When Land Is Like Oil
Oil still swirls in the Gulf of Mexico, and BP has spent more than $3 billion to clean up its mess. This figure doesn’t include the $20 billion fund for damages. Yet the country’s worst environmental disaster is unlikely to shutter Gulf oil drilling. For a nation where oil
consumption jumped 32% from 1970 to 2008 and domestic production fell 40%, offshore drilling remains the oil industry’s new frontier.
Just like oil, nothing says fundamentals like farmland. With a rising world population that will demand another 4 billion tons of food by 2030, arable land for efficient food generation is agriculture’s new frontier. Private equity is actively seeking farmland in the U.S. and around the world (check out "Funds Enter Farmland"). Investors are emerging from the economic downturn to bet on farmland that can act like a hedge against inflation while offering long-term returns.
Worldwide, Eastern European farms, as well as those in Africa and Australia, have emerged as financial opportunities. The World Bank and the United Nations Food and Agriculture Organization cited the trend in a report in January, noting a "sharp increase" in agricultural investments.
It’s why South America continues as a major investment platform.
Top Producer’s exclusive Frontier Study Tour in Brazil and Panama took an inside look at infrastructure expansion and land opportunities (see our coverage). Although Brazil has a long way to go, upgrades in roads and waterways and major expansion of the Panama Canal are enticing investors back to South America.
Critics call the current trend in farmland investments a modern-day land grab; investors say they are just buying up the world’s remaining arable land to turn it into efficient food supplies. The goal for agriculture is not to repeat the same mistakes as big oil. World agricultural development can’t get too greedy—it must be sustainable, both environmentally and economically. As we all learned with the BP oil spill crisis, our natural resources are our greatest assets.
Fresh Look. Speaking of resources, some of the best at Top Producer are our award-winning columnists, Jerry Gulke and John Phipps. Both farmers have penned columns for more than 15 years, offering up invaluable market advice and a perspective you’ll not find in any other farm magazine. Notice their fresh column photos and our more stream-lined, businesslike design that better supports Top Producer as the leading business publication in agriculture.
Like it? Hate it? I’d love your thoughts on the magazine, from its design to its content. Send me an e-mail anytime.
Top Producer, Summer 2010