If you are worried about inflation, the best investments to protect yourself are so-called real assets that will rise in value along with inflation. If you are interested in a real asset that pays good current income and dividends, hedges against inflation and also has tremendous value, consider farmland investments. We took farmland as an investment and sees agriculture as the premiere asset class for the next decade.
Why invest in farmland? Green World believes that farmland is among the best alternative investments for retail investors. In keeping with Green World’s theory that it is important for any investment to be on the right side of global macro trends, and as the graph from the UN demonstrates, the amount of arable land worldwide is dwindling. Simultaneously, the world’s population is forecast to jump to more than 9 billion by 2050 from 6.9 billion today. Simple economic principles of supply and demand dictate that when there is an increasing shortage of an asset combined with growing demand for it, the prices of that asset are likely to go up. This trend and the accompanying high prices for agricultural commodities has created a substantial concern amongst world governments around the issue of “food security” and has led many large institutional investors – including governments – to launch agriculture and farmland funds.
Shrinking Arable Land and Global Food Security
Just to summarize, the points below provide a good overview of reasons for including farmland in your portfolio:
1) Food inflation looks set to continue for the foreseeable future, as the amount of arable land globally is actually shrinking whilst the global population is continuing to grow. To meet growing global food demand the United Nation’s Food and Agriculture Organization estimates an extra six million hectares of additional farmland investment is needed every year for the next 30 years, creating a massive new opportunity for farmland