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After Anglo-Australian miner BHP Billiton made an eventually unsuccessful US$38.6 billion offer for agriculture-focused Potash Corp., deal makers began adding food options to their menus.
In Asia, the result has been a rich diet of food company deals, with more expected—and raising a question about whether investors might eventually end up with indigestion.
Higher prices in both raw and processed soft commodities—caused by growing Asian demand, erratic weather, and a global push toward biofuels—has led to a spate of food-focused merger deals and initial public offerings. Food quality concerns in China and fears of radioactive exposure in products in Japan...
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Source: Wall Street Journal
DGC Asset Management Limited provide Investors with the opportunity to engage in strategic mid term and long term asset-backed investments within the Agricultural, Timber and Renewable Energy sectors.
Thursday 28 April 2011
Economic Times: An Interview With Jim Rogers Still Bullish on Agriculture Investments
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In an interview with ET Now, Jim Rogers, Chairman, Rogers Holdings, talks about the things and segments he is bullish on as well as his top trade for the coming year. Excerpts:
ET Now: Last time when we interacted with you, your parting comment was to eat rice with silver chopsticks. Are you still bullish on rice and silver?
Jim Rogers: I still have all of my rice. I use silver chopsticks as well and I have not given up yet.
ET Now: What do you make of the latest warning which has come from the International Monetary Fund, where they have flagged off that ETFs at global level are causing rampant speculation in commodity prices?
Jim Rogers: The International Monetary Fund (IMF) has little concept of what it is talking about. I do not know why everybody pays attention to those guys. They have gone wrong about everything in the past 60 years. We would be better off without them. If they see speculation, I would like to know where it is. Some commodity prices are up, but nothing is terribly overpriced.
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ET Now: Do you think FED would stop buying bonds after 30th of June once QE2 ends?
Jim Rogers: I presume that they will stop buying bonds at least for a while because they have said so many times that they are going to. I do not know how long that would last because as you pointed out who is going to buy US bonds at that point and who is going to supply the liquidity to the market.
I would suspect that after a while, they will be back. Who knows what they will call it? They will make up a new name, but they will be back, they will be printing money again next time things go bad.
ET Now: Would you go short on US bonds given the fact that how cost of capital in the region is now moving up?
Jim Rogers: Yes. I plan to sell short US government bonds sometime in the next few weeks, months. Interest rates all over the world are going to go higher. We have inflation, staggering debt problems and currency problems facing us. So interest rates are going to go higher.
Download your FREE Agricultural Investment Guide here
ET Now: Do you think politicians in emerging markets would try price controls for tackling inflation?
Jim Rogers: They are causing the inflation. These bureaucrats always try to blame somebody else. They have been printing staggering amounts of money. It causes inflation and they blame the inflation on somebody else.
I am sure they are going to try price control. Politicians always try price control and they never work. They always make the situation worse when you have price controls. If you say to a farmer you can only sell your rice for Rs 3, he is not going to produce any rice.
If you say to consumers, rice only costs Rs 3, they are going to eat a lot of rice and so you have huge shortages. Prices get worse, the crisis gets worse and eventually prices skyrocket. Then the politicians realise they have done it wrong again.
ET Now: Would agri commodities continue to attract strong capital despite government pressure on price controls?
Jim Rogers: I am still optimistic about agriculture. Prices are up, but they are not up near enough to bring new investment capital into agriculture. We have a shortage of farmers developing around the world. We have shortages of everything in agriculture.
The average age of farmers in some agricultural states in the US is 58-year old. In 10 years if they are still alive, they will be 68-year old. In parts of Japan, there are huge vast empty fields because there is nobody to farm. We have serious problems facing us. Prices have to go much higher in order to attract people into agriculture and to attract capital.
Download your FREE Agricultural Investment Guide here
Jim Rogers: I own all the agriculture products. They are all going to go higher. I mainly buy the Rogers Agricultural Index which has 21 agricultural products. So I own them all.
ET Now: On a relative basis, which are the commodities which you are bullish on?
Jim Rogers: I prefer to look at the things that are still depressed. Natural gas is depressed compared to oil, silver is depressed compared to gold. I would rather look at the things within those sectors to see what are the things that are still depressed and see if maybe that is where we should be putting money.
ET Now: Meantime silver crude have already risen a lot. Do you think there is much more muscle left there?
Jim Rogers: Silver has certainly gone up a lot in the last 9-10 months. There is no question about that, but remember, silver is still 10% below where it was 31 years ago. I bet you do not know many things that are 10% below where they were 31 years ago.
Download your FREE Agricultural Investment Guide here
Silver has been going up but on a historic basis, it is still very depressed. Oil is up a lot in the last year or two, but remember the known reserves of oil are on a decline. People can moan all they want about. The fact is that the price of oil is up, but where is the oil? If somebody finds a lot of oil, prices are going to go much-much higher.
ET Now: What is your top trade for the coming one year -- US bonds, equities or commodities?
Jim Rogers: I own very few equities. My portfolio consists mainly of commodities and currencies. If the world economy gets better, you will make money in commodities because big shortages are developing. If the world economy does not get better, you are not going to make any money in stocks in a scenario like that.
You might make money in commodities because they will print even more money. Toyota and IBM are not going to go up if the world economy does not get better. Silver might, rice might, some of the things that are still depressed might because they are going to print even more money.
Download your FREE Agricultural Investment Guide here
Source: Economic Times
In an interview with ET Now, Jim Rogers, Chairman, Rogers Holdings, talks about the things and segments he is bullish on as well as his top trade for the coming year. Excerpts:
ET Now: Last time when we interacted with you, your parting comment was to eat rice with silver chopsticks. Are you still bullish on rice and silver?
Jim Rogers: I still have all of my rice. I use silver chopsticks as well and I have not given up yet.
ET Now: What do you make of the latest warning which has come from the International Monetary Fund, where they have flagged off that ETFs at global level are causing rampant speculation in commodity prices?
Jim Rogers: The International Monetary Fund (IMF) has little concept of what it is talking about. I do not know why everybody pays attention to those guys. They have gone wrong about everything in the past 60 years. We would be better off without them. If they see speculation, I would like to know where it is. Some commodity prices are up, but nothing is terribly overpriced.
Download your FREE Agricultural Investment Guide here
ET Now: Do you think FED would stop buying bonds after 30th of June once QE2 ends?
Jim Rogers: I presume that they will stop buying bonds at least for a while because they have said so many times that they are going to. I do not know how long that would last because as you pointed out who is going to buy US bonds at that point and who is going to supply the liquidity to the market.
I would suspect that after a while, they will be back. Who knows what they will call it? They will make up a new name, but they will be back, they will be printing money again next time things go bad.
ET Now: Would you go short on US bonds given the fact that how cost of capital in the region is now moving up?
Jim Rogers: Yes. I plan to sell short US government bonds sometime in the next few weeks, months. Interest rates all over the world are going to go higher. We have inflation, staggering debt problems and currency problems facing us. So interest rates are going to go higher.
Download your FREE Agricultural Investment Guide here
ET Now: Do you think politicians in emerging markets would try price controls for tackling inflation?
Jim Rogers: They are causing the inflation. These bureaucrats always try to blame somebody else. They have been printing staggering amounts of money. It causes inflation and they blame the inflation on somebody else.
I am sure they are going to try price control. Politicians always try price control and they never work. They always make the situation worse when you have price controls. If you say to a farmer you can only sell your rice for Rs 3, he is not going to produce any rice.
If you say to consumers, rice only costs Rs 3, they are going to eat a lot of rice and so you have huge shortages. Prices get worse, the crisis gets worse and eventually prices skyrocket. Then the politicians realise they have done it wrong again.
ET Now: Would agri commodities continue to attract strong capital despite government pressure on price controls?
Jim Rogers: I am still optimistic about agriculture. Prices are up, but they are not up near enough to bring new investment capital into agriculture. We have a shortage of farmers developing around the world. We have shortages of everything in agriculture.
The average age of farmers in some agricultural states in the US is 58-year old. In 10 years if they are still alive, they will be 68-year old. In parts of Japan, there are huge vast empty fields because there is nobody to farm. We have serious problems facing us. Prices have to go much higher in order to attract people into agriculture and to attract capital.
Download your FREE Agricultural Investment Guide here
Jim Rogers: I own all the agriculture products. They are all going to go higher. I mainly buy the Rogers Agricultural Index which has 21 agricultural products. So I own them all.
ET Now: On a relative basis, which are the commodities which you are bullish on?
Jim Rogers: I prefer to look at the things that are still depressed. Natural gas is depressed compared to oil, silver is depressed compared to gold. I would rather look at the things within those sectors to see what are the things that are still depressed and see if maybe that is where we should be putting money.
ET Now: Meantime silver crude have already risen a lot. Do you think there is much more muscle left there?
Jim Rogers: Silver has certainly gone up a lot in the last 9-10 months. There is no question about that, but remember, silver is still 10% below where it was 31 years ago. I bet you do not know many things that are 10% below where they were 31 years ago.
Download your FREE Agricultural Investment Guide here
Silver has been going up but on a historic basis, it is still very depressed. Oil is up a lot in the last year or two, but remember the known reserves of oil are on a decline. People can moan all they want about. The fact is that the price of oil is up, but where is the oil? If somebody finds a lot of oil, prices are going to go much-much higher.
ET Now: What is your top trade for the coming one year -- US bonds, equities or commodities?
Jim Rogers: I own very few equities. My portfolio consists mainly of commodities and currencies. If the world economy gets better, you will make money in commodities because big shortages are developing. If the world economy does not get better, you are not going to make any money in stocks in a scenario like that.
You might make money in commodities because they will print even more money. Toyota and IBM are not going to go up if the world economy does not get better. Silver might, rice might, some of the things that are still depressed might because they are going to print even more money.
Download your FREE Agricultural Investment Guide here
Source: Economic Times
Wednesday 27 April 2011
DGC Asset Management: Direct Agriculture Investments to Double by 2012 to $6 Billion
Download your FREE Agriculture Investment and Farmland Investment Guide here
Inflows of private capital in agriculture worldwide are expected to more than double to around $5 billion to $7 billion in two years as rising food prices spur investments in farm land and production facilities.
Investors from the United States and Europe are looking at South America for growing more feed grains, corn and soybeans, as rising global meat consumption propels prices, said Chris Erickson, managing director of Boston-based farm consultancy HighQuest.
"What we are seeing right now is a lot of interest from institutional investors, private capital, pensions and endowment foundations to invest in real assets," he told Reuters on the sidelines of an industry seminar in Singapore.
"Farmland today globally provides a very interesting investment scenario based on global supply and demand fundamentals."
Download your FREE Agriculture Investment and Farmland Investment Guide here
Private capital investment in farming in expected to more than double to around $5-$7 billion in the next couple of years from an estimated $2.5-$3 billion invested in the last couple of years, he told Reuters (all figures US$).
The benchmark U.S. corn prices climbed to an all-time high earlier this month as strong demand across the livestock, ethanol, export and investment sectors faced the tightest stocks since the 1930s.
Although soybean futures have been largely unchanged this year because of a temporary slowdown in imports by China, the world's top importer, the market is expected get a boost in the months ahead as farmers in the U.S. plant more corn and Beijing lifts purchases.
Download your FREE Agriculture Investment and Farmland Investment Guide here
U.S. grains rallied on Monday after a holiday weekend, with corn and wheat adding around two per cent each, on continuing worries about weather in major growing areas and limited stockpiles.
South America is likely to lead the global expansion in agriculture with surplus land and existence of large-scale farm operations in the region, even though investors are also looking at Africa for growth, Erickson said.
"Where people are seeing the expansion to handle rising demand from China and Southeast Asia, is mostly Brazil and other countries in South America," he said in an interview.
"The biggest area is South America which has the most potential. Africa too, but with South America the difference is that you already have large-scale farm operations occurring there."
Download your FREE Agriculture Investment and Farmland Investment Guide here
South America is the biggest producer of soybeans in the world with Brazil and Argentina the second- and third-largest soy exporter after the U.S. Argentina is also the world No. 1 soymeal and soyoil supplier.
"It (agriculture) is attracting foreign capital and you have some very large groups that have basically emerged from nowhere," he said.
"In South America, El Tejar was farming around 200,000 hectares in 2006 and today they are farming close to 800,000 hectares."
Foreign investors such as Argentina-based El Tejar and George Soros's Adecoagro have snapped up land even in the sparsely populated Uruguay, one of the region's most stable.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: Canadian Cattlemen
Inflows of private capital in agriculture worldwide are expected to more than double to around $5 billion to $7 billion in two years as rising food prices spur investments in farm land and production facilities.
Investors from the United States and Europe are looking at South America for growing more feed grains, corn and soybeans, as rising global meat consumption propels prices, said Chris Erickson, managing director of Boston-based farm consultancy HighQuest.
"What we are seeing right now is a lot of interest from institutional investors, private capital, pensions and endowment foundations to invest in real assets," he told Reuters on the sidelines of an industry seminar in Singapore.
"Farmland today globally provides a very interesting investment scenario based on global supply and demand fundamentals."
Download your FREE Agriculture Investment and Farmland Investment Guide here
Private capital investment in farming in expected to more than double to around $5-$7 billion in the next couple of years from an estimated $2.5-$3 billion invested in the last couple of years, he told Reuters (all figures US$).
The benchmark U.S. corn prices climbed to an all-time high earlier this month as strong demand across the livestock, ethanol, export and investment sectors faced the tightest stocks since the 1930s.
Although soybean futures have been largely unchanged this year because of a temporary slowdown in imports by China, the world's top importer, the market is expected get a boost in the months ahead as farmers in the U.S. plant more corn and Beijing lifts purchases.
Download your FREE Agriculture Investment and Farmland Investment Guide here
U.S. grains rallied on Monday after a holiday weekend, with corn and wheat adding around two per cent each, on continuing worries about weather in major growing areas and limited stockpiles.
