Tag Archives: experts
Will Farmland Bust? Here Are 3 Key Variables
Is the farmland market — one many experts say is starting to level off from the boom in values over much of the last decade — just taking a “breather” from its rocket ride higher, or is the expected leveling an inevitable function of the marketplace? History has certainly proven the cyclical nature of the land market; the last century of land market observations reveals a few common drivers of that cycle. But is today different? “Speculation on what is and what will happen to Iowa farmland values abounds,” says Iowa State University Extension ag economist and farmland values expert Mike Duffy. Obviously farm income’s the primary key to rising or falling land values. And, just as it’s so important to the farmland equation, it’s also far from clear exactly where the average farm’s income is headed in the near future, and how that’s going to manifest itself as a key land variable, Duffy says. “What happens to farm income will have a direct bearing on land values. While it isn’t a perfect correlation, it is a strong one,” he says. “I think some of the factors that created the busts we saw after the past 2 booms haven’t been as strong this time.” So since income’s something of a wildcard right now, Duffy has stepped back to examine those 2 “land booms” of the last century, how they’ve unfolded and what ultimately happened to the land market and those with stakes therein. The first of these “golden eras” was from 1900 to 1920, Duffy says, a time when rising corn prices sent land in Iowa up almost 500% in the first 19 years of the century. Then came the early 1970s. “The second boom period, 1973 to 1981, has been referred to as the second golden era in agriculture. Land values in Iowa increased by over 30% per year in 1973, 1974 and 1975. Over the entire boom period Iowa farmland values went from $482 an acre in 1972 to $2,147 an acre in 1981, an increase of 345%,” he says. Prices & returns Those 2 past boom times have some similarities and some differences when viewed with the meteoric rise in land values of most of the last 8 to 10 years. But, though these cloud the crystal ball, there are 3 common features of the boom cycles that could shed light on how the current one’s going to unfold. The first is a simple matter of dollars and cents. “One feature is the booms were driven by increasing prices and returns. A 1967 publication by the State Historical Society described the first boom period as, ‘For agriculture this was prosperity piled on top of prosperity,'” Duffy says. “The second boom in the early 1970s was fueled by the rapid rise in commodity prices due in part to the opening of major export markets. Corn prices in Iowa averaged $1.04 per bushel in 1972 and they averaged $2.58 per bushel in 1974.” Continue reading
Agriculture – Food Production
Experts believe that the globe will see the demand for food rise by at least 70% in the next half century. Food production must rise by 70% A report by the UN’s Food and Agriculture Organisation predicts that the production of food must increase by 70% by 2050. This has sparked interest in Brazilian agriculture as an asset class. Just ten years ago, the Matopiba region of Brazil was totally unproductive and unusable for large scale farming operations. More recently, with the addition of lime and phosphorus to the soil the region has become responsible for producing 12.2 million tonnes of Brazil’s grains and oilseed crops, which is 8.2% of the whole country’s production. The Matopiba region has the perfect climate for farming, and boasts a further 2 million hectares of fertile, productive land that will benefit from future investment into farmland infrastructure and machinery. This is leading to wide interest amongst foreign investors hoping to benefit from the growth in Brazilian agriculture and the ever increasing price for crops, as the demand for food outweighs the current and on-going supply of productive, fertile land with which to grow them in, agriculture and farmland investments remain strong alternative strategies to help diversify your portfolio and hedge inflation. DGC Asset Management have been involved in the acquisition and development of farmland in Australia, and has part-funded the developments of greenfield sites in Latin America for five years; returning yields of between 8 and 16 per cent, with additional upside in the capital value of underlying farmland assets. David Garner, Partner at DGC said, “Agricultural land represents one of the most attractive investments for the long-term investor seeking a stable yield and capital appreciation. I think we will continue to see institutional Investors increases their allocations to the agriculture sector in order to reduce equity exposure and correlated their portfolios with rising food and land prices against a backdrop of increasing demand and resource scarcity”. Whilst equity markets continue to deliver hitherto unseen volatility, Investors will continue to seek out real asset investments that are unlikely to depreciate to nothing overnight, and where the underlying assets deliver a cash flow to replace the income lost in an environment of low interest rates. With such Investor interest offering short term price support for good quality agricultural land, investing in farmland and agriculture is likely to feature in more investment portfolios throughout 2013. – See more at: http://www.dgcassetmanagement.com/news/agriculture-food-production#sthash.piYd60Z1.dpuf Continue reading
