Since 2002 the level of growth in global farmland values has been significant as demand for farmland around the world continues. According to our Global Farmland Index* the average annualised growth in values during the past 16 years was 12 per cent.
Looking back over the index’s time frame, it is evident that values increased most strongly during the early 2000s. Between 2002 and 2007 the index recorded an average annualised increase of 28 per cent. The key contributing factor to this substantial five-year increase was the rise in values across the emerging markets of Central Europe and South America, where interest had previously been limited.
Since the 2008 international banking crisis there has been a softening in the growth of average values and an annualised increase of just 0.7 per cent was recorded over the past six years.
More recently, however, governments' and government-backed investment funds have been seeking to acquire land to address domestic food security concerns. This has been exacerbated by regional trading security, climate pressures and local environmental degradation, leading to increasing competition for the best quality overseas farmland.
Similarly, private investors and ‘farmland funds’ have been attracted by the capital appreciation of farmland values around the world and the potential to maximise farming returns through management intervention, particularly in the emerging markets.
This interest in farmland has led some governments to intervene in order to protect farmland ownership by implementing policies that restrict and make it more difficult for non-domestic buyers to acquire it.
Global Farmland Index
*The Global Farmland Index was launched in 2012 and is based upon data from 15 key farmland markets (plus a global average) and aims to provide a comparative indication of farmland value trends around the globe. The index is derived from the average value of crop/arable land in domestic currency converted to US$ per hectare. The 15 countries are Argentina, Australia, Brazil, Canada, Denmark, France, Germany, Hungary, Ireland, New Zealand, Poland, Romania, United Kingdom, United States and Uruguay.