South America is likely to lead the global expansion in agriculture with surplus land and existence of large-scale farm operations in the region, even though investors are also looking at Africa for growth, Erickson said.
"Where people are seeing the expansion to handle rising demand from China and Southeast Asia, is mostly Brazil and other countries in South America," he said in an interview.
"The biggest area is South America which has the most potential. Africa too, but with South America the difference is that you already have large-scale farm operations occurring there."
Download your FREE Agriculture Investment and Farmland Investment Guide here
South America is the biggest producer of soybeans in the world with Brazil and Argentina the second- and third-largest soy exporter after the U.S. Argentina is also the world No. 1 soymeal and soyoil supplier.
"It (agriculture) is attracting foreign capital and you have some very large groups that have basically emerged from nowhere," he said.
"In South America, El Tejar was farming around 200,000 hectares in 2006 and today they are farming close to 800,000 hectares."
Foreign investors such as Argentina-based El Tejar and George Soros's Adecoagro have snapped up land even in the sparsely populated Uruguay, one of the region's most stable.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: Canadian Cattlemen
DGC Asset Managament: Rising Food Prices Spur Agricultural Investments
Download your FREE Agriculture Investment and Farmland Investment Guide here
Inflows of private capital in agriculture worldwide are expected to more than double to around $5 billion to $7 billion in two years as rising food prices spur investments in farm land and production facilities.
Investors from the U.S. and Europe are looking at South America for growing more feed grains, corn and soybeans, as rising global meat consumption propels prices, said Chris Erickson, managing director of the farm consultancy High-Quest.
Download your FREE Agriculture Investment and Farmland Investment Guide here
"What we are seeing right now is a lot of interest from institutional investors, private capital, pensions and endowment foundations to invest in real assets," he told Reuters on the sidelines of an industry seminar in Singapore.
"Farmland today globally provides a very interesting investment scenario based on global supply and demand fundamentals."
Private capital investment in farming in expected to more than double to around $5-$7 billion in the next couple of years from an estimated $2.5-$3 billion invested in the past couple of years, he told Reuters.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: Calgary Herald
Inflows of private capital in agriculture worldwide are expected to more than double to around $5 billion to $7 billion in two years as rising food prices spur investments in farm land and production facilities.
Investors from the U.S. and Europe are looking at South America for growing more feed grains, corn and soybeans, as rising global meat consumption propels prices, said Chris Erickson, managing director of the farm consultancy High-Quest.
Download your FREE Agriculture Investment and Farmland Investment Guide here
"What we are seeing right now is a lot of interest from institutional investors, private capital, pensions and endowment foundations to invest in real assets," he told Reuters on the sidelines of an industry seminar in Singapore.
"Farmland today globally provides a very interesting investment scenario based on global supply and demand fundamentals."
Private capital investment in farming in expected to more than double to around $5-$7 billion in the next couple of years from an estimated $2.5-$3 billion invested in the past couple of years, he told Reuters.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: Calgary Herald
935 Million People Don't Have Enough to Eat
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More than 935 million people around the world don’t have enough to eat — and the number grows every day. The World Bank says food prices have soared 36 per cent over the past year. The United Nations Food and Agricultural Organization reports that its index of world food prices is the highest since it began keeping records 21 years ago. The world’s poor are hungry, and quickly growing hungrier.
Some of the consequences are clear. Unrest in some of the countries of the “Arab Awakening,” notably Egypt, has been fuelled by quickly rising food prices. There have been food riots in Bangladesh where nutritious palm oil — a major ingredient for biofuel — is harder to find. The UN is alarmed about the 50 per cent shortfall in funding for Afghanistan’s food operations, saying seven million Afghans will go hungry this year.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Ironically, the crisis is being made worse by the otherwise laudable rush into biofuels. In a particularly cruel example of the law of unintended consequences, the diversion of such crops as corn, cassava, canola and sugar to make ethanol is sending their prices through the roof. “Global maize prices rose about 73 per cent in the six months after June 2010,” reports the World Bank’s Agriculture and Rural Development Team.
Forty per cent of the U.S. corn crop now goes into ethanol. (The figure is much lower in Canada: the federal government has deemed our fuels should be made up of 5 per cent ethanol.) China imports almost all of Thailand’s cassava root crop — a staple food in much of Africa — and turns it into fuel.
Using food to make fuel is a positive step as the world attempts to wean itself off oil. But when it begins to impact the food chain it becomes worrisome. “Supply of food must match world needs,” says Olivier De Schutter, the UN’s special rapporteur on the right to food. He recommends that rich countries develop strategies to support ecological agriculture in less developed states.
Download your FREE Agriculture Investment and Farmland Investment Guide here
This is not a new problem. In 2008, when food prices spiked even higher, leaders of the G20 countries pledged $22 billion over three years to help poor countries increase food production. Predictably, when the crisis eased they lost their focus. The World Bank fund set up to administer this money has received only $400 million so far.
Developed countries need to heed the experts who warn that targets for biofuel must now be balanced against demand for basic foodstuffs. And the G20, Canada among them, should pony up the money they promised three years ago. With the world’s population predicted to top 9 billion by 2050, money spent now to ensure food security down the road will be an excellent investment.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: The Star
More than 935 million people around the world don’t have enough to eat — and the number grows every day. The World Bank says food prices have soared 36 per cent over the past year. The United Nations Food and Agricultural Organization reports that its index of world food prices is the highest since it began keeping records 21 years ago. The world’s poor are hungry, and quickly growing hungrier.
Some of the consequences are clear. Unrest in some of the countries of the “Arab Awakening,” notably Egypt, has been fuelled by quickly rising food prices. There have been food riots in Bangladesh where nutritious palm oil — a major ingredient for biofuel — is harder to find. The UN is alarmed about the 50 per cent shortfall in funding for Afghanistan’s food operations, saying seven million Afghans will go hungry this year.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Ironically, the crisis is being made worse by the otherwise laudable rush into biofuels. In a particularly cruel example of the law of unintended consequences, the diversion of such crops as corn, cassava, canola and sugar to make ethanol is sending their prices through the roof. “Global maize prices rose about 73 per cent in the six months after June 2010,” reports the World Bank’s Agriculture and Rural Development Team.
Forty per cent of the U.S. corn crop now goes into ethanol. (The figure is much lower in Canada: the federal government has deemed our fuels should be made up of 5 per cent ethanol.) China imports almost all of Thailand’s cassava root crop — a staple food in much of Africa — and turns it into fuel.
Using food to make fuel is a positive step as the world attempts to wean itself off oil. But when it begins to impact the food chain it becomes worrisome. “Supply of food must match world needs,” says Olivier De Schutter, the UN’s special rapporteur on the right to food. He recommends that rich countries develop strategies to support ecological agriculture in less developed states.
Download your FREE Agriculture Investment and Farmland Investment Guide here
This is not a new problem. In 2008, when food prices spiked even higher, leaders of the G20 countries pledged $22 billion over three years to help poor countries increase food production. Predictably, when the crisis eased they lost their focus. The World Bank fund set up to administer this money has received only $400 million so far.
Developed countries need to heed the experts who warn that targets for biofuel must now be balanced against demand for basic foodstuffs. And the G20, Canada among them, should pony up the money they promised three years ago. With the world’s population predicted to top 9 billion by 2050, money spent now to ensure food security down the road will be an excellent investment.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: The Star
No Better Investment Than Farmland
Download your FREE Agriculture Investment and Farmland Investment Guide here
We have been taught from an early age that humans have four basic needs: food, water, clothing and shelter. Interestingly enough, it is the U.S. farm sector that provides two — food and clothing — out of those four needs.
This fact puts farming and the programs that protect farmers from adversity — the farm safety net — pretty high on this country's priority list.
Yet farm programs account for just one-quarter of 1 percent of the federal budget, and some are advocating further reductions.
Though every dime we spend must be scrutinized, dollar for dollar there is not a better investment of taxpayer funds than the U.S. farm safety net.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Take the federal crop-insurance program, for example. It's hard to think of a federal program that exacts so much benefit per dollar of federal investment. This amplification is possible because crop insurance combines the best of government and the private sector to help protect farmers from adversity and, therefore, ensure a safe, affordable, ample food supply for our citizens and the world.
In 2010, for a relatively small federal outlay combined with private money from the farmers who purchased the policies, the government was able to augment a $4 billion investment into an astounding $80 billion in liability coverage for America's food, feed and clothing crops.
Should calamity strike our nation's farmers in the form of weather or market drops, it's the private sector, not the taxpayer, that would cover the cost of reimbursing the farmers for their losses and ensuring that they don't lose their businesses because of events out of their control.
Download your FREE Agriculture Investment and Farmland Investment Guide here
When examining the programs that put food on the tables of the workers of this country, necessary budget cuts must be smart and targeted. The pressure on the food supply is increasing incrementally every year as the world's population creeps from nearly 7 billion now to 9.3 billion in the next few decades. That's why Sen. Pat Roberts, R-Kan., recently urged Congress to let the Senate Agriculture Committee, and those who understand the policy issues, "do that job from a policy standpoint."
Unfortunately, the farm safety net has been tapped several times in the recent past as the bottomless money reservoir to pay for other things, many of them not related to agriculture. In fact, all told, nearly $12.45 billion total has been cut from crop insurance in the past several years.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Agriculture leaders and Congress need to be careful when charting a course for the future of farm policy. These programs provide the basic necessities of life in addition to the economic engine that is fueling our economic recovery.
The future of any nation is inextricably linked to the future of its food supply. For that reason alone, it would be hard to justify further weakening our farm safety net.
Jerry McReynolds of Woodston is the immediate past president of the National Association of Wheat Growers.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: Kansas.com
We have been taught from an early age that humans have four basic needs: food, water, clothing and shelter. Interestingly enough, it is the U.S. farm sector that provides two — food and clothing — out of those four needs.
This fact puts farming and the programs that protect farmers from adversity — the farm safety net — pretty high on this country's priority list.
Yet farm programs account for just one-quarter of 1 percent of the federal budget, and some are advocating further reductions.
Though every dime we spend must be scrutinized, dollar for dollar there is not a better investment of taxpayer funds than the U.S. farm safety net.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Take the federal crop-insurance program, for example. It's hard to think of a federal program that exacts so much benefit per dollar of federal investment. This amplification is possible because crop insurance combines the best of government and the private sector to help protect farmers from adversity and, therefore, ensure a safe, affordable, ample food supply for our citizens and the world.
In 2010, for a relatively small federal outlay combined with private money from the farmers who purchased the policies, the government was able to augment a $4 billion investment into an astounding $80 billion in liability coverage for America's food, feed and clothing crops.
Should calamity strike our nation's farmers in the form of weather or market drops, it's the private sector, not the taxpayer, that would cover the cost of reimbursing the farmers for their losses and ensuring that they don't lose their businesses because of events out of their control.
Download your FREE Agriculture Investment and Farmland Investment Guide here
When examining the programs that put food on the tables of the workers of this country, necessary budget cuts must be smart and targeted. The pressure on the food supply is increasing incrementally every year as the world's population creeps from nearly 7 billion now to 9.3 billion in the next few decades. That's why Sen. Pat Roberts, R-Kan., recently urged Congress to let the Senate Agriculture Committee, and those who understand the policy issues, "do that job from a policy standpoint."
Unfortunately, the farm safety net has been tapped several times in the recent past as the bottomless money reservoir to pay for other things, many of them not related to agriculture. In fact, all told, nearly $12.45 billion total has been cut from crop insurance in the past several years.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Agriculture leaders and Congress need to be careful when charting a course for the future of farm policy. These programs provide the basic necessities of life in addition to the economic engine that is fueling our economic recovery.
The future of any nation is inextricably linked to the future of its food supply. For that reason alone, it would be hard to justify further weakening our farm safety net.
Jerry McReynolds of Woodston is the immediate past president of the National Association of Wheat Growers.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: Kansas.com
UAE Investing $2 Billion in Sudanese Agriculture Investments
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The Ambassador of the United Arab Emirates (UAE) in Khartoum, Hassan Ahmed Al-Shihi has said his country is currently investing over two billion US dollars in the Sudan.
Al-Shihi said, in an interview to Al-Khaleej press on the occasion of holding the first forum on investment opportunities for the Sudanese nationals working abroad which began Friday in Al-Sharja, UAE, that his country is keen to see an increase of its agricultural investments in Sudan.
He stated that the investment climate in Sudan was attractive, adding that bilateral relations between UAE and Sudan were a model for the fraternal and cooperation ties, describing them as historical relations.
Download your FREE Agriculture Investments Guide here
The UAE ambassador revealed that a fair amount of deals were signed in economic, technical and cultural cooperation and information exchange spheres, explaining that UAE government and Abu Dhabi Development Fund have extended loans and assistances to Sudan represented in a number of vital projects in the fields of roads, railways, spinning and textile factories and support of the balance of payments.
He affirmed that the economic bonds between the two sister states were advanced and that could be seen in the several and successful UAE investments in Sudan, explaining that the development of the bilateral relations could be viewed through the volume of commercial exchange between the two countries which jumped from 697 million dollars in 2008 to 1.1 billion dollars in 2009, a rate of 56.8%. so that Sudan is now occupying the 33rd rank among places of investment for the United Arab Emirates, in its overall investment abroad, moving up the ladder from 44 in 2008Al-Shihi described the investment climate in Sudan as good and attractive for investors for its strategic location and possessing of natural resources and potentialities, affirming that the economic policies Sudan adopted including economic liberalization, restructuring of the economy and privatization of public enterprises besides cancellation of state grip on some productive and service activities and modernization of investment acts and regulations altogether have encouraged investments.
Download your FREE Agriculture Investments Guide here
He encouraged UAE investors to come to Sudan, pointing out that a memo of understanding between Sudan and the United Arab Emirates was signed on encouragement and safeguarding of UAE investments in Sudan.
Download your FREE Agriculture Investments Guide here
Source: Suranews
The Ambassador of the United Arab Emirates (UAE) in Khartoum, Hassan Ahmed Al-Shihi has said his country is currently investing over two billion US dollars in the Sudan.