China’s Carbon Emissions ‘Could Peak’ In 2025
Last updated on 3 July 2013, 11:24 am By Ed King A group of leading Chinese climate change experts says the country could ensure emissions peak in 2025 without damaging economic growth. In an article published in Climate Policy , they argue the two degree warming limit agreed by world leaders in 2009 is still achievable, provided China takes further steps to cut pollution. China accounts for 24% of global emissions, and its GDP is expected to overtake the USA’s before 2030. To avoid two degrees the country needs to cut emissions 70% by 2050 compared to 2020 levels. Together with massive investment in renewables and efficiency, the authors recommend a nationwide carbon pricing scheme be deployed within the coming years, which they say can be implemented without damaging growth. “The results suggest that recent and continued technological progress will make it possible for China to limit its CO2 emissions and for these to peak before 2025,” they say. Choking pollution in China’s major cities is placing pressure on new premier Xi Jingping to curb emissions from cars and power plants The paper sets high levels of ambition on renewables, efficiency, nuclear, and carbon capture and storage technologies, which could mitigate increases in coal and gas use. In order to comply with what the authors label the ‘enhanced low carbon scenario’, by 2050 renewables must account for 48% of total power generation, with solar providing 1040GW and wind 930GW. “A reduction of the necessary magnitude will require the near-simultaneous and successful deployment of all the available low-carbon energy technologies and massive international cooperation,” they say, adding: “improving China’s energy efficiency will increase economic competitiveness”. The paper has generated a high level of interest outside China given the experts involved and their level of engagement with the government. Lead author Jiang Kejun is part of the Energy Research Institute, which is affiliated to the National Development and Reform Commission, the influential government ministry that oversees China’s economic and energy strategy. “You can say that given the position of the researchers, there are definitely some political implications there,” the World Resources Institute’s Ailun Yang told RTCC. “Jiang Kejun has consistently been one of the most progressive voices within the system. He always gives out the most ambitious analysis and forecasts, but I think it’s important to note that in much of his analysis – even though they seem provocative – he was proven right” US pressure The paper is especially relevant given claims made by US climate negotiators that China’s mere presence puts 2 degrees out of reach and that a binding Chinese carbon cap is unthinkable. The US is pushing for a ‘pledge and review’ agreement at the international climate negotiations, a system which is unlikely to ensure the level of emission cuts scientists believe are required. Seasoned observers at UN negotiations talk of Washington’s negotiating position being ‘index linked’ to China’s. Reports that leading Chinese climate experts believe it is possible to limit global warming are likely to place pressure on the USA to match that ambition, despite President Obama’s recent offerings in his new Climate Change Action Plan . New markets A recent report from the UN Environment Programme confirmed China’s status as the world’s leading market for renewable energy, driving $67 billion of investment in 2012. Heavy pollution from coal power stations is forcing officials to consider alternative forms of energy – and raising the stakes for the country’s seven pilot emission trading schemes, the first of which launched in Shenzhen on June 18. “The basic idea is that we have to establish a price level for carbon in China, and I think that is the right step to take,” said Yang, adding: “I think the enormous local impacts of China’s energy mix and dependence on coal is becoming a huge push for China to take even stronger climate mitigation action.” The Shenzhen exchange accounts for 30 million metric tonnes of CO2 emissions, equating to a quarter of the region’s GDP and around 600 companies. Nationally the country released 8 billion metric tonnes of greenhouse gases in 2012. Emissions rose 171% between 2000 and 2011. – See more at: http://www.rtcc.org/…h.0a6ugSUN.dpuf Continue reading
