2025 Farmland Year-End Results: Dispersion Within a Durable Asset Class

The National Council of Real Estate Investment Fiduciaries (NCREIF) recently released its 4Q 2025 results for the NCREIF Farmland Property Index, providing a detailed view of institutional U.S. farmland performance through year-end. The data reflects a year of modest headline returns, continued valuation adjustments within permanent crops, and steady income generation across the asset class.^[1]

At the aggregate level, farmland finished essentially flat in 2025. Beneath that headline figure, however, performance diverged meaningfully between annual and permanent cropland. Understanding that divergence — and the forces behind it — is central to interpreting the current cycle.

Key Takeaways

• Permanent cropland has generated 9.37% annualized total returns over the past 20 years, despite a recent two-year valuation reset.
• Annual cropland generated 9.52% annualized total returns over the same 20-year period, reflecting consistency across property types.
• In 2025, income remained positive across farmland, while appreciation reflected continued valuation recalibration following higher interest rates.
• Farmland performance is shaped by multi-year biological and capital market cycles; single-year outcomes rarely reflect full-cycle economics.

2025 Headline Results: Stable Income, Valuation Adjustment

According to the NCREIF Farmland Index 4Q 2025 report:

• Total Farmland Return (2025): +0.20%
• Income Return: +3.05%
• Appreciation: -2.80%
• 4Q 2025 Return: -0.70%

Farmland finished the year essentially flat at the total return level. Income remained stable and positive, while the modest decline was driven primarily by adjustments to appraised values rather than widespread deterioration in operating performance, reflecting continued valuation recalibration following the rapid rise in interest rates beginning in 2022.

Annual Cropland: Continued Resilience

Annual cropland — including row crops such as corn, soybeans, cotton, and wheat — generated:

• Total Return (2025): +3.52%
• Appreciation: +0.52%
• Income: +2.99%

Annual cropland benefits from shorter production cycles. Because crops are planted and harvested within a single growing season, operators can adjust planting decisions more rapidly in response to commodity pricing and input costs.

Over longer horizons, annual cropland has demonstrated resilience across commodity and interest rate cycles, supported by steady income generation and measured appreciation.

Why Were Permanent Crops Negative in 2024–2025?

Permanent cropland — which includes orchards and vineyards producing over multiple harvests — experienced a second consecutive year of negative total returns:

• 2025 Total Return: -5.43%
• Appreciation: -8.48%
• Income: +3.24%^[2]

This follows continued negative performance over the past several years, with Permanent Cropland generating a -7.84% two-year annualized return and a -6.21% three-year annualized return as of 4Q 2025.

Several structural factors contributed:

• Higher Discount Rates: Rising interest rates increased capitalization rates across private real estate sectors, including specialty agriculture. Appraised values adjusted accordingly.
• Multi-Year Planting Cycles: Permanent crops require several years to reach full production. Elevated prices in prior years incentivized planting in certain categories, contributing to supply expansion that later pressured pricing.
• Commodity-Specific Oversupply: Certain specialty crops experienced localized supply-demand imbalances, affecting pricing and investor sentiment.

Importantly, income remained positive in 2025. The adjustment was driven primarily by valuation recalibration rather than deterioration in underlying agricultural productivity or land use. In practical terms, farmland continued to produce crops and generate revenue even as valuation assumptions adjusted.

Permanent Agriculture Is Cyclical by Design

Permanent crops are long-duration biological assets. Orchards and vineyards require several years to reach full maturity and begin producing at scale, and they may remain productive for decades. Unlike annual crops, they cannot be replanted quickly in response to short-term pricing shifts.

As a result, supply adjustments tend to unfold over several years. Historically, permanent agriculture has moved through multi-year valuation cycles influenced by:

• Planting incentives during strong pricing environments
• Commodity oversupply periods
• Interest rate environments
• Capital market liquidity

Such cycles are inherent to long-duration agricultural assets rather than indicative of structural impairment.

Long-Term Context: Multi-Cycle Performance

Despite the recent two-year reset, permanent cropland continues to show positive long-term annualized returns. According to the NCREIF Farmland Index 4Q 2025 report:

• Permanent Cropland (20-year annualized total return): 9.37%
• Annual Cropland (20-year annualized total return): 9.52%
• Total Farmland (20-year annualized total return): 9.57%

These figures span multiple commodity cycles, planting expansions, global trade shifts, and varying interest rate environments. They illustrate that farmland performance — including permanent cropland — has historically been driven by income generation and multi-cycle appreciation rather than isolated annual outcomes. For additional historical context on how U.S. farmland has performed over the past three decades — see our Why Farmland page.

Permanent agriculture has historically experienced periods of valuation compression following planting expansions, monetary tightening, or a combination of both. Rising interest rates can increase capitalization rates across private real assets, while planting incentives during strong pricing environments can later contribute to supply expansion.

However, these valuation adjustments do not alter the biological productivity or long-term utility of the underlying land. Orchards and vineyards continue to produce crops and generate income even as appraisal assumptions reset, underscoring the distinction between operating performance and mark-to-market valuation changes.

Across total farmland, income has consistently contributed to return generation. Since the inception of the index in 1991, income has served as a stabilizing component of overall performance, particularly during periods of valuation adjustment.

Unlike transaction-dependent real estate sectors, farmland’s income is derived from biological production and agricultural leases. This recurring income stream can help stabilize return profiles when appraisal values reset and may support longer-term holding periods through agricultural cycles.

For investors allocating to long-duration real assets, understanding where the market sits within broader agricultural and capital market cycles is often more important than any single year’s result.

Crop-Level Dispersion in 2025

Performance varied meaningfully across individual permanent crop categories in 2025:

• Oranges: +9.89% total return
• Pistachios: +3.55% total return
• Almonds: -4.43% total return
• Apples: -10.19% total return
• Wine Grapes: -11.98% total return

In several cases, total returns were supported by income even where appreciation was negative. Pistachios, for example, delivered positive total returns despite experiencing downward valuation adjustments.

This dispersion underscores a key point: farmland is not a monolithic asset class. Outcomes are influenced by crop selection, regional dynamics, water access, export exposure, and capital structure.

Regional Variation Reflects Crop Composition

Regional results further illustrate this divergence. The Pacific West region — which includes a significant concentration of permanent cropland — recorded:

• Total Return (2025): -4.81%
• Appreciation: -8.34%
• Income: +3.74%

Regions more heavily weighted toward annual crops posted comparatively stronger performance. These differences reflect crop composition and capital allocation patterns rather than uniform geographic performance.

Interpreting the Current Cycle

The 2024–2025 period represents a recalibration following several years of elevated transaction activity and compressed capitalization rates during historically low interest rate environments.

At FarmTogether, we moderated acquisition velocity during this period of peak valuation expansion. As pricing in certain permanent crop categories has adjusted, we are observing a broader set of opportunities that meet our underwriting criteria.

Valuation adjustments following rapid rate changes are not uncommon in private real asset markets. In permanent agriculture, such adjustments may be amplified by multi-year planting cycles and commodity-specific supply dynamics.

At the aggregate level, farmland delivered a modest positive total return in 2025 supported by steady income. Beneath the surface, permanent crops continued a valuation reset, while annual cropland remained comparatively stable.

Several themes emerge:

• Performance varies meaningfully by crop type.
• Income has remained durable despite valuation adjustments.
• Long-term returns reflect multiple agricultural and capital market cycles.
• Regional results largely reflect crop composition.

Farmland is a biologically driven asset class shaped by both cyclical and structural forces. Understanding those cycles — rather than focusing solely on single-year outcomes — is central to evaluating long-duration agricultural investments.