Al-Shihi said, in an interview to Al-Khaleej press on the occasion of holding the first forum on investment opportunities for the Sudanese nationals working abroad which began Friday in Al-Sharja, UAE, that his country is keen to see an increase of its agricultural investments in Sudan.
He stated that the investment climate in Sudan was attractive, adding that bilateral relations between UAE and Sudan were a model for the fraternal and cooperation ties, describing them as historical relations.
Download your FREE Agriculture Investments Guide here
The UAE ambassador revealed that a fair amount of deals were signed in economic, technical and cultural cooperation and information exchange spheres, explaining that UAE government and Abu Dhabi Development Fund have extended loans and assistances to Sudan represented in a number of vital projects in the fields of roads, railways, spinning and textile factories and support of the balance of payments.
He affirmed that the economic bonds between the two sister states were advanced and that could be seen in the several and successful UAE investments in Sudan, explaining that the development of the bilateral relations could be viewed through the volume of commercial exchange between the two countries which jumped from 697 million dollars in 2008 to 1.1 billion dollars in 2009, a rate of 56.8%. so that Sudan is now occupying the 33rd rank among places of investment for the United Arab Emirates, in its overall investment abroad, moving up the ladder from 44 in 2008Al-Shihi described the investment climate in Sudan as good and attractive for investors for its strategic location and possessing of natural resources and potentialities, affirming that the economic policies Sudan adopted including economic liberalization, restructuring of the economy and privatization of public enterprises besides cancellation of state grip on some productive and service activities and modernization of investment acts and regulations altogether have encouraged investments.
Download your FREE Agriculture Investments Guide here
He encouraged UAE investors to come to Sudan, pointing out that a memo of understanding between Sudan and the United Arab Emirates was signed on encouragement and safeguarding of UAE investments in Sudan.
Download your FREE Agriculture Investments Guide here
Source: Suranews
Tuesday 26 April 2011
Farmland Investment Rockets Ahead
Download your FREE Farmland Investment Guide here.
THE proportion of investment motivated purchasers in the land market more than doubled to 31 per cent last year, said land agents.
And this was on the back of a 9 per cent-plus increase in 2010.
Now, growth in land values is expected to be more than 10 per cent this year, with further rises predicted for 2012.
“While the demand for farmland is influenced by a lack of supply and driven by existing farmers, there are good reasons why an investment in farmland may be appropriate from a tax planning perspective for traditional farming families and for so-called ‘lifestyle’ farmers alike. Indeed it is non-farming buyers which have competed with farmers in purchasing farmland thus pushing prices upwards,” said Mike Harrison of Saffery Champness.
“HMRC recognise farmland as being land occupied wholly or mainly for the purposes of food production either via the growing of crops for direct or indirect consumption or for the rearing of livestock, or both. For inheritance tax (IHT) purposes, it is worth remembering farmland is extended to include woodlands on the farm and any buildings used in connection with the farming business.
Download your FREE Farmland Investment Guide here.
“The two principal reliefs from IHT are agricultural property relief (APR) and business property relief (BPR). Both are subject to certain ownership conditions, and operate by reducing the value of assets which are liable to IHT.”
For let farmland the reliefs available at the applicable relief rates are given on the agricultural value of the property, which may be lower than its market value; for example where there is a possibility of future development or amenity value attached.
Let land
For in-hand land, the relief will be available on the market value. Mr Harrison said the structure of the business was of great importance if the maximum relief was to be available as property held outside the business structure was only eligible for the reduced relief.
“The availability of APR on the farmhouse is unique, reflecting the involvement of the farmer with the business. This means the appropriateness of the farmhouse is closely scrutinised by HMRC.”
But there are conditions on ownership. “To qualify for APR, the farmland must either have been owned by the farmer for seven years and used by someone else, for the purposes of farming, or to have been farmed in-hand by the farmer for two years.
Download your FREE Farmland Investment Guide here.
CG tax reliefs
Source: Farmers Guardian
THE proportion of investment motivated purchasers in the land market more than doubled to 31 per cent last year, said land agents.
And this was on the back of a 9 per cent-plus increase in 2010.
Now, growth in land values is expected to be more than 10 per cent this year, with further rises predicted for 2012.
“While the demand for farmland is influenced by a lack of supply and driven by existing farmers, there are good reasons why an investment in farmland may be appropriate from a tax planning perspective for traditional farming families and for so-called ‘lifestyle’ farmers alike. Indeed it is non-farming buyers which have competed with farmers in purchasing farmland thus pushing prices upwards,” said Mike Harrison of Saffery Champness.
“HMRC recognise farmland as being land occupied wholly or mainly for the purposes of food production either via the growing of crops for direct or indirect consumption or for the rearing of livestock, or both. For inheritance tax (IHT) purposes, it is worth remembering farmland is extended to include woodlands on the farm and any buildings used in connection with the farming business.
Download your FREE Farmland Investment Guide here.
“The two principal reliefs from IHT are agricultural property relief (APR) and business property relief (BPR). Both are subject to certain ownership conditions, and operate by reducing the value of assets which are liable to IHT.”
For let farmland the reliefs available at the applicable relief rates are given on the agricultural value of the property, which may be lower than its market value; for example where there is a possibility of future development or amenity value attached.
Let land
- 100 per cent for property, farmed under a tenancy which commenced after August 31,1995
- 50 per cent for most other tenanted agricultural land
- 100 per cent for interests in business assets owned by a sole trader, a partnership or shares in private companies carrying on a farming business
- 50 per cent for land, buildings and certain other assets used in a farming partnership or company, but owned personally
For in-hand land, the relief will be available on the market value. Mr Harrison said the structure of the business was of great importance if the maximum relief was to be available as property held outside the business structure was only eligible for the reduced relief.
“The availability of APR on the farmhouse is unique, reflecting the involvement of the farmer with the business. This means the appropriateness of the farmhouse is closely scrutinised by HMRC.”
But there are conditions on ownership. “To qualify for APR, the farmland must either have been owned by the farmer for seven years and used by someone else, for the purposes of farming, or to have been farmed in-hand by the farmer for two years.
Capital gains
“Farmers purchasing land following the introduction of the single payment regime on January 1, 2005 should note part of the cost could relate to the purchase of entitlement, which is separate from the land. The disposal of single payment entitlement is treated as a separate asset for capital gains purposes,” he said.Download your FREE Farmland Investment Guide here.
CG tax reliefs
- For in-hand farming, contracted or not, three CGT reliefs available on sale or transfer
- Rollover - on the replacement of land and farm buildings with other qualifying business assets following the sale of the original property
- Holdover - on gifts
- Entrepreneurs’ - on certain qualifying disposals and with a lifetime limit of up to £10 million of gains per individual
- Rules to treat all farming as one trade.
- Ability to average a farm’s financial results between tax years, if this reduces the tax liability.
- Election to treat a herd of breeding animals as a capital asset rather than trading stock.
- Some relief for losses against other income.
Source: Farmers Guardian
UAE to Invest In Farmland
Download your FREE Agriculture Investment and Farmland Investment Guide here.
The UAE plans to hold further talks with officials from Australia with a view to invest in farmland as part of its plan to tackle food security.
Sultan Bin Saeed Al Mansouri, the UAE's Minister of Economy on Sunday hailed the recent visit of a UAE delegation to Australia as a valuable step forward in economic relations between the two countries.
He said in comments published by state news agency WAM that it would "open new prospects for cooperation in the fields of innovation, research and development, technology, agriculture and livestock production, petrochemicals and others".
Part of the delegation was Khadem Al Darei, managing director and vice chairman of Al Dahra Agriculture, who said: "The visit identified attractive investment prospects in Australia and plenty of opportunities to share experiences and insights, as well as opportunities in the agribusiness where we are keen to import livestock and fresh and frozen meat from Australia, in order to satisfy the local demand.
Download your FREE Agriculture Investment and Farmland Investment Guide here.
"We also discussed possibilities of investing in agriculture lands to produce basic commodities to support the strategic reserve of the UAE."
In the UAE, the government and private companies have looked to lease and buy farmland to help ensure domestic food supplies.
Like other Gulf states, the UAE suffered in 2008 when international food prices spiked to record levels, forcing up import bills.
Al Mansouri said: "We expect even closer cooperation and more mutual investment opportunities as an outcome of this extremely fruitful meeting."
Download your FREE Agriculture Investment and Farmland Investment Guide here.
To ensure continuity of cooperation with the Australian side at the same pace, the Ministry of Economy has adopted an integrated follow up mechanism to oversee the developments in bilateral relations between the two countries on both public and private sector levels.
Mohammed Ahmed Bin Abdul Aziz Al Shihhi, Undersecretary of the Ministry of Economy, added: "We have agreed with the Australian side to adopt a follow up mechanism that insures implementing all the projects and cooperation highlighted during the visit."
Officials agreed to increase the supply of meat from Australia to UAE markets to satisfy the needs of the local market and specifically during the holy month of Ramadan.
Download your FREE Agriculture Investment and Farmland Investment Guide here.
Source: Arabian Business
The UAE plans to hold further talks with officials from Australia with a view to invest in farmland as part of its plan to tackle food security.
Sultan Bin Saeed Al Mansouri, the UAE's Minister of Economy on Sunday hailed the recent visit of a UAE delegation to Australia as a valuable step forward in economic relations between the two countries.
He said in comments published by state news agency WAM that it would "open new prospects for cooperation in the fields of innovation, research and development, technology, agriculture and livestock production, petrochemicals and others".
Part of the delegation was Khadem Al Darei, managing director and vice chairman of Al Dahra Agriculture, who said: "The visit identified attractive investment prospects in Australia and plenty of opportunities to share experiences and insights, as well as opportunities in the agribusiness where we are keen to import livestock and fresh and frozen meat from Australia, in order to satisfy the local demand.
Download your FREE Agriculture Investment and Farmland Investment Guide here.
"We also discussed possibilities of investing in agriculture lands to produce basic commodities to support the strategic reserve of the UAE."
In the UAE, the government and private companies have looked to lease and buy farmland to help ensure domestic food supplies.
Like other Gulf states, the UAE suffered in 2008 when international food prices spiked to record levels, forcing up import bills.
Al Mansouri said: "We expect even closer cooperation and more mutual investment opportunities as an outcome of this extremely fruitful meeting."
Download your FREE Agriculture Investment and Farmland Investment Guide here.
To ensure continuity of cooperation with the Australian side at the same pace, the Ministry of Economy has adopted an integrated follow up mechanism to oversee the developments in bilateral relations between the two countries on both public and private sector levels.
Mohammed Ahmed Bin Abdul Aziz Al Shihhi, Undersecretary of the Ministry of Economy, added: "We have agreed with the Australian side to adopt a follow up mechanism that insures implementing all the projects and cooperation highlighted during the visit."
Officials agreed to increase the supply of meat from Australia to UAE markets to satisfy the needs of the local market and specifically during the holy month of Ramadan.
Download your FREE Agriculture Investment and Farmland Investment Guide here.
Source: Arabian Business
MarketWatch: China's Economy On Track to Eclipse US by 2016
Download your FREE Guide to Agriculture Investment here
An Article byBrett Arends taken from MarketWatch
The International Monetary Fund has just dropped a bombshell, and nobody noticed.
For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.
And it’s a lot closer than you may think.
According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.
Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.
Download your FREE Guide to Agriculture Investment here
According to the IMF forecast, which was quietly posted on the Fund’s website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.
Most people aren’t prepared for this. They aren’t even aware it’s that close. Listen to experts of various stripes, and they will tell you this moment is decades away. The most bearish will put the figure in the mid-2020s.
But they’re miscounting. They’re only comparing the gross domestic products of the two countries using current exchange rates.
That’s a largely meaningless comparison in real terms. Exchange rates change quickly. And China’s exchange rates are phony. China artificially undervalues its currency, the renminbi, through massive intervention in the markets.
Download your FREE Guide to Agriculture Investment here
The comparison that really matters
In addition to comparing the two countries based on exchange rates, the IMF analysis also looked to the true, real-terms picture of the economies using “purchasing power parities.” That compares what people earn and spend in real terms in their domestic economies.
Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and rising.
Just 10 years ago, the U.S. economy was three times the size of China’s.
Naturally, all forecasts are fallible. Time and chance happen to them all. The actual date when China surpasses the U.S. might come even earlier than the IMF predicts, or somewhat later. If the great Chinese juggernaut blows a tire, as a growing number fear it might, it could even delay things by several years. But the outcome is scarcely in doubt.
Download your FREE Guide to Agriculture Investment here
This is more than a statistical story. It is the end of the Age of America. As a bond strategist in Europe told me two weeks ago, “We are witnessing the end of America’s economic hegemony.”
We have lived in a world dominated by the U.S. for so long that there is no longer anyone alive who remembers anything else. America overtook Great Britain as the world’s leading economic power in the 1890s and never looked back.
And both those countries live under very similar rules of constitutional government, respect for civil liberties and the rights of property. China has none of those.
Download your FREE Guide to Agriculture Investment here
Victor Cha, senior adviser on Asian affairs at Washington’s Center for Strategic and International Studies, told me China’s neighbors in Asia are already waking up to the dangers. “The region is overwhelmingly looking to the U.S. in a way that it hasn’t done in the past,” he said. “They see the U.S. as a counterweight to China. They also see American hegemony over the last half-century as fairly benign. In China they see the rise of an economic power that is not benevolent, that can be predatory. They don’t see it as a benign hegemony.”
The rise of China, and the relative decline of America, is the biggest story of our time. You can see its implications everywhere, from shuttered factories in the Midwest to soaring costs of oil and other commodities. Last fall, when I attended a conference in London about agricultural investment, I was struck by the number of people there who told stories about Chinese interests snapping up farmland and foodstuff supplies — from South America to China and elsewhere.
This is the result of decades during which China has successfully pursued economic policies aimed at national expansion and power, while the U.S. has embraced either free trade or, for want of a better term, economic appeasement.
