural Group's funds returned, in aggregate, 21.41%.
In the last year or two, there has been more interest in farmland, he said.
"2005 is looking very good for us," said Mr. Conrad. He added he does not worry about rainfall or the price of Washington apples or Wisconsin cranberries. "If you are well-diversified, if you have a drought in one region, properties may go up in another region. I worry about trade wars and a strong U.S. dollar," he said.
One of Hancock's foreign interests is in a small Australian operation that supplies wine grapes to Casella Wines Pty. Ltd., maker of Yellow Tail wines and one of Australia's largest wine producers. "It's a tremendous growth story," he said.