Tag Archives: green
These Farms Could Grow Your Wealth
Posted on June 10, 2013 by Juan Federico Fischer Uruguay has some of the most fertile soil in the world. The case for owning farmland as a strategy to safely grow or preserve your nest egg has never been stronger. Increasing populations and wealth in emerging economies is the primary driver. As people in these economies become richer, they eat more food. Drought (or too much rain) has caused havoc with harvests in major producers like Canada, the Ukraine and parts of Brazil in recent years. The countries producing food are restricting trade, as they fear shortages. Looking to the medium term, we can expect food prices to continue to trend up. And the best place to find productive farmland is Uruguay . With consistent appreciation and an annual cash return Uruguayan farmland is a great store of value in turbulent times. Nestling between Argentina, Brazil and the Atlantic Uruguay is peaceful, stable and has over 2.6 million acres of farmland under cultivation. Lying unused are more than 4 million acres suitable for cultivation. The land is mostly flat—perfect for the machinery needed. And water isn’t a problem. Much of the country sits on the world’s largest aquifer and rainfall is even and year-round. It’s easy to find good land. The country is among the most fertile in the world. Uruguay has non-degraded soil producing two crops a year and healthy grass-fed cattle. The country supplies 5% of global beef exports; it’s the 6th largest producer of soya beans…and the 4th biggest exporter of rice. The case gets stronger when you hear how free you are to sell your crops wherever and whenever you find a willing buyer. There are no export tariffs, or production quotas or other restrictions like there are in other parts of the world. There are also no limitations on what you—as a foreign buyer— can buy…and you are treated as a local under the law. It’s probably the easiest place for the individual farmland investor. It’s a passive, turnkey investment. You don’t need to know anything about farming. You can lease out the land for a cash rental paid up front, or you can hire a local farm management company that reports on operations directly to you. They’ll give you a business plan. Once you agree on that with them they will implement it on your behalf. The cost of land ranges from $900 to $5,000 per acre. If you buy land and lease it to a farmer you can expect a yield of around 4%. Go with a management company and you can expect a higher yield, perhaps around 6% to 8%. Here’s a recent example of what’s on offer: A farm in the western part of Uruguay near the colonial town of Colonia. This is where you’ll find some of the best land in Uruguay. It’s 120 acres and the price is $485,000—$4,041 an acre. Then there’s the appreciation potential farmland offers you. Over the last eight years, farmland has appreciated at an annual rate of above 15%. You can expect the appreciation to continue, at about 10% yearly. Continue reading
Invest In Farmland
By Anne Perks FARMLAND has out-performed both equities and commodities in terms of value growth and levels of volatility over the past 17 years, with momentum continuing into the first quarter of 2013, according to Chesterton Humberts’ latest rural research report. Since 1995, average farmland values have risen by 9.2 per cent per annum, well above equities (4.1%) and gilts (7.4%), while returns were much less volatile (12.4%) when compared to oil (51%) and gold (14.7%). This makes it one of the best performing asset classes in terms of low risk and high returns after gold. Chesterton Humberts has recently set up an index to monitor growth in agricultural estate values. According to the company’s new Agricultural Estates Index, which tracks quarterly changes in the value of a standard basket of agricultural estate types (from bare land parcels up to fully-equipped residential estates) with grades 1, 2 and 3 land only, average estate values rose by 0.4% in Q1 2013 to stand at £10,581 per acre. The biggest uplift was seen in the larger transactions, which are mainly driven by investors seeking opportunities to achieve worthwhile economies of scale. Overall, however, farmers remain the main buyer group as they seek to expand their existing acreage, followed by UK investors and private purchasers, including overseas buyers taking advantage of the current weakness of sterling. Andrew Pearce, head of Chesterton Humberts’ rural agency, explains: “Despite the weather failing to improve during the first quarter of 2013, there is certainly a compelling long-term case for investing in farmland. The main advantages, which include scarcity value, rising food demand and tax advantages, are set to continue for the foreseeable future. Additionally, the changing global weather patterns are likely to exert upwards pressure on food commodity prices, while technology will create longer-term cost savings and efficiencies.” Nick Barnes, head of