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Those with deep pockets can invest with an institutional manager of agriculture real estate, like the Westchester Group or the Hancock Agricultural Investment Group in Boston, which is part of the Manulife Financial Corporation, the insurance and financial service company. Hancock oversees nearly 154,000 acres in the United States and Australia. Sixty percent of its land supports “permanent” crops like fruit- or nut-bearing trees and various vines, with the other 40 percent focused on “annual” row crops like cotton, rice, corn and soybeans, according to Jeffrey A. Conrad, the group’s president.
Because of its high minimum investment — $50 million — most of its clients are big institutions, like pension funds looking for alternative investments, he said. Hancock said its investors had returns of 14.4 percent, after fees, for 2007 and 26.2 percent, annualized, for the last three years. Since 1991, the annualized return has been 12.5 percent.
Mr. Conrad says his investors have benefited from the group’s diverse portfolio. “If you buy 640 acres in the Midwest and plant one or two crops, you’re exposed to the weather of that particular area, and other risks,” he said. “We can build a diversified portfolio by region or crop types. We have a scale advantage.”
Still, he said, investor interest spiked only fairly recently. “It was a hard sell to get people interested in this asset class until the last 10 or 12 months,” he said.
Mr. Wise of the Westchester Group agreed. “I remember speaking to a large investment conference in London back in the late ’80s,” he said. “There were 400 people in the audience, and when I spoke on agriculture, I swear 80 percent of them left the room.
“Just a couple of weeks ago at another conference in London, there was interest from people from every corner of the world,” he continued. “We’re in a new paradigm.”
Returns at the Westchester Group — where the minimum investment is $25 million for institutional accounts and $1 million for individuals — have been in excess of 12 percent a year over the last 10 years, according to Mr. Wise.
While Mr. Gracey of Northern California is looking forward to high returns, he has already discovered the less tangible advantages to owning and living on a farm. “The suburbs can be so oppressive — people get on each other’s nerves and everyone’s on edge,” he said. “Here, everyone is just naturally nice because they’re not stressed.”
He says his two small children also seem happier. “They can roam around,” he said. “It’s like a gigantic park.”