Download your FREE Guide to Agriculture Investment here
“There are two systems in collision,” said Ralph Gomory, research professor at NYU’s Stern business school. “They have a state-guided form of capitalism, and we have a much freer former of capitalism.” What we have seen, he said, is “a massive shift in capability from the U.S. to China. What we have done is traded jobs for profit. The jobs have moved to China. The capability erodes in the U.S. and grows in China. That’s very destructive. That is a big reason why the U.S. is becoming more and more polarized between a small, very rich class and an eroding middle class. The people who get the profits are very different from the people who lost the wages.”
The next chapter of the story is just beginning.
U.S. spending spree won’t work
What the rise of China means for defense, and international affairs, has barely been touched on. The U.S. is now spending gigantic sums — from a beleaguered economy — to try to maintain its place in the sun. See: Pentagon spending is budget blind spot .
Download your FREE Guide to Agriculture Investment here
It’s a lesson we could learn more cheaply from the sad story of the British, Spanish and other empires. It doesn’t work. You can’t stay on top if your economy doesn’t.
Equally to the point, here is what this means economically, and for investors.
Some years ago I was having lunch with the smartest investor I know, London-based hedge-fund manager Crispin Odey. He made the argument that markets are reasonably efficient, most of the time, at setting prices. Where they are most likely to fail, though, is in correctly anticipating and pricing big, revolutionary, “paradigm” shifts — whether a rise of disruptive technologies or revolutionary changes in geopolitics. We are living through one now.
The U.S. Treasury market continues to operate on the assumption that it will always remain the global benchmark of money. Business schools still teach students, for example, that the interest rate on the 10-year Treasury bond is the “risk-free rate” on money. And so it has been for more than a century. But that’s all based on the Age of America.
Download your FREE Guide to Agriculture Investment here
No wonder so many have been buying gold. If the U.S. dollar ceases to be the world’s sole reserve currency, what will be? The euro would be fine if it acts like the old deutschemark. If it’s just the Greek drachma in drag ... not so much.
The last time the world’s dominant hegemon lost its ability to run things singlehandedly was early in the past century. That’s when the U.S. and Germany surpassed Great Britain. It didn’t turn out well.
Updated with IMF reaction
The International Monetary Fund has responded to my article.
In a statement sent to MarketWatch, the IMF confirmed the report, but challenged my interpretation of the data. Comparing the U.S. and Chinese economies using “purchase-power-parity,” it argued, “is not the most appropriate measure… because PPP price levels are influenced by nontraded services, which are more relevant domestically than globally.”
Download your FREE Guide to Agriculture Investment here
The IMF added that it prefers to compare economies using market exchange rates, and that under this comparison the U.S. “is currently 130% bigger than China, and will still be 70% larger by 2016.”
My take?
The IMF is entitled to make its case. But its argument raises more questions than it answers.
First, no one measure is perfect. Everybody knows that.
But that’s also true of the GDP figures themselves. Hurricane Katrina, for example, added to the U.S. GDP, because it stimulated a lot of economic activity — like providing emergency relief, and rebuilding homes. Is there anyone who seriously thinks Katrina was a net positive for the United States? All statistics need caveats.
Download your FREE Guide to Agriculture Investment here
Second, comparing economies using simple exchange rates, as the IMF suggests, raises huge problems.
Currency markets fluctuate. They represent international money flows, not real output.
The U.S. dollar has fallen nearly 10% against the euro so far this year. Does anyone suggest that the real size of the U.S. economy has shrunk by 10% in comparison with Europe over that period? The idea is absurd.
Download your FREE Guide to Agriculture Investment here
China actively suppresses the renminbi on the currency markets through massive dollar purchases. As a result the renminbi is deeply undervalued on the foreign-exchange markets. Just comparing the economies on their exchange rates misses that altogether.
Purchasing power parity is not a perfect measure. None exists. But it measures the output of economies in terms of real goods and services, not just paper money. That’s why it’s widely used to compare economies. The IMF publishes PPP data. So does the OECD. Many economists rely on them.
Download your FREE Guide to Agriculture Investment here
Source: MarketWatch
Brett Arends is a senior columnist for MarketWatch and a personal-finance columnist for The Wall Street Journal.
An Article byBrett Arends taken from MarketWatch
The International Monetary Fund has just dropped a bombshell, and nobody noticed.
For the first time, the international organization has set a date for the moment when the “Age of America” will end and the U.S. economy will be overtaken by that of China.
And it’s a lot closer than you may think.
According to the latest IMF official forecasts, China’s economy will surpass that of America in real terms in 2016 — just five years from now.
Put that in your calendar.
It provides a painful context for the budget wrangling taking place in Washington right now. It raises enormous questions about what the international security system is going to look like in just a handful of years. And it casts a deepening cloud over both the U.S. dollar and the giant Treasury market, which have been propped up for decades by their privileged status as the liabilities of the world’s hegemonic power.
Download your FREE Guide to Agriculture Investment here
According to the IMF forecast, which was quietly posted on the Fund’s website just two weeks ago, whoever is elected U.S. president next year — Obama? Mitt Romney? Donald Trump? — will be the last to preside over the world’s largest economy.
Most people aren’t prepared for this. They aren’t even aware it’s that close. Listen to experts of various stripes, and they will tell you this moment is decades away. The most bearish will put the figure in the mid-2020s.
But they’re miscounting. They’re only comparing the gross domestic products of the two countries using current exchange rates.
That’s a largely meaningless comparison in real terms. Exchange rates change quickly. And China’s exchange rates are phony. China artificially undervalues its currency, the renminbi, through massive intervention in the markets.
Download your FREE Guide to Agriculture Investment here
The comparison that really matters
In addition to comparing the two countries based on exchange rates, the IMF analysis also looked to the true, real-terms picture of the economies using “purchasing power parities.” That compares what people earn and spend in real terms in their domestic economies.
Under PPP, the Chinese economy will expand from $11.2 trillion this year to $19 trillion in 2016. Meanwhile the size of the U.S. economy will rise from $15.2 trillion to $18.8 trillion. That would take America’s share of the world output down to 17.7%, the lowest in modern times. China’s would reach 18%, and rising.
Just 10 years ago, the U.S. economy was three times the size of China’s.
Naturally, all forecasts are fallible. Time and chance happen to them all. The actual date when China surpasses the U.S. might come even earlier than the IMF predicts, or somewhat later. If the great Chinese juggernaut blows a tire, as a growing number fear it might, it could even delay things by several years. But the outcome is scarcely in doubt.
Download your FREE Guide to Agriculture Investment here
This is more than a statistical story. It is the end of the Age of America. As a bond strategist in Europe told me two weeks ago, “We are witnessing the end of America’s economic hegemony.”
We have lived in a world dominated by the U.S. for so long that there is no longer anyone alive who remembers anything else. America overtook Great Britain as the world’s leading economic power in the 1890s and never looked back.
And both those countries live under very similar rules of constitutional government, respect for civil liberties and the rights of property. China has none of those.
Download your FREE Guide to Agriculture Investment here
Victor Cha, senior adviser on Asian affairs at Washington’s Center for Strategic and International Studies, told me China’s neighbors in Asia are already waking up to the dangers. “The region is overwhelmingly looking to the U.S. in a way that it hasn’t done in the past,” he said. “They see the U.S. as a counterweight to China. They also see American hegemony over the last half-century as fairly benign. In China they see the rise of an economic power that is not benevolent, that can be predatory. They don’t see it as a benign hegemony.”
The rise of China, and the relative decline of America, is the biggest story of our time. You can see its implications everywhere, from shuttered factories in the Midwest to soaring costs of oil and other commodities. Last fall, when I attended a conference in London about agricultural investment, I was struck by the number of people there who told stories about Chinese interests snapping up farmland and foodstuff supplies — from South America to China and elsewhere.
This is the result of decades during which China has successfully pursued economic policies aimed at national expansion and power, while the U.S. has embraced either free trade or, for want of a better term, economic appeasement.
Download your FREE Guide to Agriculture Investment here
“There are two systems in collision,” said Ralph Gomory, research professor at NYU’s Stern business school. “They have a state-guided form of capitalism, and we have a much freer former of capitalism.” What we have seen, he said, is “a massive shift in capability from the U.S. to China. What we have done is traded jobs for profit. The jobs have moved to China. The capability erodes in the U.S. and grows in China. That’s very destructive. That is a big reason why the U.S. is becoming more and more polarized between a small, very rich class and an eroding middle class. The people who get the profits are very different from the people who lost the wages.”
The next chapter of the story is just beginning.
U.S. spending spree won’t work
What the rise of China means for defense, and international affairs, has barely been touched on. The U.S. is now spending gigantic sums — from a beleaguered economy — to try to maintain its place in the sun. See: Pentagon spending is budget blind spot .
Download your FREE Guide to Agriculture Investment here
It’s a lesson we could learn more cheaply from the sad story of the British, Spanish and other empires. It doesn’t work. You can’t stay on top if your economy doesn’t.
Equally to the point, here is what this means economically, and for investors.
Some years ago I was having lunch with the smartest investor I know, London-based hedge-fund manager Crispin Odey. He made the argument that markets are reasonably efficient, most of the time, at setting prices. Where they are most likely to fail, though, is in correctly anticipating and pricing big, revolutionary, “paradigm” shifts — whether a rise of disruptive technologies or revolutionary changes in geopolitics. We are living through one now.
The U.S. Treasury market continues to operate on the assumption that it will always remain the global benchmark of money. Business schools still teach students, for example, that the interest rate on the 10-year Treasury bond is the “risk-free rate” on money. And so it has been for more than a century. But that’s all based on the Age of America.
Download your FREE Guide to Agriculture Investment here
No wonder so many have been buying gold. If the U.S. dollar ceases to be the world’s sole reserve currency, what will be? The euro would be fine if it acts like the old deutschemark. If it’s just the Greek drachma in drag ... not so much.
The last time the world’s dominant hegemon lost its ability to run things singlehandedly was early in the past century. That’s when the U.S. and Germany surpassed Great Britain. It didn’t turn out well.
Updated with IMF reaction
The International Monetary Fund has responded to my article.
In a statement sent to MarketWatch, the IMF confirmed the report, but challenged my interpretation of the data. Comparing the U.S. and Chinese economies using “purchase-power-parity,” it argued, “is not the most appropriate measure… because PPP price levels are influenced by nontraded services, which are more relevant domestically than globally.”
Download your FREE Guide to Agriculture Investment here
The IMF added that it prefers to compare economies using market exchange rates, and that under this comparison the U.S. “is currently 130% bigger than China, and will still be 70% larger by 2016.”
My take?
The IMF is entitled to make its case. But its argument raises more questions than it answers.
First, no one measure is perfect. Everybody knows that.
But that’s also true of the GDP figures themselves. Hurricane Katrina, for example, added to the U.S. GDP, because it stimulated a lot of economic activity — like providing emergency relief, and rebuilding homes. Is there anyone who seriously thinks Katrina was a net positive for the United States? All statistics need caveats.
Download your FREE Guide to Agriculture Investment here
Second, comparing economies using simple exchange rates, as the IMF suggests, raises huge problems.
Currency markets fluctuate. They represent international money flows, not real output.
The U.S. dollar has fallen nearly 10% against the euro so far this year. Does anyone suggest that the real size of the U.S. economy has shrunk by 10% in comparison with Europe over that period? The idea is absurd.
Download your FREE Guide to Agriculture Investment here
China actively suppresses the renminbi on the currency markets through massive dollar purchases. As a result the renminbi is deeply undervalued on the foreign-exchange markets. Just comparing the economies on their exchange rates misses that altogether.
Purchasing power parity is not a perfect measure. None exists. But it measures the output of economies in terms of real goods and services, not just paper money. That’s why it’s widely used to compare economies. The IMF publishes PPP data. So does the OECD. Many economists rely on them.
Download your FREE Guide to Agriculture Investment here
Source: MarketWatch
Brett Arends is a senior columnist for MarketWatch and a personal-finance columnist for The Wall Street Journal.
Private Investment in Agriculture to Double in Two Years
Download your FREE Agriculture Investment Guide here
Private investment in agriculture globally is expected to double to around $5 billion to $7 billion in two years, a farm consultancy executive said on Monday.
"What we are seeing right now is a lot of interest from institutional investors, private capital, pensions and endowment foundations to invest in real assets," said Chris Erickson, managing director of Boston-based farm consultancy HighQuest.
Download your FREE Agriculture Investment Guide here
"Farmland today globally provides a very interesting investment scenario," he told Reuters on the sidelines of an industry seminar in Singapore.
"Over the next couple of years you are looking at $5-7 billion of investment in agriculture globally," Erickson said, adding that the investment would be double that seen in the last two years.
Download your FREE Agriculture Investment Guide here
Source: Reuters
Private investment in agriculture globally is expected to double to around $5 billion to $7 billion in two years, a farm consultancy executive said on Monday.
"What we are seeing right now is a lot of interest from institutional investors, private capital, pensions and endowment foundations to invest in real assets," said Chris Erickson, managing director of Boston-based farm consultancy HighQuest.
Download your FREE Agriculture Investment Guide here
"Farmland today globally provides a very interesting investment scenario," he told Reuters on the sidelines of an industry seminar in Singapore.
"Over the next couple of years you are looking at $5-7 billion of investment in agriculture globally," Erickson said, adding that the investment would be double that seen in the last two years.
Download your FREE Agriculture Investment Guide here
Source: Reuters
Saturday 23 April 2011
Bloomberg: China Buys 50% of U.S. Soybean Stocks
Download your FREE Agricultural Investments and Farmland Investment Guide here.
Corn and soybeans rose on speculation that wet, cold weather across the U.S. Midwest will limit planting and reduce yields.
Fields from central Arkansas to Detroit may get as much as 8 inches (20 centimeters) of rain the next 10 days, keeping soils saturated, said Tim Bowden, a senior meteorologist for Planalytics Inc. in Berwyn, Pennsylvania. Farms from Nebraska to northern Indiana will receive as much as 4 inches of rain, and the cool weather will slow evaporation, Bowden said.
