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Farmland – The New Green Gold of 2012
February 9, 2012Article by Ray Withers
As any savvy investor will know, land is the most valuable asset we have. Of the 30% of the Earth’s surface which is land, just over half is used for agriculture however with the global population rising fast, passing the 7 billion marker only last year, and large areas of farmland previously used for food production being transformed into fields of bio fuel crops, the pressure on our food supply is becoming concerning.
Even today’s most prolific philanthropist Bill Gates has turned his attentions to the issue of global food shortages, redistributing funds from his own Gates Foundation to the research, development and protection of agricultural lands and techniques.
Both at macro and micro level, as we all have experienced in our local supermarkets and as stated in the Knight Frank Wealth Report 2011, food and soft commodity prices have hit record highs with UK wheat prices reaching £200 per tonne in 2010. There is simply not enough food being produced to meet demand and with the OECD estimating the production must increase by 70% before 2050 to satisfy global population growth and changing consumption trends, will farmland be new the green gold of 2012?
As a tangible asset, farmland is highly appealing to investors, especially those cautious of volatile stocks, shares and bonds. Not correlated with mainstream asset classes, investment in agricultural land is based simply on supply and demand and similarly to gold, has remained one of the most robust asset classes in recent times.
For years cash-rich and land-poor nations have been purchasing agricultural land in overseas shores such as the US, Australia, Russia and South American nations in order to protect themselves from food scarcity as well as enjoy the lucrative returns. And now this trend has sparked a desire for individual investors to own their slice of farmland be it in the Yorkshire Dales or the Uruguayan interior.
Ray Withers, CEO of international investment agency Property Frontiers, which specialises in alternative asset classes, comments,
“As an investor myself I always consider the fundamental elements of supply and demand behind any investment. Today the pressure we place upon our land is vast and global food shortages are cleanly apparent which suggests to me that investing in high performance agricultural land, in the right location and via the right investment structure would be a wise and ethical choice in 2012.”
For many including Withers, the vast farmlands of South America are the preferred choice for investors due to the productive climate and soils. Politically calm and economically stable nations such as Uruguay have established and productive agricultural lands with foreigners owning up to 25% of food production land.
Opportunities are now abounding in these nations for investors to capitalise on low land prices and the ever growing global demand for food. For more information about investing in farmland, the new green gold, contact the experts at Property Frontiers about their exclusive new investment opportunity on +44 1865 202 700.