Each week Land Commodities’ research department scours the internet looking for newly released reports, academic papers and research with relevance to agri-investors. The most notable examples are summarised in a weekly roundup for the benefit of our clients and subscribers. Click on the links below for a summary and free download of any of these reports.
Recent years have seen an unprecedented level of investor interest in the agricultural sector, in everything from soft commodities to farmland. Farmland values in some regions like the US and parts of Europe have appreciated spectacularly, prompting concerns about asset bubbles. Are investors underestimating environmental and other risks that could cause unanticipated downward revaluations or even write-offs? This report maps out the risks that could affect asset values and assesses capital exposure across the agricultural supply chain in the coming years.
This paper charts the development of capital market involvement in the agricultural sector, in particular the increasing prominence of farmland as a portfolio investment. Total institutional investment in farmland stands at between $30 and $40 billion globally, but the average institution still allocates less than 1% to the asset class. For an insight into the trends and investment considerations that might continue to drive the financialization of farmland in the future.
According to the latest figures, the U.S. farmland bubble continues to inflate spurred on by historically low agricultural lending rates. Average US farm real estate values rose by 9.4% during the 2012-2013 reporting period. There are differences, however, at a state level and between different land types. For more detailed information on irrigated versus non-irrigated cropland and pastureland prices at a state-by-state level.
According to this report on trends in US farm lending, rising farmland values continue to contribute to higher farm real estate loan volumes. However, compared to the last reporting period, more agricultural bankers now expect farmland values to plateau in the coming months. Taken in conjunction with the recently more hawkish tone of the Fed, could this signal a slowdown in the credit fuelled farmland market?
This paper discusses the globalisation and financialization of food production, and the possible negative impacts in areas such as sustainability, ecological accountability, global food security, food price volatility and hunger. A thought provoking read for investors concerned about these issues and the public perceptions that surround them.
As government subsidies to the agricultural sector continue to rise across the globe, the pressure to increase financial support for farmers mounts in countries with minimal subsidy regimes. Could this represent a mid-to-long-term opportunity for investors in regions such as Australia whose agricultural sectors currently enjoy almost no subsidy support? This report discusses how even China, which until recently, taxed rather than supported farmers, is the latest emerging market producer to jump on subsidies bandwagon.