“The markets are focused on the extended planting delays developing in the Midwest,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “Farmers are already looking at shorter-season varieties,” which will yield less than normal, he said.
Download your FREE Agricultural Investments and Farmland Investment Guide here.
Corn futures for July delivery rose 4 cents, or 0.5 percent, to close at $7.445 a bushel at 1:15 p.m. on the Chicago Board of Trade. Prices have doubled in the past year, and on April 11 touched $7.8875, the highest since June 2008. Still, the commodity dropped 0.7 percent for the week. The CBOT will be closed tomorrow in observance of the Good Friday holiday.
Soybean futures for July delivery advanced 20.5 cents, or 1.5 percent, to $13.8975 a bushel in Chicago. The most-active futures gained 3.5 percent this week, after touching a three- week low of $13.2825 on April 14.
Soybeans also rose on increased U.S. sales to China, the world’s biggest importer and consumer, Schultz said. Rising sales of corn for delivery after Sept. 1 provided support, he said. The U.S. is the largest grower and exporter of both crops.
Download your FREE Agricultural Investments and Farmland Investment Guide here.
U.S. Exports Gain
U.S. exporters sold 348,960 metric tons of soybeans in the week ended April 14 for delivery before Aug. 31, more than double the 130,191 tons sold a week earlier, the U.S. Department of Agriculture said today. China bought more than 50 percent of the total.
Sales of corn for delivery after Sept. 1 totaled 243,908 tons, pushing the accumulated total to 3.132 million, four times higher than at the same time last year, USDA data show.
“The sales to China were a surprise with talk about cancelations this week,” Schultz said. “Overseas demand for this year’s corn crop is rising because of the weather problems.”
Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, government figures show.
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Source: Bloomberg
Corn and soybeans rose on speculation that wet, cold weather across the U.S. Midwest will limit planting and reduce yields.
Fields from central Arkansas to Detroit may get as much as 8 inches (20 centimeters) of rain the next 10 days, keeping soils saturated, said Tim Bowden, a senior meteorologist for Planalytics Inc. in Berwyn, Pennsylvania. Farms from Nebraska to northern Indiana will receive as much as 4 inches of rain, and the cool weather will slow evaporation, Bowden said.
“The markets are focused on the extended planting delays developing in the Midwest,” said Mark Schultz, the chief analyst for Northstar Commodity Investment Co. in Minneapolis. “Farmers are already looking at shorter-season varieties,” which will yield less than normal, he said.
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Corn futures for July delivery rose 4 cents, or 0.5 percent, to close at $7.445 a bushel at 1:15 p.m. on the Chicago Board of Trade. Prices have doubled in the past year, and on April 11 touched $7.8875, the highest since June 2008. Still, the commodity dropped 0.7 percent for the week. The CBOT will be closed tomorrow in observance of the Good Friday holiday.
Soybean futures for July delivery advanced 20.5 cents, or 1.5 percent, to $13.8975 a bushel in Chicago. The most-active futures gained 3.5 percent this week, after touching a three- week low of $13.2825 on April 14.
Soybeans also rose on increased U.S. sales to China, the world’s biggest importer and consumer, Schultz said. Rising sales of corn for delivery after Sept. 1 provided support, he said. The U.S. is the largest grower and exporter of both crops.
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U.S. Exports Gain
U.S. exporters sold 348,960 metric tons of soybeans in the week ended April 14 for delivery before Aug. 31, more than double the 130,191 tons sold a week earlier, the U.S. Department of Agriculture said today. China bought more than 50 percent of the total.
Sales of corn for delivery after Sept. 1 totaled 243,908 tons, pushing the accumulated total to 3.132 million, four times higher than at the same time last year, USDA data show.
“The sales to China were a surprise with talk about cancelations this week,” Schultz said. “Overseas demand for this year’s corn crop is rising because of the weather problems.”
Corn is the biggest U.S. crop, valued at $66.7 billion in 2010, followed by soybeans at $38.9 billion, government figures show.
Download your FREE Agricultural Investments and Farmland Investment Guide here.
Source: Bloomberg
Friday 22 April 2011
DGC Asset Management: Argentina to Limit Foreign farmland Ownership
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Argentine President Cristina Fernandez on Wednesday reiterated plans to limit the ability of foreigners to purchase farmland.
Fernandez said she would submit a bill to Congress this year to "protect the jurisdiction of land so it will continue to belong to the Argentine Republic."
Fernandez made a similar announcement on March 1. As she said back then, the bill will not be "xenophobic or chauvinistic."
In what seemed like a campaign speech, Fernandez told an arena full of supporters late Wednesday that Argentina won't be "inventing anything new" with this bill. Instead, she the bill will be similar to related laws already in place in other countries.
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Pressure has been building in Argentina to limit the amount of land that foreigners can buy, as record prices for grain and derivative products fuel concerns that deep-pocketed overseas investors might end up controlling a significant percentage of the country's farmland.
Last year, congressmen from across Argentina's political spectrum sponsored about 12 different bills that would have put limits on foreign land ownership.
Agriculture exports were largely responsible for Argentina's $12.06 billion trade surplus last year, while taxes on farm exports accounted for a significant percentage of the federal government's tax revenue.
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Argentina is the world leader in soymeal and soyoil exports, ranks No. 2 in corn exports, and third in soybeans. It is also one of the world's top beef exporters.
As global commodity prices soar, investors have increasingly looked to the fertile farmlands of Argentina and Brazil for investment opportunities.
That has helped fuel surging land prices in recent years. At the end of 2010, prime farmland in Argentina's Buenos Aires Province was selling for $15,000 a hectare (2.47 acres), according to local daily La Nacion. That is about double the price in 2007 and over five times prices in 2002 when the country was in the midst of an economic crisis.
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Argentina's northern neighbor, Brazil, has already taken steps to protect its national sovereignty over farmland. Last year, Brazil's former President Luiz Inacio Lula da Silva placed limits on foreign ownership.
In Argentina, about 7%, or 20 million hectares, of the country's productive farmland is in the hands of foreigners already, according to the Argentine Agrarian Federation.
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Source: Bloomberg
Argentine President Cristina Fernandez on Wednesday reiterated plans to limit the ability of foreigners to purchase farmland.
Fernandez said she would submit a bill to Congress this year to "protect the jurisdiction of land so it will continue to belong to the Argentine Republic."
Fernandez made a similar announcement on March 1. As she said back then, the bill will not be "xenophobic or chauvinistic."
In what seemed like a campaign speech, Fernandez told an arena full of supporters late Wednesday that Argentina won't be "inventing anything new" with this bill. Instead, she the bill will be similar to related laws already in place in other countries.
Download your FREE Farmland Investment and Agricultural Investment Guide here
Pressure has been building in Argentina to limit the amount of land that foreigners can buy, as record prices for grain and derivative products fuel concerns that deep-pocketed overseas investors might end up controlling a significant percentage of the country's farmland.
Last year, congressmen from across Argentina's political spectrum sponsored about 12 different bills that would have put limits on foreign land ownership.
Agriculture exports were largely responsible for Argentina's $12.06 billion trade surplus last year, while taxes on farm exports accounted for a significant percentage of the federal government's tax revenue.
Download your FREE Farmland Investment and Agricultural Investment Guide here
Argentina is the world leader in soymeal and soyoil exports, ranks No. 2 in corn exports, and third in soybeans. It is also one of the world's top beef exporters.
As global commodity prices soar, investors have increasingly looked to the fertile farmlands of Argentina and Brazil for investment opportunities.
That has helped fuel surging land prices in recent years. At the end of 2010, prime farmland in Argentina's Buenos Aires Province was selling for $15,000 a hectare (2.47 acres), according to local daily La Nacion. That is about double the price in 2007 and over five times prices in 2002 when the country was in the midst of an economic crisis.
Download your FREE Farmland Investment and Agricultural Investment Guide here
Argentina's northern neighbor, Brazil, has already taken steps to protect its national sovereignty over farmland. Last year, Brazil's former President Luiz Inacio Lula da Silva placed limits on foreign ownership.
In Argentina, about 7%, or 20 million hectares, of the country's productive farmland is in the hands of foreigners already, according to the Argentine Agrarian Federation.
Download your FREE Farmland Investment and Agricultural Investment Guide here
Source: Bloomberg
The Gaurdian: Farmland proves Top Draw for City Investors
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Applying Mark Twain's famous dictum, "Buy land, they're not making it anymore", City bankers are queuing up to spend their bonuses on farmland – cashing in on rising prices, improving yields and significant tax breaks.
Estate agents report a significant increase in interest from City professionals chasing a dwindling supply of land coming to market.
"Farmland has always been an attractive investment but at the moment it seems to be the flavour of the month," said Alex Lawson, director of farms and estates at estate agent Savills. "The interest from the City has been very significant for the last five to 10 years but where in the past the main driver has been the ambition to have a country manor, we are now seeing much greater interest in the bare land without a property."
Lifestyle buyers are being replaced by investors attracted by high returns on land. Over the last 11 years, farmland prices have outperformed equities by a considerable margin. Figures compiled by estate agent Knight Frank suggest that while the FTSE 100 index is still below its level at the start of 2000, the index of farmland prices has almost trebled in value.
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With growing concern about the security of food supply and the signs of an emerging global land grab, the attraction of farmland as an investment is clear. As the world population grows – and more acreage is devoted to crop for biofuel and to renewable energy projects such as photovoltaic plants and wind farms – so less land is available for food farming.
At the same time the strength of commodity prices has improved the historically low financial yield from investment in farming, which is providing a more stable underpinning for land prices.
"Commodity prices have done well," said Tom Raynham, an associate in farm and estate sales at Knight Frank. "With a long period of high prices then this ultimately flows through to the market."
He estimates that about a third of his clients are investors but notes that recent transactions have seen them in the majority.City bankers are well aware investment in farmland has considerable tax advantages. A farm's losses can be offset against their bonuses. There are also reliefs to shelter capital gains and, importantly, agricultural land is exempt from inheritance tax when simple conditions are met. With some land in the Cotswolds, a favourite retreat for the City, selling for £15,000 an acre, the IHT saving on a 1,000 acre farm at that price would be £6m.
Download your FREE Guide to Farmland Investment here
City investors in farmland are supported by a growing number of contract farmers who will work but not own the land. One Gloucestershire farmer farms 2,500 acres but does not own any of it. Negotiating the terms of the contract could be enough to secure the IHT relief.
The rise in farmland prices coincides with an improving outlook for farm profitability with arable farmers in particular benefiting from the rise in commodity prices. Many farmers missed out on much of that rise last year because they sold around 40% of their wheat crop at forward prices, but one Cotswolds farmer is said to have made a clear cash profit of £500,000 from his 5,000 acre farm last year.
Download your FREE Guide to Farmland Investment here
Source: Gaurdian
Applying Mark Twain's famous dictum, "Buy land, they're not making it anymore", City bankers are queuing up to spend their bonuses on farmland – cashing in on rising prices, improving yields and significant tax breaks.
Estate agents report a significant increase in interest from City professionals chasing a dwindling supply of land coming to market.
"Farmland has always been an attractive investment but at the moment it seems to be the flavour of the month," said Alex Lawson, director of farms and estates at estate agent Savills. "The interest from the City has been very significant for the last five to 10 years but where in the past the main driver has been the ambition to have a country manor, we are now seeing much greater interest in the bare land without a property."
Lifestyle buyers are being replaced by investors attracted by high returns on land. Over the last 11 years, farmland prices have outperformed equities by a considerable margin. Figures compiled by estate agent Knight Frank suggest that while the FTSE 100 index is still below its level at the start of 2000, the index of farmland prices has almost trebled in value.
Download your FREE Guide to Farmland Investment here
With growing concern about the security of food supply and the signs of an emerging global land grab, the attraction of farmland as an investment is clear. As the world population grows – and more acreage is devoted to crop for biofuel and to renewable energy projects such as photovoltaic plants and wind farms – so less land is available for food farming.
At the same time the strength of commodity prices has improved the historically low financial yield from investment in farming, which is providing a more stable underpinning for land prices.
"Commodity prices have done well," said Tom Raynham, an associate in farm and estate sales at Knight Frank. "With a long period of high prices then this ultimately flows through to the market."
He estimates that about a third of his clients are investors but notes that recent transactions have seen them in the majority.City bankers are well aware investment in farmland has considerable tax advantages. A farm's losses can be offset against their bonuses. There are also reliefs to shelter capital gains and, importantly, agricultural land is exempt from inheritance tax when simple conditions are met. With some land in the Cotswolds, a favourite retreat for the City, selling for £15,000 an acre, the IHT saving on a 1,000 acre farm at that price would be £6m.
Download your FREE Guide to Farmland Investment here
City investors in farmland are supported by a growing number of contract farmers who will work but not own the land. One Gloucestershire farmer farms 2,500 acres but does not own any of it. Negotiating the terms of the contract could be enough to secure the IHT relief.
The rise in farmland prices coincides with an improving outlook for farm profitability with arable farmers in particular benefiting from the rise in commodity prices. Many farmers missed out on much of that rise last year because they sold around 40% of their wheat crop at forward prices, but one Cotswolds farmer is said to have made a clear cash profit of £500,000 from his 5,000 acre farm last year.
Download your FREE Guide to Farmland Investment here
Source: Gaurdian
Financial Times: Farmland Investors Cash IN
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Agricultural land prices have continued to rise in the first three months of the year, driven by a shortage of supply and strong demand from private investors and farmers.
Farmland values in England rose by 2.7 per cent to £5,700 an acre in the first quarter of 2011, the largest first-quarter growth in arable land prices since 2008, according to Savills.
But even though land values have risen by around 100% over the past four years, agents believe there are still further strong price rises ahead. “Everyone is predicting considerable capital growth in land values over the years to come,” says Mark McAndrew, head of Strutt & Parker’s estates and farms department.
