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Old McDonald Had A … Good Investment
You’ve heard it a million times: invest in real estate because “they’re not making any more of it.” Often, that’s less than true. Manhattan hasn’t gotten any bigger, but its residential and office capacity has soared. It is more than true, however, for farmland: the number of arable acres per world population has been falling steadily since the 1960s. Many reasons for investing in farmland are screamingly obvious: it produces current yield with no interest rate risk; generates returns highly uncorrelated to the general financial markets; and protects holders from inflation. That’s why some folks like to call it “gold with a coupon.” But, are these reasons maybe too obvious? After all, larger institutions have been pouring money in to farmland for years, and per-acre prices have had a tremendous run over the past decade and more. Is too late for average investors to get in? I don’t think so. The reason is simple: the fundamentals still work. Properly acquired acreage still maps to a solid 4% yield, appreciation completely aside. That’s what you should expect from a cash lease on a quality property producing corn, wheat, and soybeans–irreplaceable elements of the worlds’ diet. (I’ll pass on handicapping almond and avocado farms). And 4% — without interest rate risk and with inflation protection — looks awfully good right now. Could land values fall and damage your total returns? Of course. But there are some awfully strong fundamental reasons that support even these recent higher prices. Most basic is the huge, rising, politically empowered middle class of the Middle East, Asia, and Latin America. One thing you can pretty much count on is that better diets will on the top of their agendas. And that means direct demand for grain staples, and also for animal protein, which depends on… those same staples. Indeed, one credible estimate says that if every person in China suddenly had two eggs a day, it would take the entire Canadian wheat output just to feed those overworked hens. But there’s another, pretty surprising, reason land values are unlikely to fall significantly, despite the recent run up. And it is: technology. Numerous innovations, from GPS-guided tractors to ever better seed stock to irrigation breakthroughs, are constantly increasing the yield a given acre can produce. To give just one cool example, some farms now plant seeds with gel packs that absorb and hold rainfall (that otherwise would run off or evaporate) until the plant needs it. So even if commodity prices do tumble, the land’s economic yield is protected by enhanced output over time, a spectacular natural hedge. And, of course, if do we continue to get the underlying appreciation that has fueled much of the +10% total returns of the past many years, so much the better. (A quick note on political and environmental risk: no, changes in the farm subsidy system– if any– are not likely to change the basic investment thesis here; and yes, crop insurance is a good safeguard against flood and drought). Now, the bad news. It’s not so easy to invest in farms. Do not think for a moment that investing in agricultural companies, or the ETFs that hold them, is a reasonable substitute. Those might be decent choices too, but they do not represent the same basic investment proposition as owning the land itself. And remember, we’re not “playing” a theme here looking for big gains- – we’re making a solid, yield-oriented, purchase-power-protecting allocation. So… where to look? There are numerous, high quality, mid-size investment partnerships out there with strong management teams and reasonable investment minimums. And some wealth management firms have excellent internal teams that will handle the property purchase and management for you through a separately managed account. In either case, you can expect to pay modest management fees, but the expertise is likely worth it. Or, you can go directly to one of many farm brokerages (easy to find online) and have at it… but make sure to watch a few episodes of Green Acres first. To learn more about this and other alternative investment topics, check out my new book, The Alternative Answer. And please follow me on Twitter @bobrice3. Continue reading
‘Big Data’ Will Change The Way You Farm
Big data. If you haven’t yet heard that term dropped in casual conversation with other farmers, you likely will — soon. It is the term commonly used to describe the colossal amounts of information that are being generated throughout the world at breakneck speed and that are becoming so large and complex that processing, assessing and storing it often prove challenging. How big is big data? If the data now stored across the planet were printed in books, these books would cover the entire surface of the United States some 52 layers deep, according to Viktor Mayer-Schonberger and Kenneth Cukier, authors of a new book titled “Big Data: A Revolution That Will Transform How We Live, Work and Think.” People and organizations across the planet are already harnessing this data to accomplish all sorts of things. Three people who have witnessed the marriage of precision farming and big data within the last few years say farming is primed to benefit too. John P. Fulton, an Auburn University professor of biosystems engineering who heads the Alabama Cooperative Extension System’s crops team; Simerjeet Virk, a bioystems research engineer at Auburn University; and Andrew Williamson, a British cereal crops producer and Nuffield Farming Scholar, contend that data compiled in real time are already providing producers with a clearer, more comprehensive picture of all facets of farming, whether this happens to be soil science, seed rates, fertilizer optimization or weed and pest control. They predict that this growing body of data will ultimately free producers of much of the day-to-day guesswork associated with farming. The three have identified seven major lessons farmers should draw from this Big Data revolution. Seven big data lessons 1. Big data will secure a considerably clearer farming picture. Williamson, who farms more than 900 acres of cereal crops near Birmingham, England, is one of a growing number of producers around the world harnessing big data. He began yield mapping in 2007, convinced that mapping offered “the quickest way to get a lot of data in order to move forward.” He followed this with targeted soil sampling to determine a correlation between soil nutrient variability and yields. He later began using a real-time sensor to apply in-crop nitrogen at varying rates based on the amounts of chlorophyll detected in the plants. Williamson further enhanced this picture by measuring the soil electrical conductivity to build prescription maps — a picture he has recently enhanced with pest, weed and yield data. Virk says that the kind of refined farming pictures Williamson and other farmers around the world are compiling on the basis of farming data are destined to become even clearer in the future — not only clearer but better integrated. “The next step will be a cloud-based system that integrates all facets of farming on behalf of producers,” he says. 2. Along with clarity comes diversity. “The farming picture will not only become more refined but also more diverse,” says Fulton, who draws a comparison with the different ways individual homeowners