Agriculture has become an attractive investment destination for a number of reasons.
Most important of all being the strong market fundamentals in support of the sector
on both the demand and supply side. An increasing population, changing
demographics, reductions in arable land and climate change have led to an urgent
need of more productive methods of growing food.
"There will be 9.6 billion people in the world by 2050, that will require more than 70% more
crops than we have today. This combined with a reduction in arable land and the effects of
climate change will result in sector over-performance."
Strong Returns !
Inflation Protection
As food prices are closely linked to inflationary trends, owners of agricultural assets and those exposed to farming businesses posses a hedge against inflation. This is one key diversification benifit of the asset class.
Low Correlation With Other assets
Agriculture has been shown to have low correlation with many other asset classes such as equities and corporate debt, wich dominate the investment market. This means that including agricultural in a portfolio can provide significant diversification benifits, resulting in an increase in portfolio return or reducing overall portfolio risk.
Low Relationship With Economic Cycles
Population driven food demand remains the core base of demand for agricultural commodities. The demand for food is relatively inelastic to income making demand for agricultural commoditiesless subject to an economic slowdown.