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Strutt & Parker is forecasting a 10 per cent increase in average arable land values this year – and as much as 50 per cent over the next five years.
This has led to a growing number of private investors buying UK farmland as an investment. “High crop prices and the fundamentals of feeding the world’s population continue to drive the interest in farmland as an investment asset,” says Ian Bailey of Savills.
Aside from capital gains, agricultural land can provide substantial tax advantages for private investors. Farmland qualifies for agricultural property relief, which means that all the land, as well as a portion of the farmhouse, is exempt from inheritance tax after two years – provided the owner actively farms the land or has a farming contract in place based on shared profit.
Owners of farms can also qualify for three capital gains reliefs: rollover relief, holdover relief and entrepreneurs’ relief, says Mike Harrison of Saffery Champness, the accountancy firm.
Private Property Search (PPS), a buying agent, says it has seen an increase in recent months of clients looking to purchase farms for investment purposes.
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Ian Hepburn of PPS says private investors typically buy farms in the “fashionable” counties of Berkshire, Oxfordshire, Hampshire, Wiltshire and Dorset.
By contrast, farmland in the eastern counties are more geared to commercial operators who are attracted to the quality of the farmland and the ability to maximise returns.
“These investors include funds wanting to invest in commercial farmland, Europeans wanting to expand their farming interests in the UK and the bigger commercial farms,” explains Hepburn.
However, the price of arable land varies significantly between these locations. “There’s a North/South divide in the farmland market, similar to what’s happening in the residential property market,” says McAndrew.
He says the most visible sign of this is the boundary between Cambridgeshire and Lincolnshire. According to McAndrew, a 500-acre plot of arable land in Cambridgeshire would cost around £8,000 per acre, while a similar plot in South Lincolnshire would cost around £6,500 per acre.
McAndrew says land prices in Northern England currently look cheap. “If I was a buyer, I would be half inclined to sell my 500 acres in Wiltshire and go and buy 1,000 acres in Northumberland if I could find it,” he says.
Download your FREE Farmland Investment Guide here
Source: Financial Times
Agricultural land prices have continued to rise in the first three months of the year, driven by a shortage of supply and strong demand from private investors and farmers.
Farmland values in England rose by 2.7 per cent to £5,700 an acre in the first quarter of 2011, the largest first-quarter growth in arable land prices since 2008, according to Savills.
But even though land values have risen by around 100% over the past four years, agents believe there are still further strong price rises ahead. “Everyone is predicting considerable capital growth in land values over the years to come,” says Mark McAndrew, head of Strutt & Parker’s estates and farms department.
Download your FREE Farmland Investment Guide here
Strutt & Parker is forecasting a 10 per cent increase in average arable land values this year – and as much as 50 per cent over the next five years.
This has led to a growing number of private investors buying UK farmland as an investment. “High crop prices and the fundamentals of feeding the world’s population continue to drive the interest in farmland as an investment asset,” says Ian Bailey of Savills.
Aside from capital gains, agricultural land can provide substantial tax advantages for private investors. Farmland qualifies for agricultural property relief, which means that all the land, as well as a portion of the farmhouse, is exempt from inheritance tax after two years – provided the owner actively farms the land or has a farming contract in place based on shared profit.
Owners of farms can also qualify for three capital gains reliefs: rollover relief, holdover relief and entrepreneurs’ relief, says Mike Harrison of Saffery Champness, the accountancy firm.
Private Property Search (PPS), a buying agent, says it has seen an increase in recent months of clients looking to purchase farms for investment purposes.
Download your FREE Farmland Investment Guide here
Ian Hepburn of PPS says private investors typically buy farms in the “fashionable” counties of Berkshire, Oxfordshire, Hampshire, Wiltshire and Dorset.
By contrast, farmland in the eastern counties are more geared to commercial operators who are attracted to the quality of the farmland and the ability to maximise returns.
“These investors include funds wanting to invest in commercial farmland, Europeans wanting to expand their farming interests in the UK and the bigger commercial farms,” explains Hepburn.
However, the price of arable land varies significantly between these locations. “There’s a North/South divide in the farmland market, similar to what’s happening in the residential property market,” says McAndrew.
He says the most visible sign of this is the boundary between Cambridgeshire and Lincolnshire. According to McAndrew, a 500-acre plot of arable land in Cambridgeshire would cost around £8,000 per acre, while a similar plot in South Lincolnshire would cost around £6,500 per acre.
McAndrew says land prices in Northern England currently look cheap. “If I was a buyer, I would be half inclined to sell my 500 acres in Wiltshire and go and buy 1,000 acres in Northumberland if I could find it,” he says.
Download your FREE Farmland Investment Guide here
Source: Financial Times
DGC Asset Management: Farmland and Timber Form part of a Well Diversified Investment Portfolio
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A diversified portfolio is more than stocks, bonds and cash reserves. It can be land — farmland or timberland.
An investment in land is more tangible and less volatile than equities, speakers at Thursday's Virginia Land Forum said.
"We get to deal with land, real dirt and real assets," said Dennis Moon, a managing director with U.S. Trust, an investment management company based in New York.
"From a U.S. Trust perspective, farm and timber are important ingredients to a well-diversified, long-term portfolio," said Tom Gates, moderator at the afternoon event at The Westin Richmond Hotel in Henrico County. The event drew about 130 land brokers and real estate attorneys from across the state.
Download your FREE Guide to Agricultural Investments and Farmland Investment here
Investments in land can provide the benefits of higher returns with lower risk than equities over the long term, meaning 15 years or more, Gates said.
William G. Barnett, a partner in Commonwealth Land, a division of Commonwealth Commercial Partners Inc. in Henrico, said the price for rural properties in Virginia of more than 100 acres peaked in 2005 at an average $3,000 per acre.
Prices fell and transactions bottomed out in 2009, but the industry is seeing signs of recovery, he said.
"We believe this is the best buying market with proper due diligence that we have experienced in our lifetime," Barnett said.
Download your FREE Guide to Agricultural Investments and Farmland Investment here
Sean M. Sullivan, a partner in the Raleigh, N.C., office of Richmond-based Williams Mullen, spoke on the challenges of investing in commercial land in light of new environmental regulations and the cost of compliance.
Some regulations have been challenged in the court as being beyond the authority of the Environmental Protection Agency, Sullivan said. "I would be surprised if there aren't more lawsuits."
Investor confidence has taken a pounding, Moon said. Commercial and residential real estate continues to feel the pain. Add in the trouble in the Middle East, surging gas prices and the devastating tsunami in Japan.
Download your FREE Guide to Agricultural Investments and Farmland Investment here
People want to know where they can put their money, Moon said.
He said farmland is a robust asset class, particularly with prices for corn, wheat and rice rising. The world population continues to grow, and emerging middle classes in China and India are fueling the need for more and better foods.
Moon said he sees no bubble in sight — "not for real core farmland that you can grow something on." Institutional investors see this investment class as providing a good, stable return, he said.
Moon said he doesn't have a crystal ball into what will happen with land for oil and gas drilling or exploration. "It's too much of a geopolitical issue."
He described ranch land as a funny asset. "There are ways to make money running livestock, but it takes quite a bit of an operation to do."
The recreational aspects of ranch land — hunting and fishing — can be a promising investment, he said.
Doug Donnell, also with U.S. Trust, said the number of timberland transactions has dropped dramatically in the past couple of years, in light of the ailing housing industry and the reduced demand for lumber. "The markets are simply difficult right now."
He said he is bullish for the long term. "We think now is a great time to acquire timberland. Not everyone feels that way."
Download your FREE Guide to Agricultural Investments and Farmland Investment here
Source: Richmond Times Dispatch
A diversified portfolio is more than stocks, bonds and cash reserves. It can be land — farmland or timberland.
An investment in land is more tangible and less volatile than equities, speakers at Thursday's Virginia Land Forum said.
"We get to deal with land, real dirt and real assets," said Dennis Moon, a managing director with U.S. Trust, an investment management company based in New York.
"From a U.S. Trust perspective, farm and timber are important ingredients to a well-diversified, long-term portfolio," said Tom Gates, moderator at the afternoon event at The Westin Richmond Hotel in Henrico County. The event drew about 130 land brokers and real estate attorneys from across the state.
Download your FREE Guide to Agricultural Investments and Farmland Investment here
Investments in land can provide the benefits of higher returns with lower risk than equities over the long term, meaning 15 years or more, Gates said.
William G. Barnett, a partner in Commonwealth Land, a division of Commonwealth Commercial Partners Inc. in Henrico, said the price for rural properties in Virginia of more than 100 acres peaked in 2005 at an average $3,000 per acre.
Prices fell and transactions bottomed out in 2009, but the industry is seeing signs of recovery, he said.
"We believe this is the best buying market with proper due diligence that we have experienced in our lifetime," Barnett said.
Download your FREE Guide to Agricultural Investments and Farmland Investment here
Sean M. Sullivan, a partner in the Raleigh, N.C., office of Richmond-based Williams Mullen, spoke on the challenges of investing in commercial land in light of new environmental regulations and the cost of compliance.
Some regulations have been challenged in the court as being beyond the authority of the Environmental Protection Agency, Sullivan said. "I would be surprised if there aren't more lawsuits."
Investor confidence has taken a pounding, Moon said. Commercial and residential real estate continues to feel the pain. Add in the trouble in the Middle East, surging gas prices and the devastating tsunami in Japan.
Download your FREE Guide to Agricultural Investments and Farmland Investment here
People want to know where they can put their money, Moon said.
He said farmland is a robust asset class, particularly with prices for corn, wheat and rice rising. The world population continues to grow, and emerging middle classes in China and India are fueling the need for more and better foods.
Moon said he sees no bubble in sight — "not for real core farmland that you can grow something on." Institutional investors see this investment class as providing a good, stable return, he said.
Moon said he doesn't have a crystal ball into what will happen with land for oil and gas drilling or exploration. "It's too much of a geopolitical issue."
He described ranch land as a funny asset. "There are ways to make money running livestock, but it takes quite a bit of an operation to do."
The recreational aspects of ranch land — hunting and fishing — can be a promising investment, he said.
Doug Donnell, also with U.S. Trust, said the number of timberland transactions has dropped dramatically in the past couple of years, in light of the ailing housing industry and the reduced demand for lumber. "The markets are simply difficult right now."
He said he is bullish for the long term. "We think now is a great time to acquire timberland. Not everyone feels that way."
Download your FREE Guide to Agricultural Investments and Farmland Investment here
Source: Richmond Times Dispatch
Thursday 21 April 2011
Agrimoney: Grain Stock to Remain Low, Demand High, Prices High in 2011
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Grains gurus have slashed hopes for any recovery in world grain inventories next season, lifting forecasts for consumption at a time when weather is threatening crops in many major producing nations.
The International Grains Council, which a month ago pegged the production deficit in grains in 2011-12 at 3m tonnes, on Wednesday lifted its estimate to 10m tonnes.
The deficit will lower stocks to a four-year low of 334m tonnes, representing 18.4% of consumption, down from 23% two seasons ago, when readier supplies accelerated a fall in grain prices.
"A further downturn in world carryover stocks is likely," the IGC.
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Less Than Ideal Conditions
The forecasts helped a rally in grain prices which took Chicago wheat for May back over $8 a bushel at one point, and saw London's May contract hit a record high of £222.00 a tonne.
However, the rally foundered as weather forecasts introduced drier weather into the outlook for major US corn areas, where chances had looked dim of getting sowings wrapped up anywhere near May 10, seen as the cut-off date after which yields suffer.
"Latest extended outlooks have turned drier and could allow the farmers in the fields in early May," Benson Quinn Commodities said.
While the broker, for wheat, noted continued "dry conditions in US, the European Union, Russia and China" – four of the world's top five producers – and snow in North American areas gearing up for spring wheat plantings, corn prices lost 2% in Chicago, dragging US wheat into negative territory by the close.
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'Very low supplies'
The IGC flagged the threats to wheat production in cutting by 1m tonnes to 672m tonnes its estimate for the world harvest in 2011-12.
"Less-than-ideal conditions for some crops lower the projection of world wheat production," the council said, adding that "adversely dry conditions and a delayed start to spring seeding in parts of the northern hemisphere may affect the final outcome".
But it highlighted world corn inventories as set to prove particularly thin in 2011-12, falling for a third successive season, this time by 8m tonnes.
"Unless the US maize [corn] crop exceeds all expectations, supplies of this grain will remain very low," despite better prospects for the European Union crop this year, and a likely switch by livestock farmers to wheat in the face of high corn prices.
Indeed, IGC analysts lifted further their estimate for corn consumption by US ethanol plants.
They also highlighted concerns about "dwindling supplies" of high-protein milling wheat, following rain damage to last year's Australian, Canadian and German cropsDownload your FREE guide to Agricultural Investment and Farmland Investment here.
Source: Agrimoney
DGC Asset Management: Farmland Investment - Food Security or Profiteering?
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Punjab, India’s government is considering buying or leasing millions of acres of land in Central and South America, where Punjabi farmers already cultivate tens of thousands of acres. The purpose: to grow crops that will help feed India’s 1.1 billion people.
North of Buenos Aires, Argentina, a Japanese company is growing corn and soybeans for shipment back to Japan. In Africa, a Japanese aid agency works with partners from Brazil and Mozambique to convert part of Guinea’s vast savannah into corn, soybean and cotton production.
A leading Malaysian palm-oil producer is looking at plans for a 300,000-hectare (720,000-acre) palm-oil plantation in Cameroon.
Bahrain currently produces bananas on 2,400 acres in the Philippines. Kuwait is interested in another 2,400 acres there for rice production. Saudi investors are negotiating for an additional 2,400 acres for aquaculture and are already pumping money into a 12,000-acre project to grow basmati rice, corn, bananas and pineapple.
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In Mongolia, South Korea has bought more than 800,000 acres to develop “an overseas food base” to procure more food resources.
In Romania, nearly 2.4 million acres of farmland are now foreign-owned – about 12% of the country’s base farmland.
