Investment in Farmland: African Farmland is the Next Frontier

A very interesting piece here from the Wall Street Journal on the rapid rise of private capital in African farmland investments.The article has some very interesting statistics:

"To meet growing global food demand the United Nation's Food and Agriculture Organization estimates an extra six million hectares need to be brought under cultivation every year for the next 30 years. With sub-Saharan Africa estimated to hold up to 60% of the world's remaining uncultivated land."

The article also references a private equity fund called Emergent Asset Management here in London that is purely dedicated to investing in African farmland.  It sounds quite intriguing - until one sees the price tag which calls for a minimum investment of US$500,000 for individuals!

However, if you are intrigued by this type of investment in farmland, we are pleased to say that our unique farmland investment in Africa starts at only £5,850 (which is approximately 6,400 Euros and US$9,500).  The investment recently paid a 16.2 pc dividend yield, and was awarded the "Alternative Investment of the Year" award from a prestigious UK property association.  The key is that the price of farmland in Africa starts at such a low base that both high yield and tremendous upside in land values are possible.  The target return is yearly dividend of 15 pc dividend yield, with a 7 pc yearly upside in capital value of the land (although in practice its been way more than just 7 pc so far).  Like all farmland investments, this one is meant to be held for the medium to long term, although it can be sold at any time.  The initial phase of the project is selling out quickly, but additional acres are being purchased by the project developers due to the high demand from retail investors whom are keen to add some diversification to their portfolios in these unsteady times.  And, all of our projects, including this one, are SIPP eligible investments for UK citizens.

China's Arable Land Shortage and the Case for Farmland Investing

China's will shortly be releasing its annual white paper on agriculture. Here is this year's white paper. As the attached graph clearly shows, China's arable farmland has been shrinking precipitously. How to play the Chinese interest in farmland investing as well as the broader macro-economic perspective of shrinking arable farmland globally? Basic supply and demand indicates that when there is an increasing shortage of an asset along with a growing demand, prices go up. Hence, it is inevitable that as China and other emerging market countries continue to grow and get richer, the demands on existing farmland will become higher and farmland investments will increase in value.

Please consider our three farmland investment opportunities:

Farmland investment in Africa

Farmland investment in Europe

Farmland investment in Australia

Wheat Price up 6% so Far in 2012 - Wheat Farmland Investments Should Benefit

Very positive news on wheat prices. So far, wheat is up 6% in 2012. Furthermore, we came across this facinating prediction from Saxo Bank, saying that wheat prices could double in 2012. This is part of a section Saxo Bank has called "Outrageous Predictions", which are events that would be unlikely but significant. Still, even though this prediction is indeed unlikely to come to pass, wheat is clearly poised for a strong year, and farmland investments in this sector will do very well. As we have a farmland investment in Australia as well as a farmland investment in Europe that both focus on wheat farming, the performance of wheat so far is indeed very heartening.

Farmland and Agriculture - Immune to Drops in Commodity Prices?

Well, maybe not entirely, but it is our opinion that the agriculture sector sector is less sensitive to the ups and downs of commodities and the global economy than such other areas as metals and mining. This article on the investing website Seeking Alpha made much the same point. The article states:

"Agricultural commodities on the other hand face much less elastic demand. Less housing in construction in China hurts copper demand, but it does not change the fact that people will not stop eating. Emerging economies may be facing slowdowns, but they are not contracting or halting to the point that consumers will be forced to change back to a grain based diet from their newly acquired meat based diets."

This captures exactly why we favor agriculture as our favorite commodities sector. We prefer to play the sector by investing in farmland, as we believe that farmland as an investment brings a certain stability and peace of mind to a portfolio that agriculture stocks and futures may not achieve/ However, anyway you decide to play it, if you are investing in commodities do try to make sure that agriculture is is included.

Finally, we are very pleased to note here in this press release that the African farmland project Green World represents recently paid an initial yield of 16.2%!

Update on GreenWorld's African Farmland Investment

While we focused in our previous post on GreenWorld's farmland investment in Australia, there is also wonderful news in regards to our farmland investment in Africa. This investment in rice farmland in Sierra Leone recently paid a 16.2pc dividend, prooving that its target for dividends of 15.2pc per annum was spot-on. Farmland prices in Africa start from a very low base, and there have been quite a few lare institutional investors such as pension funds and University endowments investing in farmland in Africa.

Please contact us at info@greenworldbvi.com for further information!

Over US$ 1 Billion Going into Australian Farmland Investment - This is One of the Best investments on the Planet!

We have come across extremely interest news regarding Australia, which provides further validation of GreenWorld BVI's Australia farmland investment. According to an article in the Australian press, there is approximately US$1.6 billion that will be flowing into Australian farmland imminently. The three investors putting money into Australian farmland are a UK fund that is putting in US$400 million; legendary commodities investor Jim Rogers who is using a rural land fund that has US$600 million into the pipeline; and an Australian government pension fund called called Future Fund. That is US$1.6 billion in high-end institutional money ready to go! We truly feel that this is one of the best farmland investments in the world.

This will provide tremendous price support for this existing Australian farmland investment which is already running successfully, harvesting wheat and paying dividends. Dividends are targeted at 9% yearly. Please contact us at info@greenworldbvi.com if you are interested to learn more!! Needless to say, with US$1.6 billion about to flow into the sector, substantial increases in the capital value of farmland is on offer as well. On a final note, the Australian wheat harvest in Q1 of next year is expected to be a bumper crop, meaning the dividends on offer to investors who buy in now are quite prospective. And again, as per our previous post on the amazingly low valuations of Australian farmland make it one of the best opportunities on the planet in our humble view.

FINALLY, last but not least, this project is fully SIPP eligible. Due diligence on the project has also been done by an independent consultancy which is itself regulated by the UK FSA. The consultancy has verified the project and produced a very positive report on it. We strongly encourage interested investors to contact us immediately before the Q1 wheat harvest at info@greenworldbvi.com and we are happy to provide some overview documents on the project.

Farmland Investments for SIPP Holders

If you own a SIPP it is well worth noting that there is an entire entire portfolio of farmland investments that are all Sipp eligible investment. Farmland as an investment pays high current income, offers stability and long-term capital growth, and is an excellent inflation hedge. GreenWorld is happy to provide more detailed information on these.

If you are interested in investing in farmland, we have three projects we can offer:

1) Farmland investment in Australia
2) Farmland investment in Europe
3) Farmland investment in Africa

If you are interested in any of these farmland investments in Europe, Australia or Africa, feel free to contact us at info@greenworldbvi.com