The basics supporting farming investment are pretty easy to measure; as the global population expands we need extra food, to generate even more food we require extra farming land as this is the resource that supplies every one of the grain and wheats that we consume, and all of the space to graze the animals that end up on our plate. So we are managing a very standard concern of supply and need, if demand increases and supply can’t maintain, the value of the underlying resource rises, so let’s check out several of the essential indicators of supply and need for farming investment.
For 7 of the last eight years we have taken in extra grain than we have generated, bringing the international shop down to vital levels.
Given that 1961 the amount of agricultural land per person has actually dropped by 50% (0.42 hectares each to 0.21 hectares each in 2007).
The global populace is anticipated to grow by 9 billion by 2050.
Many brain trust and experts believe that we will need to increase the amount of agricultural land by 50% to support that growth, essentially an efficient area the size of greater London need to be located weekly.
In the last ten years basically no more land has been bought into manufacturing as environment modification, destruction and growth and a host of other aspects mean that there is little or no more new land we can use to farm.
The underlying asset that produces our food, the land, will certainly end up being more valuable as even more individuals demand food.
Agricultural land value surge when the food it creates can be sold for a greater cost, making possessing farmland more lucrative, and food prices go to a 40 year reduced, leaving room for around 400% cost rising cost of living. As a matter of fact a bushel of wheat cost around $27 in the early seventies and now costs simply $3.
Farmland in the UK has risen in value by 20% from June 2009 to June 2010, and 13% in 2010 alone according to the Knight Frank Farmland Index.
So the elements sustaining agriculture investment are sound and very plainly show an excellent photo for possible investment. But can we soak up cost rising cost of living? Well there are a myriad of research studies that inform us really clearly that as a population, we absorb raises in food rates nearly 100%, and sacrifice spending in other locations, so indeed, we can.