manage their landscapes. To see and hear more comments from Fulton, click here . “Homeowners manage their yards very differently, but they’re getting the job done and all the yards look good,” he says. “A similar trend will play out in row-crop farming,” he says. “The more farmers learn from their individual data streams, the more their individual farming practices will diverge, whether in terms of variety selection, seeding rates or whatever. “Like homeowners, though, they will be getting the job done.” 3. Big data should be viewed as stored knowledge for lean times. As Williamson sees it, his job as a farmer is to “convert energy generated by the sun into profitable crops.” In a sense, a farming data stream should be viewed much the same way: As stored knowledge that can provide farmers with a clear, comprehensive picture of their farming operations — an especially valuable asset during down cycles, he says. “If the cycle dips, we need to be on our game to make sure we’re doing the best we can when it’s difficult to make the margin,” Williamson says. 4. Big data is no substitute for farmer’s intuition. Despite the promise of Big Data, Fulton stresses that the “number 1 data set will always be a farmer’s intuition.” Farmer insights most valuable “There is no data more valuable than the insights a farmer has gained over 10, 20 or 30 years of experience,” he says. “The promise of big data will come from overlaying it with all the insights a farmer has gained through years of experience. Virk shares this view. In the end, farmers will always know more about their farming operations’ strengths and weaknesses than any software or machine, he says. “The integrated farming picture that emerges from all these big data-related advances will ensure decision-making is easier, but in the final analysis the farmer’s intuition will still be the critical factor in all of this, he says. 5. Big data requires a mindset change. Farmers are creatures of habit, Williamson says. Most think that time spent in the field is more valuable than time invested peering into a computer screen. Experience has taught him that time invested analyzing his farm data is just as important as time spent in the field. Indeed, producers who opt to manage their own data rather than pay an analyst to do it should develop a new daily routine, he says. “If you’re going to do it yourself, you had better be comfortable with spending more time on the computer,” he says. According to Fulton, the big data revolution is also challenging Cooperative Extension to undertake its own transformation by developing an understanding of row-crop farming as a system of interrelated parts. Much of the ACES crop team’s in-service training now emphasizes a multidisciplinary approach, underscoring how different disciplines — agronomy, economics, plant pathology and entomology, for example —comprise a comprehensive farming picture. Fulton also believes Extension educators will serve a valuable role in the future showing producers how to make optimal use of their data stream by organizing it into a more seamless picture of their farming operation. 6. Big Data will play a critical role in feeding the world. Big data is gaining traction at an especially critical time in history as farmers gear up to feed an estimated 9 billion people by midcentury. “This will require farmers to secure higher levels of production efficiency, and this can only be attained with more mechanization and other forms of technological adoption,” Fulton says. Big data will fill much of this void by providing producers with a clearer understanding of how to match varieties to soil and climatic conditions along with strategies for reducing fertilizer, pesticide and herbicide applications, all with the aim of securing the highest levels of farming efficiency, he says. 7. Like it or not, big data is the new reality in farming. While farmers will have some choices about how to participate in the coming big data revolution, they cannot afford the luxury of not participating, Fulton says. “We’re already seeing new partnerships growing out of these changes at a steadily accelerating pace, and to be successful, farmers will need to be engaged with these emerging partnerships,” he says. “But it’s important that they ask the right questions before joining these partnerships and only partner with people and organizations that they trust.” Continue reading
Eco2 Ltd. of UK to Implement Trimble’s Forestry Bioenergy Solution from Cengea
SUNNYVALE, Calif., Sept. 9, 2013 /PRNewswire/ — Trimble (NASDAQ: TRMB ) announced today that Eco2 Ltd. will be implementing its forestry bioenergy solution from Cengea , a Trimble Company and part of its Forestry Division. The Cengea solution will be used to manage Eco2’s supply chain operations for its state-of-the-art, straw-fired Sleaford Renewable Energy Plant in Lincolnshire in England. “Eco2 spent some six months reviewing the marketplace for integrated biomass supply chain solutions, and found that Trimble’s solution from Cengea provides the closest match with our application,” said David McDonald, operations director of Eco2. “With full implementation support and a hosted platform, we will be able to rapidly configure the software and integrate it with systems at the Sleaford Renewable Energy Plant. We look forward to working closely with Trimble and demonstrating the full capabilities of the system in the coming months.” About Eco2 Ltd. Established in 2002, Eco2 is a leading renewable energy project developer specializing in the initiating, developing, financing and operating renewable energy projects throughout the UK and Europe. Initially focused on onshore wind and landfill gas projects since 2006, Eco2 has concentrated on developing biomass projects. Over the last 20 years the management team has extensive experience in the development and construction of over 390MW of biomass projects throughout the world and the Eco2 Team has been involved in over 60 percent of the UK Dedicated Biomass Capability. For more information about Eco2, visit: eco2uk.com . About Trimble’s Forestry Division Trimble’s Forestry Division offers field hardware, field software and enterprise solutions that improve the productivity and operations for some of the world’s largest integrated forest product companies, forest land owners, international food processing companies and conservation organizations as well as small and medium-sized businesses and state and federal departments involved in soil, water and biodiversity protection. For more information, visit: www.trimble.com/forestry . About Trimble Trimble applies technology to make field and mobile workers in businesses and government significantly more productive. Solutions are focused on applications requiring position or location—including surveying, construction, agriculture, forestry, fleet and asset management, public safety and mapping. In addition to utilizing positioning technologies, such as GPS, lasers and optics, Trimble solutions may include software content specific to the needs of the user. Wireless technologies are utilized to deliver the solution to the user and to ensure a tight coupling of the field and the back office. Founded in 1978, Trimble is headquartered in Sunnyvale, Calif. For more information, visit: www.trimble.com . GTRMB SOURCE Trimble RELATED LINKS http://www.trimble.com http://eco2uk.com Continue reading