Where should you invest in Farmland?

Written by Stephanie Price, Journalist

Investing in farmland is a particularly volatile business, if you get the land area wrong it can go horribly wrong, but get it right and you will reap the rewards for years to come.

Tom Osbourne, Senior Research Fellow at University of Reading, tells us the safest areas to buy land, and the places to avoid.

Crops should be chosen and managed with respect to current climate, however, investors must look to the future with regard to climate change to ensure an economically sound long-term investment.

Climate change is resulting in the intensification of the hydrological cycle and increasing temperatures that are going to be well outside of current variability. There is significant warming in areas already, however, some areas seem to be unaffected.

“Wetter regions are going to get wetter, dryer regions are going to get dryer,” Mr Osbourne said.

There is a general consensus that crops in the tropics are going to suffer, whereas areas in higher latitudes will see yield increases.

· America - the US hasn’t suffered much significant climate change to date. Everywhere on the planet is going to be affected, however, the US seems relatively untouched by these trends on a seasonal average.

· UK – The UK climate is good for agriculture, however, everything is done on a much smaller scale. Production of crops in the UK will benefit, especially those less thirsty crops like barley.

· Russia - Russia seems to be suffering currently with a 15% drop in yields due to climate change.

· Africa – Africa possesses 60% of the worlds agricultural land, however, its geography makes it particularly vulnerable to climate change. Only 5% of African farmland is irrigated and 50% of the product is lost after the harvest. Anywhere that’s already fairly dry already will only worsen.

· Australia – Wheat in Australia will suffer with climate change. Queensland once produced 2 million tonnes of wheat which has now dropped to 200 000 tonnes. “In Queensland they won’t produce wheat in 5 years,” claimed Prof. Bob Hansen, CEO, Mainland Holdings. However, Australia is still the land of opportunity, with the ability to build very large-scale operations.

· Indonesia – Indonesia is a winner with it seeing larger and larger crops of palm oil.

What are your thoughts?  Where do you place your agricultural investments and why?