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According to AP2, the $34.6 billion Swedish national pension fund, the business has entered into a joint venture with the $453 billion US pension giant, TIAA-CREF, to invest at least $500 million in grain producing farmland in the U.S., Australia and Brazil.
David Garner, Partner at agricultural and real estate investment consultancy DGC Asset Management (www.dgcassetmanagement.com ) said: "Farmland Investment is now well on the radar of large institutional investors seeking
stable, non-correlated returns. U.S. farmland returned 11.6% per annum between 1950 and 2008, with a much lower volatitlity than traditional asset classes."
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Many investors are now looking further afield than stocks, bonds and cash, with many choosing to allocate capital to agricultural land and timber assets in the hope of generating superior returns without altering the overall risk profile of a diversified portfolio.
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"Farmland investments in the UK have performed particularly well this last year as values have continued to rise and farmers have enjoyed bumber prices for their crops, whilst our greenfield development projects in South America have generated an annual cash income circa. 10% since 2007, even throughout the recent financial depression." Added Mr Garner.
Investing in agricultural land certainly shows the potential to provide a good store of wealth as land values are inextricably linked to inflation and rising food prices, yet acquiring such assets can be difficult with price of entry and operational expertise preventing many smaller investors from participating.
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Source: DGC Asset Management