Farmland Investments for Retail Investors

Large investors around the world – from pension funds to hedge funds and sovereign wealth funds – are all increasingly focused on investment in farmland. This article is about one reason individual investors should also consider agricultural investments.

One of the major reasons for our bullishness on agriculture investments is the availability of quality farmland. As the graph below from the UN Food and Agriculture Organization (FAO) clearly demonstrates, the amount of arable farmland has already shrunk and will continue to do so.

To take a more specific example of this trend. China currently contains 20pc of the world’s population, but only 7pc of its arable farmland. Unfortunately for the Chinese, China has already been losing arable farmland at an alarming rate. According to this article from the English language China Daily, the amount of arable land available for farmland investment in China has fallen sharply:

“Acute shortages of reserve farmland and water resources are now the main restraints for the country to ensure its food security, Zhang Ping, minister of the National Development and Reform Commission, said on Thursday while making a report to the top legislature.

“The cultivable land in the country sharply decreased from 130.04 million hectares in 1996 to 121.72 million hectares in 2008 due to rapid urbanization and natural disasters, figures from the National Bureau of Statistics show.

“Also, the current per capita cultivated farmland is about 0.092 hectares, which is only about 40 percent of the global average. Less than 4.7 million hectares in the country can be considered reserve farmland," Zhang told the legislature.

According to a report from agricultural consultancy Colvin and Co., the Chinese government estimates they need to maintain 120 million hectares for crop production until 2020 in order to be self-sufficient in grain production. Bank of America estimates that China’s arable land has already fallen below the 120 million hectare threshold and could decrease to 117 million hectares by 2015. They further note that due to pollution and development new opportunities for farm land investment by Chinese state-owned agriculture investment companies is diminishing rapidly.

Already, China is becoming a net importer of food. China will import some 1.7 million tons of corn this year, 5.8 million tons next year and as much as 15 million tons in 2014-2015.

The point here is not to overwhelm the reader with facts and figures about China, but to have investors think about the big picture. With US$3.1 trillion of reserves, when China wants or needs something, it goes out and buys it. Food and farmland investing are no exception. China has already been hungrily eyeing farmland investments in a variety of countries and regions, including Australia, Argentina, Russia, Brazil, Ukraine and more.

How to play the Chinese agricultural trend? The best way to do this is simply to make a farm land investment directly. Whilst it is true that historically the farmland asset class has been limited to institutional investors only, new opportunities have recently emerged for individuals to make direct farmland investments as well.

There are now farmland investment options for retail investors with investment minimums starting as low as £1,950 per acre (approximately $3,100) for quality farmland investment in Africa, making it easily accessible by individuals and a great way to diversify. There are also direct farmland investments for retail investors in Europe and elsewhere. All of these target yearly income payments of between 9-15%, whilst also allowing investors to share in the upside of any capital gains as well.

There are, of course, risks with any investment. However, if individual investors perform the proper and due-diligence and invest in the right structure with the right people and institution, farmland investment can be both safe and profitable and could make a wonderful addition to individuals’ portfolios.

Inflation Hedge Investments

As the western economies continue to stagnate to stagnate, the UK's central bank has just unveiled plans to launch another round of “Quantitative Easing” of about US$ 80 billion. We at Green World believe that Quantitative Easing (“QE”) is simply a polite term for “printing money”. The US FED is actively contemplating QE3 asd well. In practice, much of this will simply end up causing inflation through price increases in staples such as energy and food. Legendary investor Mark Faber believes massive inflation is in the future. We at Green World therefore strongly advocate that you consider adding inflation hedge investments to your portfolio. Inflation investments will not protect you in day-to-day life, but at least allow your finances to be hedged.

QE - Like Currency Debasement in the Roman Empire

As the crisis in the Eurozone continues to linger, central banks globally continue to use Quantitative Easing - QE or the printing of new money - in an effort to stabilize the economic situation. As Amrose Evans Pritchard pointed out in an article in the Daily Telegraph, the UK and US have used QE to inflate away some of the debt, which is a form of stealth default. Interestingly enough, this is not only a modern phenomonon, as currency debasement has occured as far back as the Roman Empire. As investors, all one can do to combat Governments' use of QE is to invest in "hard assets" such as farmland investments and timber investments as a hedge. Feel free to contact us at info@greenworldbvi.com to learn more.

Are You Looking for Alternative SIPP Investments to Ride Out the Storm?

If you do own a SIPP, it might well be worth it to consider alternatve investments in hard assets such as forestry and farmland. Assets such as Forestry and Farmland provide high current income, excellent capital growth prospects and can offer an excellent inflation hedge Perfect for riding out the storm of financial crisis. Below are the alternative investment options we offer:

Timber Investments

Farmland Investments

Low Carbon Investments

International Property Investments


Please e-mail greenworldbvi@hushmail.com for more detailed information on alternative investments available!

Farmland Investments: A Great New Asset Class for Retail Investors

We have been talking quite a bit in our other blog about the advantages of farmland as an investment for retail investors. In that regard, it might also be useful to summarize the advantages of farmland investments here as well:

1.High current income when interest rates for traditional savings accounts are close to zero
2.Very good medium to long-term prospects for capital gain due to the continued high prices of agricultural commodities
3.An excellent hedge against inflation as central banks inevitably turn to additional printing of money in response to the global financial crisis and a possible break-up of the Eurozone
4.Farmland provides diversification as it is not correlated to assets such as global stocks

GreenWorld BVI offers three farmland agricultural investments for retail investors:

Farmland investment in Africa
Farmland investment in europe
Farmland investment in Australia

Contact us at info@greenworldbvi.com for more information.

Jim Rogers in Sharp Clash with Marc Faber on Commodities

Jim Rogers has had quite a spat with his fellow investor Marc Faber. Faber recently said that he believed that the economic crisis would cause a big drop in commodity prices and that Rogers' was wrong for putting so much emphasis on commodities. Rogers replied sharply, stating that although there might be corrections in the commodities markets at times, the sector remained in a long-term upward trend. Rogers is extremely positive on farmland as an investment, and as Green World are also heavily involved in farmland investments, we were quite pleased to see Rogers sharp response to Faber. GreenWorld offers three farmland investments noted below - all target retail investors and are SIPP eligible investments - feel free to contact us at info@greenworldbvi.com for more information.

Farmland investment in Africa

Farmland investment in Europe

Australian farmland

China to Focus on Reducing Carbon Emissions - A Good Argument for Carbon Credit Investments

We just saw a very good article here. It looks like China is finally getting serious about making low carbon investments to reduce the amount of C)2 they give off. Given the severe environmental degradation in China, this is well overdue and is fantastic news for both China and the planet. Realistically, whatever the West may be willing to do to lower its emissions, unless and until China joins this effort very little progress will be made. China's actions and further plans will be well worth watching, but this is a good beginning to a difficult long-term problem. It also indicates to us that Green World's carbon credit investments are going to be increasingly valuable in the future.