Global farmland continues to attract considerable interest from governments, government-backed investment funds and private investors. In terms of global food and energy security, environmental sustainability and economic growth its importance is unequivocal.
According to our Global Farmland Index, increased competition for the best farmland has led to an annualised average rise of 12 per cent in values since 2002 and during this time farmland values have outperformed many other commodities.
Investors are attracted by the capital appreciation and the potential to maximise farming returns through management intervention particularly in some of the emerging markets such as South America and Central Europe.
Global farmland values outperform other assets over time
With a rising global population and a new urgency on climate change responses in some developed economies, the long-term importance of food and energy security is expected to continue. Globally we expect the demand for productive farmland to increase.
Agriculture’s thirst for water and resources, the changing patterns in diets, the amount of produce wasted in both developed and developing food systems, plus the urgent need for consumers to adapt our [our?] approach to environmental management, all point to changes in the way we grow and consume food and energy.
Sustainable agriculture has become a significant issue and there is an increasing need to balance economic productivity goals with environmental and social costs. For buyers of overseas farmland, finding the right opportunities, and demonstrating the effectiveness of management protocols for long-term sustainable returns, is key.
We believe profitable investment performance in terms of both income and capital require:
- A detailed understanding of the resource – growing the right crops in the right places (land quality, soil, climate, water availability) and the opportunities offered by changing current practice and management.
- Investing in technology to drive down costs, increase productivity, optimise decision-making and add value within the supply chain.
- New income streams that might include new crops and systems, ecosystems services and offsetting and adding value through processing/retailing and shortening supply chains.
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.
Read more Spotlight: Global Farming Index