Out west, the demand is growing for farmland. According to Schuil & Associates (S&A), a farm sales firm in California, prices are strong for this type of land and getting stronger. “Farmland prices typically follow commodity prices,” says co-founder of S&A Michael Schuil. “When commodity prices are strong, the farmland prices are also strong.” He added that thanks to “healthy” commodity prices on items like citrus, dairy, nuts and grains, farmland prices are likely to be “on the rise” as well. With a growing buyer base exhibiting increasing interest in this type of land, more non-farmers investing in farmland in order to grow pensions and retirement funds and foreign buyers playing a larger role in the farmland sector, Schuil believes that 2011 “is a very good time for farm sellers.” He added that “if someone is considering selling their land, they should consider selling it now.”
The trend in California is just a small part of what investors and analysts are calling “The Global Land Grab,” which large investment groups and corporations are buying up farmland around the world and pushing prices skyward in the process. “Agriculture is one clear and unmistakable source of payoff for institutional investors,” says international nonprofit research and analysis organization GRAIN. The report indicates that while farmland averages about 1 to 3 percent of the average pension fund portfolio today, that number is expected to rise to 3 to 5 percent by 2015. This is “huge,” notes the report, given that “1 percent may amount to several billion dollars.”
Are you considering buying farmland? Do you think it is the relatively “safe” investment that analysts are claiming?
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