Tag Archives: press
Farmland — Gold You Can Eat
by Chris Bennett in Farm Press Blog Will investors continue to park their money on farmland? Speculation on a farmland crash hasn’t put a dent in the market. Talk of bubbles or crashes hasn’t put a dent in the farmland market, and if the end is nigh — nobody is blinking. Farmland is “gold I can eat” to Steve Romick, a heavyweight investor and managing partner at FPA Funds. Farmland purchases have moved far beyond the agriculture industry, with insurance agencies, specialized investors, foreign firms and pension funds all throwing elbows in a bidding war. Romick, in an interview with Forbes , answered the “Why farmland now?” question by comparing it with the gold market: “I don’t know how to value gold. I don’t know if it should be a thousand dollars an ounce, the rough cost to pull it out of the ground, or $1,600 an ounce, where it is today, or whether it should be $2,000 or God forbid it’s $4,000 because government may take it away from you … “I look at farmland. Farmland has increased in price. But farmland, interestingly, will benefit from the same things that gold will benefit from. If there’s inflation, farmland will benefit. If there’s a decline in fiat currencies, particularly the U.S. dollar, farmland will benefit. Ag prices are denominated in dollars. So if the dollar drops by 50 percent versus the won, for example, in Korea they can buy twice as much or their economy can benefit by not having to spend as much for the same amount of food.” Traditional investments often have been anemic and the poor returns have helped carve a channel for new dollars to flow toward cropland; dollars that would typically have gone elsewhere. The rise in farmland prices and the pace of sales is brisk, with the Midwest leading the spike. Iowa, South Dakota and Nebraska have doubled their 2005 farmland values. Iowa acreage averages $8,296 per acre, reflecting the confidence in corn and commodity demand, and an Iowa farm recently went for $21,900 per acre. In 2012, a Swiss bank bought 9,800 acres of Wisconsin cropland for $67.5 million. UBS AgriVest Farmland Fund Inc., a Connecticut-based farm real estate fund, is expected to close on a $108-million bid for 29,000 farmland acres in Wisconsin and Texas, according to Farmland Investor Letter . The value of the purchases is dizzying and the number of investor players beyond ag is growing. Midwest farm values get the most attention, but coast-to-coast, the same cropland value pattern is evident. California is a prime example, where farmland values grew to $7,200 in 2012. Almond acreage in Tulare County can bring close to $20,000 per acre. Continue reading
Peak Farmland Grinds Against Cropland Expansion
by Chris Bennett in Farm Press Blog Welcome to Peak Farmland. The belief that a human plague is gobbling up the Earth has been turned on its head. The belief that a human plague is gobbling up the Earth, carving out more cropland, and hacking down more trees — has been turned on its head. Welcome to Peak Farmland. Farmland expansion has reached its crest and the amount of global land needed to grow food is set to stabilize. That’s the opinion of three Rockefeller University researchers in a recent study: “ Peak Farmland and the Prospects for Sparing Nature .” If the report is on target, global cropland use will shrink by an astounding 370 million acres — about the equivalent of two Californias and one Texas — by 2060. Jessie Ausubel, one of the report authors, says, “Happily, the cause is not exhaustion of arable land, as many had feared, but rather moderation of population and tastes and ingenuity of farmers.” Ausubel and his colleagues believe crop technology will allow agricultural yields to win the race against demand — and it won’t be a neck-and-neck finish. In short, approximately 570,000 square miles of Earth will be abandoned as farmland.) But, as Reuters points out, the Rockefeller report may be a house of cards — buttressed by too much guesswork. “Ausubel’s study admits to making many assumptions — rising crop yields, slowing population growth, a relatively slow rise in the use of crops to produce biofuels, moderate rises in meat consumption — that could all skew the outcome…” The Rockefeller report is in direct conflict with the UN and grinds against a 2009 Food and Agricultural Organization study that projects a 5 percent worldwide expansion of arable land by 2050 — 173 million more acres of farmland will be needed. (That’s the approximate total acreage of California and New Mexico combined.) The UN study projects 9.1 billion people by 2050, requiring a 70 percent increase in food production. Imminent acreage expansion is not just a UN projection. Foreign investment companies across the globe are snapping up farmland in developing countries, anticipating the food rush to come. Speculators see this new land “scramble” as a sure-bet, based on food demand and biofuels mandates. (For example, Spiegel reports that 100 percent of Liberia’s arable land has been bought by foreigners.) Trends over the next few years will show who is right: Ausubel or the UN. The Peak Farmland study is anathema to apocalyptic boilerplate. “We are a plague on the Earth. It’s coming home to roost over the next 50 years or so,” says naturalist and BBC documentary maker David Attenborough. Attenborough told Radio Times there is far more in the tea leaves than ecological doom: “…It’s sheer space, places to grow food for this enormous horde.” In line with convention, Attenborough believes global agricultural production will never be able to keep up with population increases — and proponents of Peak Farmland believe he is dead wrong. Twitter: @CBennett71 Continue reading
US Housing Crisis
Experts believe the huge devaluation of real state and foreclosures in the US has recently made a crisis in this country. Press TV’s Rhonda Pence reporting f… Continue reading
