Farmland: The Next Boom?
(Wall Street Journal)
By BRETT ARENDS
Is farmland going to be the next gold?
It isn't as implausible as it may sound. Forecasts are always a sucker's game, but there are good reasons why the next few decades could see a new boom in farm country—and big money for those who own the land.
Demand for food is soaring. The world has consumed more food than it has produced in nine of the past 10 years, Susan Payne, chief executive of agricultural investment firm Emergent Asset Management, told the World Agricultural Investment Conference in London this week. Population is rising fast; another billion mouths to feed will probably be added in just in the next 15 years.
And as the developed countries get richer, they want to eat more meat and dairy products. The Chinese eat about four times as much meat per person as they did in the 1980s, says Ms. Payne. These are intensive products. It takes seven pounds of grain to produce one pound of beef. SG Securities estimates that demand for grain alone will rise by 50% to 100% over the next 40 years.
We've already seen trouble. There were food riots in some countries two years ago. Wheat, coffee and sugar prices have rocketed this summer. Canaries in the coal mine? "We expect to see a resource war around 2020," says Ms. Payne.
They're not making any more land. Indeed, they're taking some of it away. A lot is being appropriated for cities, factories and shopping malls. We are losing yet more to soil erosion, salinization, overexploitation and desertification. Climate change is having an effect. Charmion McBride, head of agriculture for Insight Investment, says the amount of arable land per person on the planet has halved in about 40 years.
By BRETT ARENDS
Is farmland going to be the next gold?
It isn't as implausible as it may sound. Forecasts are always a sucker's game, but there are good reasons why the next few decades could see a new boom in farm country—and big money for those who own the land.
Demand for food is soaring. The world has consumed more food than it has produced in nine of the past 10 years, Susan Payne, chief executive of agricultural investment firm Emergent Asset Management, told the World Agricultural Investment Conference in London this week. Population is rising fast; another billion mouths to feed will probably be added in just in the next 15 years.
And as the developed countries get richer, they want to eat more meat and dairy products. The Chinese eat about four times as much meat per person as they did in the 1980s, says Ms. Payne. These are intensive products. It takes seven pounds of grain to produce one pound of beef. SG Securities estimates that demand for grain alone will rise by 50% to 100% over the next 40 years.
We've already seen trouble. There were food riots in some countries two years ago. Wheat, coffee and sugar prices have rocketed this summer. Canaries in the coal mine? "We expect to see a resource war around 2020," says Ms. Payne.
They're not making any more land. Indeed, they're taking some of it away. A lot is being appropriated for cities, factories and shopping malls. We are losing yet more to soil erosion, salinization, overexploitation and desertification. Climate change is having an effect. Charmion McBride, head of agriculture for Insight Investment, says the amount of arable land per person on the planet has halved in about 40 years.
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