Around 225, 000 people are exceeding to the global population every single clock, all of whom need food and fuel. At the same time, incomes in developing economies are rising, causing a shift toward a more respected and more resource powerful westernised slop based on meat. Considering that 1kg of meat requires the input of 7kg of grain as animal feed, this combination of more people and higher consumption per capita adds tremendous strain to current stretched agricultural productivity.
The amount of farmland on the planet is in fact falling. Urbanisation, soil degradation, water scarcity and climate change all associate to reduce the stock of land suitable for growing the essential crops we need.
In light of this on - going and increasing disparity between supplies of farmland and demand for agricultural commodities, investors are turning to farmland in order to capture financial gains as food prices rise and productive land becomes intrinsically more valuable.
There are a range of farmland investment strategies to consider, from simple acquisition of land and leasing to farmer, through to sharing crop revenues in a joint venture under a contract framing agreement. But certainly the most profitable agriculture investment strategy is greenfield development; the acquisition of land with agricultural potential and converting into productive agricultural assets through the establishment of infrastructure such as irrigation, storage facilities and road, as well as amending the soil profile to ensure maximum productivity.
Greenfield farmland developments add substantial capital value to previously unused land, as well as positively impacting the current black hole in agricultural productivity that leave over 1 billion people hungry around the world each year. Investors also benefit from on - going income from crop revenues as newly converted land produce an annual yield from the production of crops.
The majority of future growth is widely expected to come from developing regions including Asia, Africa and Latin America, where economic growth outpaces that of the west by a huge margin. It is these key growth regions that the appetite for agricultural commodities will grow the most. In fact, in Germany the population is expected to get smaller in the next 40 years, whilst in China the population is expected to expand by some 30 % in the same period.
It is fair to say then that agriculture investments based on the development of suitable land, in close proximity to key growth regions in Asia, Africa and Latin America offer investors the best opportunity to capture not only short term appreciation through development, but also long - term growth and income driven by population growth and rising incomes.