Demand for good agricultural land has exploded around the globe. Before 2008, global farmland expanded on average by fewer than 10 million acres annually, but expansion plans in 2009 totaled more than 100 million acres, according to the World Bank. More than 70% of the demand has been in Africa, where Ethiopia, Mozambique, Sudan and other countries have transferred millions of acres to investors.
After easing last year, the drumbeat of development resumed in 2011, as evidenced by the press reports above.
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Details vary from case to case – for example, some deals are by governments and others by groups of foreign investors – but most examples involve richer countries with large populations and limited agricultural resources attempting to improve their food security by controlling land and agricultural production in poorer, less developed nations.
That’s no surprise to Robert Thompson, former director of rural development at the World Bank.
“Nothing will bring a government down faster than hungry people,” says Thompson. “I think the most important crisis occurred in 2008 when a number of exporting countries went to either taxing or banning exports, and food importers like China began to get nervous about food availability.”
He notes that when India halted rice exports in 2008, the Philippines panicked, paying exorbitant prices to lock up any available supplies of rice in the free market. “They decided they would pay any price rather than face shortages.
“If a country can’t supply its food domestically, it wants assurances that supplies will be there through thick and thin and that exporting countries will allow trade to flow,” he says.
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Spiking food prices in 2007-2008 and again this year “has generated more concern to get (world) agricultural development higher on the agenda. In the 1960s and 1970s it used to be a priority. In the 1980s 25% of U.S. foreign aid/year was for development. That was down to just 1% a year ago,” Thompson notes.
Not surprisingly, there’s also a good deal of opposition to the sales boom, often characterized by opponents as a “land grab.”
In Romania, the Agricultural Producers Associations League has lobbied against land sales to state-owned foreign investment funds.
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Brazil is preparing rules to block foreign governments, state-owned companies and speculators from buying agricultural land, although it intends to allow sales to “genuine” private investors.
Thompson notes that South Korean efforts to buy land in Madagascar were blocked when public pressure forced Madagascar’s government to cancel the deal.
There’s even a website, http://farmlandgrab.org, chronicling press reports on the issue.
In practice, sale results are mixed. Many announced deals have never been implemented, or plans have been scaled back due to everything from changing prices to inadequate infrastructure, technology and institutions. The World Bank determined that as of last September, actual farming had started on only 21% of the announced deals.
In other instances, development efforts have dislocated local farming communities, leading to instability and fueling concerns that the purchases are another form of colonialism.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: Corn and Soybean Digest
Punjab, India’s government is considering buying or leasing millions of acres of land in Central and South America, where Punjabi farmers already cultivate tens of thousands of acres. The purpose: to grow crops that will help feed India’s 1.1 billion people.
North of Buenos Aires, Argentina, a Japanese company is growing corn and soybeans for shipment back to Japan. In Africa, a Japanese aid agency works with partners from Brazil and Mozambique to convert part of Guinea’s vast savannah into corn, soybean and cotton production.
A leading Malaysian palm-oil producer is looking at plans for a 300,000-hectare (720,000-acre) palm-oil plantation in Cameroon.
Bahrain currently produces bananas on 2,400 acres in the Philippines. Kuwait is interested in another 2,400 acres there for rice production. Saudi investors are negotiating for an additional 2,400 acres for aquaculture and are already pumping money into a 12,000-acre project to grow basmati rice, corn, bananas and pineapple.
Download your FREE Agriculture Investment and Farmland Investment Guide here
In Mongolia, South Korea has bought more than 800,000 acres to develop “an overseas food base” to procure more food resources.
In Romania, nearly 2.4 million acres of farmland are now foreign-owned – about 12% of the country’s base farmland.
Demand for good agricultural land has exploded around the globe. Before 2008, global farmland expanded on average by fewer than 10 million acres annually, but expansion plans in 2009 totaled more than 100 million acres, according to the World Bank. More than 70% of the demand has been in Africa, where Ethiopia, Mozambique, Sudan and other countries have transferred millions of acres to investors.
After easing last year, the drumbeat of development resumed in 2011, as evidenced by the press reports above.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Details vary from case to case – for example, some deals are by governments and others by groups of foreign investors – but most examples involve richer countries with large populations and limited agricultural resources attempting to improve their food security by controlling land and agricultural production in poorer, less developed nations.
That’s no surprise to Robert Thompson, former director of rural development at the World Bank.
“Nothing will bring a government down faster than hungry people,” says Thompson. “I think the most important crisis occurred in 2008 when a number of exporting countries went to either taxing or banning exports, and food importers like China began to get nervous about food availability.”
He notes that when India halted rice exports in 2008, the Philippines panicked, paying exorbitant prices to lock up any available supplies of rice in the free market. “They decided they would pay any price rather than face shortages.
“If a country can’t supply its food domestically, it wants assurances that supplies will be there through thick and thin and that exporting countries will allow trade to flow,” he says.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Spiking food prices in 2007-2008 and again this year “has generated more concern to get (world) agricultural development higher on the agenda. In the 1960s and 1970s it used to be a priority. In the 1980s 25% of U.S. foreign aid/year was for development. That was down to just 1% a year ago,” Thompson notes.
Not surprisingly, there’s also a good deal of opposition to the sales boom, often characterized by opponents as a “land grab.”
In Romania, the Agricultural Producers Associations League has lobbied against land sales to state-owned foreign investment funds.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Brazil is preparing rules to block foreign governments, state-owned companies and speculators from buying agricultural land, although it intends to allow sales to “genuine” private investors.
Thompson notes that South Korean efforts to buy land in Madagascar were blocked when public pressure forced Madagascar’s government to cancel the deal.
There’s even a website, http://farmlandgrab.org, chronicling press reports on the issue.
In practice, sale results are mixed. Many announced deals have never been implemented, or plans have been scaled back due to everything from changing prices to inadequate infrastructure, technology and institutions. The World Bank determined that as of last September, actual farming had started on only 21% of the announced deals.
In other instances, development efforts have dislocated local farming communities, leading to instability and fueling concerns that the purchases are another form of colonialism.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: Corn and Soybean Digest
Wednesday 20 April 2011
Bloomberg: China's Agriculture Story for Investors - Think Global Farmland
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Across the road from Zhao Yuanyi’s wheat field in China s Shandong province, Chonche Group is expanding a rail-car factory on what used to be 227 hectares of farms. Nearby, Geely Automotive makes sedans on an 87 hectare site that four years ago was covered by crops.
The factories sprawling from Jinan city, 350 kilometers (220 miles) south of Beijing, put Zhao on the front line of a clash between a policy of food self-sufficiency and industrial growth that made China the world’s second-biggest economy. Industrialization is winning, signaling prices for crops like wheat and corn will rise as China is increasingly unable to feed itself and vies for supplies on global markets.
“This year, maybe next, they’ll develop my field,” Zhao, 63, explains as he stands beneath a China Mobile Ltd. cell-phone tower on the edge of the land he’s tended all his life. The local government will buy his land, paying compensation through an annual allowance of 1,800 yuan ($276) per mu, which amounts to about 2,700 yuan for each person in the village.
Download your FREE Guide to Agricultre Investments and Farmland Investment here
China’s farmland shrank by 8.33 million hectares (20.6 million acres) in the past 12 years, the Chinese Premier's top agriculture adviser Chen Xiwen told reporters March 24. Land under cultivation has already fallen almost to the government’s 120 million hectare limit after being consumed by apartments, factories, desertification and a forestation campaign. Drought has also hit the country’s main wheat-growing region.
“China’s increased demand for agricultural commodities will mean an increase in prices for the entire world market,” said David Stroud, chief executive officer of New York-based hedge fund TS Capital Partners. “China can outlast any other bidders for the commodities it desires.”
Wheat futures in Chicago may average $8.05 a bushel this quarter, 89 percent higher than the past year’s low, as farmers struggle to rebuild global stockpiles, according to Rabobank International’s Agri Commodities Monthly e-mailed April 18. Corn futures may reach a record, jumping to as high as $10 a bushel, Alex Bos, an analyst at Macquarie Group Ltd. said April 6.
Download your FREE Guide to Agricultre Investments and Farmland Investment here
“As China continues to grow, demand and supply will struggle to keep up,” said Aban Ofon, a Singapore-based commodities analyst at Standard Chartered Plc. “This would be a problem for any country. For China, the world’s biggest consumer and producer, a small deficit can result in huge demand for imports.”
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Rising food prices cause riots and civil conflict, and widen the gap between rich and poor, according to an IMF working paper by economists Rabah Arezki and Markus Brueckner published last month on the organization’s website. World Bank President Robert Zoellick said in February that the price surge was “an aggravating factor” in uprisings sweeping the Middle East.
Hong Kong-listed Geely and closely held Chonche are using land that China needs to offset shortfalls in more developed areas. The spread of cities and factories in wetter grain- growing coastal regions such as Jiangsu and Zhejiang has put more pressure on drier provinces like Hebei and Shandong.
"Food production is increasingly being focused in northern areas that have water shortages,” agricultural adviser Chen wrote in December . That’s “very worrying for Food security.”
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Scope for raising yields my be limited as wheat farmers in China are already 51 percent more productive than their American counterparts per land area, according to data from the Department of Agriculture in Washington.
While investment in irrigation and technology such as genetically modified crops may boost that, land and water shortages and migration of labor to cities is putting grain production “on a shaky base,” said Qian Keming, head of the Agriculture Ministry’s market and economic information division.
“With rising living standards, and more consumption of meat, eggs and dairy produce, grain consumption is inevitably on the rise,” Qian said.
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Archer Daniels Midland Co., Bunge Ltd and Cargill Inc. were among U.S. food companies that in January won $6.68 billion of deals to supply China with soybeans, the U.S. Soybean Export Council said.
China’s imported food as a percentage of domestic consumption is “tiny” at about 3 percent, said Frediric Neumann , a Hong Kong-based economist for HSBC Holdings Plc. “If you doubled that to 6 percent, that implies enormous purchases on the world market. The guy with the most financial firepower is going to drive up the price and smaller countries are just going to have to cough up.”
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Soybean futures in Chicago are up about 37 percent in the past year. Wheat is up 70 percent, while corn more than doubled.
By 2015, 51.5 percent of China’s population will live in towns and cities, Wen said in March. That’s up from 36 percent in 2000, World Bank data show. China’s population is currently more than 1.3 billion.
Growth of cities in China is part of a global trend pushing up food prices, said Jeffrey Currie, London-based head of commodities research at Goldman Sachs Group Inc.
With acceleration in demand because of “urbanization and the shift in diet to more protein, we need to grow more acreage,” Currie said in February in Hong Kong . The trouble is, “we have a finite amount.”
Download your FREE Guide to Agricultre Investments and Farmland Investment here
The Land Ministry said there were 53,000 cases of illegal land use in 2010, including factories, industrial parks and golf courses. Demand for land was more than double the 400,000 hectares the government allocated, according to the ministry.
Local governments made 2.7 trillion yuan in 2010 selling rights to farmland for non-agricultural purposes, with total land sales constituting 60 to 70 percent of revenue, according to Landesa, a Seattle-based organization that works to secure land rights for the poor.
A few villages north of Zhao’s field, Zhao Daochun, 43 and who is no relation, was supervising a team of 10 men building a factory on what used to be 2 hectares of fields. His boss wouldn’t tell him what the building would be used for, he said.
Download your FREE Guide to Agricultre Investments and Farmland Investment here
“The officials don’t give a damn if the business is profitable,” Hu said. “They just want to receive kickbacks from investors who get the money from banks and probably don’t care much about profitability either.”
“I don’t know what I’ll do” once the land has been rezoned, said Zhao Yuanyi.
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Source: Bloomberg
Across the road from Zhao Yuanyi’s wheat field in China s Shandong province, Chonche Group is expanding a rail-car factory on what used to be 227 hectares of farms. Nearby, Geely Automotive makes sedans on an 87 hectare site that four years ago was covered by crops.
The factories sprawling from Jinan city, 350 kilometers (220 miles) south of Beijing, put Zhao on the front line of a clash between a policy of food self-sufficiency and industrial growth that made China the world’s second-biggest economy. Industrialization is winning, signaling prices for crops like wheat and corn will rise as China is increasingly unable to feed itself and vies for supplies on global markets.
“This year, maybe next, they’ll develop my field,” Zhao, 63, explains as he stands beneath a China Mobile Ltd. cell-phone tower on the edge of the land he’s tended all his life. The local government will buy his land, paying compensation through an annual allowance of 1,800 yuan ($276) per mu, which amounts to about 2,700 yuan for each person in the village.
Download your FREE Guide to Agricultre Investments and Farmland Investment here
China’s farmland shrank by 8.33 million hectares (20.6 million acres) in the past 12 years, the Chinese Premier's top agriculture adviser Chen Xiwen told reporters March 24. Land under cultivation has already fallen almost to the government’s 120 million hectare limit after being consumed by apartments, factories, desertification and a forestation campaign. Drought has also hit the country’s main wheat-growing region.
“China’s increased demand for agricultural commodities will mean an increase in prices for the entire world market,” said David Stroud, chief executive officer of New York-based hedge fund TS Capital Partners. “China can outlast any other bidders for the commodities it desires.”
Price Forecasts
Investors should bet on crops in shortest supply in China, with wheat and corn offering the best opportunities, he said.Wheat futures in Chicago may average $8.05 a bushel this quarter, 89 percent higher than the past year’s low, as farmers struggle to rebuild global stockpiles, according to Rabobank International’s Agri Commodities Monthly e-mailed April 18. Corn futures may reach a record, jumping to as high as $10 a bushel, Alex Bos, an analyst at Macquarie Group Ltd. said April 6.
Download your FREE Guide to Agricultre Investments and Farmland Investment here
“As China continues to grow, demand and supply will struggle to keep up,” said Aban Ofon, a Singapore-based commodities analyst at Standard Chartered Plc. “This would be a problem for any country. For China, the world’s biggest consumer and producer, a small deficit can result in huge demand for imports.”
