The Economist is reporting that broad demographic trends are driving more and more investors, including sovereign funds, to consider investments related to ag land and increased productivity. “Institutional investors such as pension funds see farmland as fertile ground to plough, either doing their own deals or farming them out to specialist funds. Some act as landlords by buying land and leasing it out. Others buy plots of low-value land, such as pastures, and upgrade them to higher-yielding orchards. Investors who are keen on even bigger risks and rewards flock to places such as Brazil, Ukraine, and Zambia, where farming techniques are often still underdeveloped and potential productivity gains immense.”
It is worth noting that highly developed markets such as the U.S. and the U.K. still hold great appeal. “Farmland has been a great investment over the past 20 years, certainly in America, where annual returns of 12 percent caused some to dub it ‘gold with a coupon.’ In America and Britain, where tax incentives have distorted the market, it outperformed most major asset classes over the past decade, and with low volatility to boot.”
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