30-year return overview
From 1991 (NCREIF Farmland Index inception) through year-end 2023, the index has produced an average annual total return in the high single digits, with only one negative year. Cumulative total return over the period substantially outpaces inflation. The shape of the return profile — modest income, steady appreciation, low volatility — is more bond-like than equity-like.
Income vs. appreciation
Total return decomposes roughly into 3–5% annual income and 3–5% annual appreciation, varying by year and by region. Income is more stable than appreciation year-to-year. Appreciation is more sensitive to regional dynamics — commodity prices, water availability, ethanol policy, regional buyer pools.
Regional variation
Corn Belt farmland (Iowa, Illinois, Indiana) typically commands the highest per-acre values and the lowest yields. Great Plains cropland (Nebraska, Kansas, the Dakotas) offers more efficient basis with comparable income. Delta region (Mississippi, Arkansas, Louisiana) has historically offered higher yield-to-basis ratios. Each region's return profile reflects its own combination of soil quality, water resources, climate, and commodity exposure.
Irrigated vs. non-irrigated
Irrigated cropland commands higher per-acre value, supports higher yields, and generates higher cash rents — but also faces water-rights risk and infrastructure capital expenditure. Non-irrigated (dryland) cropland trades at lower basis with lower yields and higher year-to-year yield variability. On a risk-adjusted basis, both have produced competitive long-term returns; the right mix depends on regional water security.
Risk-adjusted performance
U.S. farmland's volatility over the NCREIF measurement period is substantially lower than the S&P 500's. Maximum drawdowns are smaller and recover faster. Sharpe ratios computed in academic studies are consistently higher for farmland than for public equity over comparable windows. The asset class is not low-return — it is low-volatility relative to its return.
What drives return variability
Commodity price cycles (corn, soybean, wheat, cattle), weather (drought, flooding, growing-season heat), policy (commodity programs, biofuel mandates, water rights regulation), and capital flows into the asset class. None of these are predictable in detail; together they generate the year-to-year noise around a stable long-term trend.
Thirty years of NCREIF and USDA data on U.S. farmland returns — broken down by region, irrigation status, and income source.
Frequently asked.
Where can I see the NCREIF Farmland Index data?
NCREIF publishes its Farmland Index quarterly. Subscription access is required for the full dataset; summary returns are widely cited in agricultural economics research and USDA Economic Research Service publications.
How do returns vary in dry years?
Dry years compress crop-share income substantially and modestly affect cash-rent income (since rents are fixed at lease signing). Land values are more resilient — single bad years rarely move land values materially. Multi-year drought regimes are more consequential.
