Investors Harvest Profits from Agriculture Investments

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(Free-Press-Release.com) July 25, 2011 -- High inflation, low interest rates and volatile equity markets combine to define the global economy, and investors large and small are looking to decouple their portfolios from traditional assets in an effort to protect capital, generate income and smooth out volatility, with many considering farmland as the asset of choice.

David Garner, partner at investment boutique DGC Asset Management told a recent gathering of private investors that those who control farmland will hold the world’s most valuable asset in 20 years’ time.

Speaking at a private event for high net worth investors, Mr Garner stated, “It’s not complex, we just need to take a common sense view. We know that the population is likely to hit 9 billion people, all wealthier and consuming more natural resources in terms of food and energy than today, and at the same time we are losing farmland every day to urbanisation and climate change.”

DGC Asset Management provides retail investors with access to research, due diligence, and opportunities to invest in agriculture through the acquisition, development and management of farmland in South America, Australia and the UK.

“It’s hard for us in the West to comprehend, but there are already almost 1 billion undernourished people in the world, and that number is rising at a time when our ability to increase yield through the application of technology is diminishing every year,” added Garner.

The ‘Green Revolution’ of the 1970’s allowed farmers to increase the volume of crops produced per hectare, but yield increases are now less than 1% per annum, less than the rate of population expansion.

Mr Garner went on to say, “We just need to look at China, in 1985 the average Chinese person consumed around 20kg of meat per annum, that figure had risen to 50kg by 200, and is projected to reach 85kg per person by 2030. When you take into account that 1kg of meat requires on average a 7kg input of grain, you can see the strain of cereal production, and we know that when an asset is in high demand with a limited supply, we see prices rise, and long-term increases in food prices are reflected in the capital value of the underlying asset”

Many large pension funds have recently announced large scale investments in agriculture, with China’s largest grain producer committing $1.5 billion to farmland investments in Argentina in an effort to sure up food supplies.

Mr garner was keen to point out the importance of partnering with experienced agricultural operators with local experience, adding that at least 50% of the success of an agricultural investment can be put down to the quality of on-farm management.

agriculture investment     dgc asset management     farmland investment