With farmland investment firmly on the radar of investors, from Sovereign Wealth Funds to small Private Investors, it is absolutely key to understand the fundamental limits to increasing the amount of global agricultural land, a factor that is limiting supply and making the arable land that we do have infinitely more valuable as time passes.
The majority of the usable land has already been cultivated, and a large proportion of the land that is remaining is either desert (or too dry for farming), ice (or too cold for farming) or forest land which acts as a crucial carbon sink in the fight against global warming. All of this essentially means that there is very little land left on Earth that is suitable for farming purposes, leaving a large question mark over food security on a global basis.
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At the Copenhagen Summit in December of last year, a new international agreement on emissions was signed at the United Nations Framework Convention on Climate Change. This effectively replaces the Kyoto Protocol and will increases the level of protection for forest land, another factor hat intrinsically limits future farmland expansion.
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As Agriculture and deforestation are already responsible for over a quarter of all greenhouse gases, those choosing to invest in farmland will be in possession of an asset that will always be in demand, with that demand increasing, but to coin a phrase, they truly aren't making it anymore!
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