Farmland Partners is investigating a land purchase in
Canada, and looked at farms in Scotland too, in its quest to exploit global farm
price growth it sees continuing, driven by the quest to meet food demand.
The land investment group is "looking at" a Canadian
purchase which would represent the company's first acquisition outside its
native US, where it holds more than 150,000 acres of farms, making it what is
believed to be the country's fourth-ranked private landowner.
The proposal comes fresh from visit to Scotland, where the group
"looked at an opportunity" in the south east, but rejected it for the poor
rental yield prospects.
"We were looking at a 1% return," excluding the potential
for land price appreciation, Paul Pittman, the Farmland Partners chief
executive, told Agrimoney LIVE - well below the rates of 3% or more that Farmland
Partners typically aims for.
'Trend not changing'
The quest for foreign acquisitions is aimed at exploiting what it sees as a long-term trend of land prices - underpinned by the reduction in world
farm area, at a time when growing populations and affluence are boosting demand
for agricultural commodities.
"This trend [of higher land prices] is not changing," Mr
Pittman said, although he acknowledged that the market was vulnerable to
The impact of the loss of farms to urbanisation – with some
2% of land seen being swallowed up by towns by 2030 – was being compounded by
the high quality of the area lost in many cases, Mr Pittman said, citing
research published late last year.
This showed that land lost was, on average, 1.8 times more
productive than average.
A significant proportion of good quality soils in China or
Europe "are underneath the big cities".
It was a "complete accident of history" that this trend had
not extended too to the US, where the large north-eastern population centres
have been built on relatively lowly-producing land.
However, while land prices look like rising worldwide, Mr
Pittman said that Farmland Partners was focused on a small number of countries,
which it saw as "tier one" - Australia, Canada and New Zealand, besides the US.
These boast "strong legal protections, good soils and
climates", he said.
"There are opportunities with a little more risk in Chile,"
he told the conference, in London.
Western Europe was dubbed "tier two", possessing good legal
protection, but with quality land hard to come by.
On buying farms in the likes of Brazil, Uruguay, Eastern
Europe and Africa, Mr Pittman said that "it does concern me that there is a
land tenure risk".