Tag Archives: press-releases
Expats Eye Foreign Farmland Investment
Taylor Scott International Continue reading
Should You Buy Farmland? Or Bonds? Or Oil? No!
This story appears in the June 24, 2013 issue of Forbes. Two areas investors should pare back on are bonds and farmland. And regarding energy, be extremely careful. Bonds have been overpriced since 2008, but that doesn’t mean the bubble won’t eventually burst. Debt instruments have already taken a hit as the Federal Reserve hints that it will be scaling back its vacuuming of Treasurys and mortgage-backed bonds. Unless you have to do the bond dance (the only buyers, other than speculators, of long-term government paper are financial institutions that must have such securities for regulatory reasons)–don’t! Municipal bonds are in a different universe from corporates and Treasurys. Here the big risk is solvency. Unless you are an expert or have an advisor who is, go for well-diversified muni-bond funds with durations of under five years. Undermining the integrity of the dollar is similar to introducing a virus into your computer: It corrupts the information. In the economy an unstable dollar undermines the integrity of prices. Hard assets go up when the dollar is weakened, as people seek to preserve what they have. Traditional, productive investments are hurt. In the inflationary 1970s the price of farmland boomed. Same with agricultural commodities. Farmers leveraged to get more and more land. When inflation was conquered in the early 1980s, this Fed-created boom collapsed. Agricultural America went into a depression. A couple of years ago in Nebraska I warned against the rapid rise in the price of farmland since the early 2000s. I was assured that farmers had vivid memories of what had happened in the 1970s and would not overborrow to make purchases. I’m not so sure this is the case today. It certainly isn’t with Wall Street , where institutions and individual investors are treating farmland as a great asset class, and many are borrowing to purchase it. Caveat emptor! Energy also has been given an artificial boost by the shaky dollar for the past decade. Commodity inflation, including oil, has for the moment sharply subsided because the Fed has been sterilizing most of the money it’s been printing by borrowing it back from banks. There’s no way to know how much more of a downside there is, but unless you are farsighted and nimble, you should be extremely cautious with energy investments. If you’re overweighted in energy, cut back for now. To repeat, the Fed may give commodities, bonds and farmland a new round of bubble life, but if you’re a long-term investor, don’t get sucked in. Continue reading
Good Quality UK Farmland Growing In Value
Monday, June 17, 2013 Western Daily Press Top-quality farmland could be costing £20,000 an acre within the next seven years, according to a leading consultant. But while James Brooke, a partner in land agents Bidwells, was referring to top-grade arable land, the rich pastures of the West Country, famous for all-year-round grass, might not be far behind. James Brooke said the ongoing rise in land values, particularly for Grade One land, would continue, and could hit £20,000 by the year 2020 Mr Brooke was speaking at the major national arable event, Cereals 2013, in Lincolnshire. He said the ongoing rise in land values, particularly for Grade One land, would continue, and could hit £20,000 by the year 2020. The current average price is just under £7,000. Demand for land was being driven by an ever-increasing world population that needed to be fed, he said. That demand for good agricultural land would continue to grow. “There is no indicator as to why the current trajectory of land-price travel should fall. I see no reason as to why £20,000 per acre should not be achievable.” He urged farmers to work within reasonable budgets and not over-extend their borrowings. Farmers seeking to expand would want to purchase more land before prices increased much higher, but he said they should be inventive when drawing up plans for future expansion. Mr Brooke said land that was adaptable to produce different crops and also to withstand climate change would be particularly sought after in the future. “There is a need for good quality land in good areas with good irrigation and drainage. We need to be able to grow crops which can adapt to climate change,” he stressed. British farmland was attractive to overseas buyers, Mr Brooke added. “So long as we have a fairly benign tax regime, we shall be seen as attractive to investors.” But in the short term, the market was being stretched by a lack of owners wishing to sell – possibly because of land being handed down from generation to generation without attracting Inheritance Tax, he said. Currently the West Country is the most active region for farm sales, according to estate agents Smiths Gore. Its Taunton office reports over 50 per cent more land was marketed nationally this spring compared with 2012, in what is traditionally the busiest period for farmland market activity. But as 2012 had the least land marketed on record, the amount for sale remains very low and will not satisfy demand, explained specialist agent Simon Derby. “Although the land marketed was a considerable increase compared with last year, we do not expect there to be much more land sold over the whole year compared with last,” he said. Smiths Gore’s analysis shows that up to a quarter of all the land marketed throughout the year was advertised in April and the first half of May. Read more: http://www.thisissomerset.co.uk/Good-quality-UK-farmland-growing-value/story-19307832- detail/story.html#ixzz2Wx2541J7 Continue reading