research, said: “The combination of low volatility with its potential to generate long-term capital growth and income allied to potential tax benefits has demonstrated that agricultural estates outperform other assets, including equities and commodities, and have thus attracted a wide range of prospective purchasers. “Provided the regulatory and tax environment stays relatively benign, it is likely to be only a matter of time before the institutional funds become more involved in the sector again.” Chesterton Humberts is now forecasting that agricultural estate values will grow at a rate of five per cent per annum over the next five years due to a combination of the longerterm positive fundamentals of the sector and the supply/demand imbalance. This figure may well be exceeded in some local markets, where the availability of larger estates will drive growth in values. FACTFILE * Farmland is second only to gold in terms of longterm risk and return. * Average per acre agricultural estate values rose 0.4 per cent to £10,581 an acre in Q1 2013. * Investors are increasingly attracted to the sector’s low volatility and high growth track record. * Agricultural estate values are forecast to grow five per cent per annum between 2013-2017. Continue reading
Expert: 2013 Ohio Farmland Value Projected To Increase
Cropland values in Ohio increased in 2012 and are expected to continue on an upward trend in 2013 despite the drought that devastated growers this year. December 12, 2012 Cropland values in Ohio increased in 2012 and are expected to continue on an upward trend in 2013, despite the drought that devastated growers this year, an Ohio State University Extension expert said. Ohio cropland value rose 13.6% this year, with bare cropland averaging $5,000 an acre, said Barry Ward, production business management leader for OSU Extension. Ward, citing statistics from the Ohio Agriculture Statistics Service, expects the trend to continue next year, with “projected budgets for Ohio’s primary crops for 2013 showing the potential for strong profits.” This is true, he said, in spite of the drought of 2012, which devastated growers and producers across the country, particularly in the Midwest including Ohio. “We’re expecting the potential for profitability (next year) with corn looking like it will be king again,” Ward said. “We’ll have farmers with strong balance sheets, which will drive land values as well. “With those strong balance sheets in spite of the drought, many farmers will continue to be in the land buying mode.” Ward spoke last week during Ohio State University’s College of Food, Agricultural, and Environmental Sciences kickoff of its 2013 Agricultural Policy and Outlook series. The event initiates a series of county meetings to be held statewide next year. Dates and times for the meetings will be announced at a later date. OSU Extension is the outreach arm of the college. The December 3 event featured presentations from experts from the college’s Department of Agricultural, Environmental and Development Economics (AEDE), who discussed issues the food and agricultural community should expect in 2013, including information on policy changes, key issues and market behavior with respect to farm, food and energy resources, and the environment. Because of the moderate to severe drought conditions many growers experienced, profit margins were highly variable, said Ward, who is also an AEDE assistant extension professor. But crop insurance proceeds will alleviate some of the revenue shortfall and financial stress due to the drought Ward said, noting that the last five year period has resulted in “some of the most profitable years in the last 50 years of crop production.” “With many dollars and buyers chasing farmland, it isn’t surprising to see land values increase substantially in 2012,” Ward said. “Crop profitability along with low interest rates have been the primary drivers in the run-up in cropland values.” Depending on land production capabilities, returns to land are projected to be $204 to $489 per acre for Ohio corn next year, he said. Returns to Land for soybeans are projected to be $102 to $295, with Returns to Land for wheat projected at $122 to $288, Ward said. The projections are based on OSU Extension Ohio Enterprise Budgets, and assume current prices of inputs and present December and September and November 2013 forward contract prices, respectively, he said. OSU Extension has a long history of developing enterprise budgets that can be used as a starting point for producers in their budgeting process. Farmers can find enterprise budgets for 2013 here . The Website is offered by Ohio State University’s AEDE. The budgets are downloadable Excel spreadsheets. Users can input their production and price levels to calculate their numbers. The budgets feature color-coded cells that allow users to plug in numbers to easily calculate bottom lines for different scenarios. Source: Ohio Ag Connection Continue reading
