Alternative Outlook

AS any savvy investor will know, land is the most valuable asset we have. Of the 30 per cent of the Earth’s surface which is land, just over half is used for agriculture.

However, with the global population rising fast, and large areas of farmland previously used for food production being transformed into fields of bio fuel crops, the pressure on our food supply is growing.

Even today’s top philanthropist, Bill Gates, has turned his attentions to the issue of global food shortages, redistributing funds from his Gates Foundation to the research, development and protection of agricultural lands and techniques.

Food and soft commodity prices have hit record highs with UK wheat prices reaching £200 per tonne in 2010. There is simply not enough food being produced to meet demand and with the OECD estimating that production must increase by 70 per cent before 2050 to satisfy global population growth, will farmland be new the green gold of 2012?

As a tangible asset, farmland is highly appealing to investors, especially those cautious of volatile stocks, shares and bonds. Investment in agricultural land is based simply on supply and demand and similarly to gold, has remained one of the most robust asset classes in recent times.

For years cash-rich and land-poor nations have been purchasing agricultural land in overseas shores such as the US, Australia, Russia and South American nations in order to protect themselves from food scarcity as well as enjoy the lucrative returns. And now this trend has sparked a desire for individual investors to own their slice of farmland.

Ray Withers, of international investment agency Property Frontiers, which specialises in alternative asset classes, said: “As an investor, I always consider the fundamental elements of supply and demand behind any investment. Today the pressure we place upon our land is vast and global food shortages are clearly apparent which suggests to me that investing in high performance agricultural land, in the right location and via the right investment structure would be a wise and ethical choice in 2012.”