New Farmland Investment Funds to Launch in a Near Perfect Storm (2011-04-14)
Background Information on Farmland Investment
The following current events create a near “perfect storm” for the launch of American Farmland Partners’
Agricultural Real Estate Investment Funds (see news release below):
· Inflationary concerns
· Continued economic uncertainty and market fluctuations
· Global loss of millions of acres of farmland each year from urbanization and climate change
· Growing world population and increased demand for grains and food
· Generation of U.S. farmers reaching retirement and looking for liquidity
· Rising oil prices & government mandate boosting ethanol demand; driving up corn use and prices
· More dollars being invested in stocks, driving the number of new offerings up 71% since last year
· An urgent need to establish food security by the Japanese government http://www.youtube.com/watch?v=A4_vg47_ZwA&feature=channel_video_title
Agriculture has become a ‘hot topic” with stories being reported almost on a daily basis.
These quick facts may shed some light on why investors have suddenly become interested in any investment having to do with agriculture:
To keep pace with population growth, more food will have to be grown in the next 50 years than has been grown in the last 10,000 years combined.
Making matters worse, millions of acres of farmland around the globe disappear each year.
There simply is not enough farmland to feed everyone.
Countless Agricultural Real Estate Investment Funds and foreign governments already manage tens of billions of dollars of farmland and new funds are being formed here and abroad all operating with a simple business model…buy farmland and rent it back to the farmers.
With so much money chasing a diminishing supply of arable acres, what would make a new group of Ag
Funds think that they could compete against larger, more established, better funded suitors?
For one, these new Ag Funds have the ear of a very important player in the story that is about to unfold,
the farmers themselves, who are finding this deal very attractive.
An important point considering the fact that 2.6 million of the 3 million owners of farmland in this
country are still individuals, family-controlled farming partnerships, or closely held agricultural businesses.
These are your “old school” farmers, “cash and carry” guys who have been through the “ups and downs” of farming, average age 55 with over 40% of them being over the age of 65 and they are sitting on a mountain of equity. Farmers, like other people nearing retirement age, have retirement and estate planning issues that need funding.