Riots, Poverty
A 5 percent shortfall in China’s overall grain harvest would potentially require 20 percent of current global grain exports to meet the country’s annual needs, Ofon said. Wheat in Chicago reached its highest level since 2008 in February on concern drought was damaging China’s crop, raising the risk the country would drain the world market.Download your FREE Guide to Agricultre Investments and Farmland Investment here
Rising food prices cause riots and civil conflict, and widen the gap between rich and poor, according to an IMF working paper by economists Rabah Arezki and Markus Brueckner published last month on the organization’s website. World Bank President Robert Zoellick said in February that the price surge was “an aggravating factor” in uprisings sweeping the Middle East.
Hong Kong-listed Geely and closely held Chonche are using land that China needs to offset shortfalls in more developed areas. The spread of cities and factories in wetter grain- growing coastal regions such as Jiangsu and Zhejiang has put more pressure on drier provinces like Hebei and Shandong.
"Food production is increasingly being focused in northern areas that have water shortages,” agricultural adviser Chen wrote in December . That’s “very worrying for Food security.”
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Wen Focus
Wen has pledged to rein in food costs and has said that inflation, which threatens social stability, was the government’s top priority.Scope for raising yields my be limited as wheat farmers in China are already 51 percent more productive than their American counterparts per land area, according to data from the Department of Agriculture in Washington.
While investment in irrigation and technology such as genetically modified crops may boost that, land and water shortages and migration of labor to cities is putting grain production “on a shaky base,” said Qian Keming, head of the Agriculture Ministry’s market and economic information division.
“With rising living standards, and more consumption of meat, eggs and dairy produce, grain consumption is inevitably on the rise,” Qian said.
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Chicken, Pork
The Chinese ate 20 percent more chicken last year than in 2006, while pork consumption rose almost 11 percent, USDA data show. It takes 2 kilograms of feed to produce one kilogram of chicken, and about double that for pork, according to the Washington-based Earth Institute Policy China, the world’s biggest grain producer, was a net exporter of soybeans until 1995. This year it’s forecast to import 57 million tons, or almost 60 percent of global trade in the oilseed used in animal-feed and tofu.Archer Daniels Midland Co., Bunge Ltd and Cargill Inc. were among U.S. food companies that in January won $6.68 billion of deals to supply China with soybeans, the U.S. Soybean Export Council said.
China’s imported food as a percentage of domestic consumption is “tiny” at about 3 percent, said Frediric Neumann , a Hong Kong-based economist for HSBC Holdings Plc. “If you doubled that to 6 percent, that implies enormous purchases on the world market. The guy with the most financial firepower is going to drive up the price and smaller countries are just going to have to cough up.”
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Global Shortage
Global food output will have to climb 70 percent between 2010 and 2050 as the world population swells to 9.1 billion people and rising incomes boost meat and dairy consumption, the UN’s FAO said last year.Soybean futures in Chicago are up about 37 percent in the past year. Wheat is up 70 percent, while corn more than doubled.
By 2015, 51.5 percent of China’s population will live in towns and cities, Wen said in March. That’s up from 36 percent in 2000, World Bank data show. China’s population is currently more than 1.3 billion.
Growth of cities in China is part of a global trend pushing up food prices, said Jeffrey Currie, London-based head of commodities research at Goldman Sachs Group Inc.
With acceleration in demand because of “urbanization and the shift in diet to more protein, we need to grow more acreage,” Currie said in February in Hong Kong . The trouble is, “we have a finite amount.”
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Illegal Use
China’s farmland per capita is less than half the world average, and one-sixth that of the U.S., according to China Comment, a Communist Party magazine. Actual land loss may be greater than the government’s numbers suggest, as local officials fudge figures and illegal use proliferates.The Land Ministry said there were 53,000 cases of illegal land use in 2010, including factories, industrial parks and golf courses. Demand for land was more than double the 400,000 hectares the government allocated, according to the ministry.
Local governments made 2.7 trillion yuan in 2010 selling rights to farmland for non-agricultural purposes, with total land sales constituting 60 to 70 percent of revenue, according to Landesa, a Seattle-based organization that works to secure land rights for the poor.
A few villages north of Zhao’s field, Zhao Daochun, 43 and who is no relation, was supervising a team of 10 men building a factory on what used to be 2 hectares of fields. His boss wouldn’t tell him what the building would be used for, he said.
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Forced to Sell
About 120 kilometers south, near Qufu, the home of Confucius, wheat farmer Hu Bo, 36, said officials forced villagers to sell about 33 hectares of land to build a coal- washing factory that’s now shuttered.“The officials don’t give a damn if the business is profitable,” Hu said. “They just want to receive kickbacks from investors who get the money from banks and probably don’t care much about profitability either.”
“I don’t know what I’ll do” once the land has been rezoned, said Zhao Yuanyi.
Download your FREE Guide to Agricultre Investments and Farmland Investment here
Source: Bloomberg
DGC Asset Management: Best UK farm Land Values Since 2008
Download your FREE Farm Land Investment Guide here
This continued demand is supported by the number of new applicants registering to buy farmland, which were 16% up during the first quarter of this year compared with the same period of 2010, the latest analysis from Savills shows.
Its Savills Farmland Value Survey shows that high crop prices and the fundamentals of feeding the world’s population continue to drive the interest in farmland as an investment asset, especially at a time when the performance of many alternative assets is muted.
Download your FREE Farm Land Investment Guide here
Across Great Britain average grade three arable land recorded growth of 2.3% during the first quarter of 2011 with the Eastern regions of England recording the strongest growth in values of 5%.
Grade three arable land values in England rose by 2.7% during the first quarter of this year to average £5,700 per acre as the effects of a growing demand from many types of buyers and a squeeze on supply took hold.
‘This continued demand is supported by the number of new applicants registering to buy farmland, which increased by 16% during the first quarter of this year compared with 2010,’ said Ian Bailey head of Savills rural research.
Download your FREE Farm Land Investment Guide here
The market was strongest in East Anglia, where the number of acres available to buy was less than half of that for the same time last year. This pushed up average values by 5% to £6,553 per acre, but where competition was strongest values achieved highs of £8,500 per acre for prime arable land in the region.
‘Across England, arable land values continue to record the strongest levels of growth. The thirst for productive, well located farmland has led to record prices; several sales of substantial blocks have achieved over £10,000 per acre and prime arable land is regularly achieving over £8,000 per acre,’ explained Alex Lawson director of Savills.
Download your FREE Farm Land Investment Guide here
The analysis also shows that supply levels continued to fall with 14,000 acres of new stock available during the first quarter in England and just 1,612 acres in Scotland. However, in England this trend was not consistent across all regions. Volumes nearly halved in East Anglia and the South West of England, but were substantially higher in the East and West Midlands and the North of England, where a number of smaller farms rather than a few large blocks became available.
‘We are standing by our forecast for between 10% and 15% growth for average land values.
Our research shows supply was constrained during the first quarter of 2011 with a 22% reduction in the volume of farmland marketed across Great Britain, compared with the same period of 2010,’ said Bailey.
In England, just under 13,500 acres were publicly marketed during the first quarter of 2011, around 1,000 acres fewer than for the same period of last year. However, this pattern was not consistent across all the English regions. Increased supply, albeit from a low base, was recorded in the North of England, East and West Midlands, where supply increased by 78%, 63% and 58% respectively.
Download your FREE Farm Land Investment Guide here
Although representing a relatively small number of farms, this increase in activity was generally made up of more farms, rather than larger farms coming to market. In Scotland just over 1,600 acres were publicly marketed in the first quarter of 2011 compared with just under 4,600 acres in the same period of 2010, a decrease of 65%.
Anecdotal evidence suggests that privately marketed farms have already this year made up a fairly significant part of the total farmland market activity, particularly in the Eastern counties.
Download your FREE Farm Land Investment Guide here
Source: Property Wire
This continued demand is supported by the number of new applicants registering to buy farmland, which were 16% up during the first quarter of this year compared with the same period of 2010, the latest analysis from Savills shows.
Its Savills Farmland Value Survey shows that high crop prices and the fundamentals of feeding the world’s population continue to drive the interest in farmland as an investment asset, especially at a time when the performance of many alternative assets is muted.
Download your FREE Farm Land Investment Guide here
Across Great Britain average grade three arable land recorded growth of 2.3% during the first quarter of 2011 with the Eastern regions of England recording the strongest growth in values of 5%.
Grade three arable land values in England rose by 2.7% during the first quarter of this year to average £5,700 per acre as the effects of a growing demand from many types of buyers and a squeeze on supply took hold.
‘This continued demand is supported by the number of new applicants registering to buy farmland, which increased by 16% during the first quarter of this year compared with 2010,’ said Ian Bailey head of Savills rural research.
Download your FREE Farm Land Investment Guide here
The market was strongest in East Anglia, where the number of acres available to buy was less than half of that for the same time last year. This pushed up average values by 5% to £6,553 per acre, but where competition was strongest values achieved highs of £8,500 per acre for prime arable land in the region.
‘Across England, arable land values continue to record the strongest levels of growth. The thirst for productive, well located farmland has led to record prices; several sales of substantial blocks have achieved over £10,000 per acre and prime arable land is regularly achieving over £8,000 per acre,’ explained Alex Lawson director of Savills.
Download your FREE Farm Land Investment Guide here
The analysis also shows that supply levels continued to fall with 14,000 acres of new stock available during the first quarter in England and just 1,612 acres in Scotland. However, in England this trend was not consistent across all regions. Volumes nearly halved in East Anglia and the South West of England, but were substantially higher in the East and West Midlands and the North of England, where a number of smaller farms rather than a few large blocks became available.
‘We are standing by our forecast for between 10% and 15% growth for average land values.
Our research shows supply was constrained during the first quarter of 2011 with a 22% reduction in the volume of farmland marketed across Great Britain, compared with the same period of 2010,’ said Bailey.
In England, just under 13,500 acres were publicly marketed during the first quarter of 2011, around 1,000 acres fewer than for the same period of last year. However, this pattern was not consistent across all the English regions. Increased supply, albeit from a low base, was recorded in the North of England, East and West Midlands, where supply increased by 78%, 63% and 58% respectively.
Download your FREE Farm Land Investment Guide here
Although representing a relatively small number of farms, this increase in activity was generally made up of more farms, rather than larger farms coming to market. In Scotland just over 1,600 acres were publicly marketed in the first quarter of 2011 compared with just under 4,600 acres in the same period of 2010, a decrease of 65%.
Anecdotal evidence suggests that privately marketed farms have already this year made up a fairly significant part of the total farmland market activity, particularly in the Eastern counties.
Download your FREE Farm Land Investment Guide here
Source: Property Wire
DGC Asset Management: Farmland Investment Outperforms Other Strategies
Download your FREE Agriculture Investment and Farmland Investment Guide here.
Rural Report - farmland values have survived the credit crunch
According to Knight Frank's latest Farmland Report resilience is part of what makes farmland so attractive as an investment and should help ensure values continue to rise steadily during 2011. The report highlights that:
Tom Raynham, of Knight Frank’s farm sales team, says: “When you look at the performance of other investments, such as the FTSE 100, the farmland market has been far less volatile and survived the credit crunch in much better shape. That hasn’t been lost on private investors and we have noticed a lot more interest in good quality arable land and farms, especially now that commodity prices have also started to increase.
“Wealthy individuals have always enjoyed owning land because of its amenity value, tax-planning benefits and as a long-term hedge against inflation, but now they are also starting to look more carefully at its potential to generate an annual return as well.
Download your FREE Agriculture Investment and Farmland Investment Guide here.
“Demand also continues to outstrip supply with relatively few potential sellers keen to test the market at the moment. Ironically, we have buyers across the country crying out for good properties. If interest rates rise it will be interesting to see whether more farms are put up for sale, but at the moment there are no signs of any significant increases this year.”
Clive Hopkins, head of farms and estates sales, comments: “Shortage of supply is also affecting the market for country estates, despite the current economic uncertainty. We still have a number of clients prepared to spend a lot of money on a really good estate. But at the very top of the market there isn’t really enough choice to draw buyers into the market. This makes people nervous about making an offer; they need the confidence of knowing that others are also making bids at similar levels.”
Download your FREE Agriculture Investment and Farmland Investment Guide here.
Source: Land Gazette
Rural Report - farmland values have survived the credit crunch
According to Knight Frank's latest Farmland Report resilience is part of what makes farmland so attractive as an investment and should help ensure values continue to rise steadily during 2011. The report highlights that:
- Farmland values rose by 3% in the first 3-months of the year and are now 11% higher than 12 months ago.
- The average price of agricultural land in England is now almost £6,000/acre, a record high.
- Farmland has performed far more strongly than many other asset classes over the past 10 years.
Tom Raynham, of Knight Frank’s farm sales team, says: “When you look at the performance of other investments, such as the FTSE 100, the farmland market has been far less volatile and survived the credit crunch in much better shape. That hasn’t been lost on private investors and we have noticed a lot more interest in good quality arable land and farms, especially now that commodity prices have also started to increase.
“Wealthy individuals have always enjoyed owning land because of its amenity value, tax-planning benefits and as a long-term hedge against inflation, but now they are also starting to look more carefully at its potential to generate an annual return as well.
Download your FREE Agriculture Investment and Farmland Investment Guide here.
“Demand also continues to outstrip supply with relatively few potential sellers keen to test the market at the moment. Ironically, we have buyers across the country crying out for good properties. If interest rates rise it will be interesting to see whether more farms are put up for sale, but at the moment there are no signs of any significant increases this year.”
Clive Hopkins, head of farms and estates sales, comments: “Shortage of supply is also affecting the market for country estates, despite the current economic uncertainty. We still have a number of clients prepared to spend a lot of money on a really good estate. But at the very top of the market there isn’t really enough choice to draw buyers into the market. This makes people nervous about making an offer; they need the confidence of knowing that others are also making bids at similar levels.”
Download your FREE Agriculture Investment and Farmland Investment Guide here.
Source: Land Gazette
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