Sowing the seeds of recovery
The appearance of green shoots in the economy is feeding the view that agriculture is also set to become more fertile.
Agents Knight Frank says confidence is returning to the UK arable land market with “deals are routinely being done at over £5,000 (€5,760) an acre and in some cases in excess of £6,000.”
In March, prices averaged £4,760, against £5,100 in the middle of 2008. Veteran investor Jim Slater has announced plans to rise $15m for his Brazilian agricultural company Agrifirma. Fund manager Westbury has launched a $200m Trilogy Green Forest Fund in the South Eastern United States. Agcapita, advised by investor Jim Rogers, has been raising money to invest in Canadian farms.
Private bank Pictet has taken a different tack by launching a fund which will invest in companies serving the agricultural community. Their marketers argue that the world’s population is growing fast.
The middle classes of Asia are keen to eat increasingly well. Climate change is starting to erode the productivity of farmland. These arguments are as valid now, as they were during the credit crisis. The difference is that investors are becoming far keener to buy commodity futures, pushing up the price of food stuff s along the way.
Which in turn, has encouraged people to buy agricultural land for recovery. As ever, there is nothing like a bit of emotional leverage to restore health to any market.
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