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Sketch: tales of the land rush

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There are three little words farm investors love to hear. Land, land and land.

At least, that's to go by delegates at the annual agri-funds bash in London. When corn tanked in Chicago, the World Agri Invest Congress barely noticed. Corporate concerns, such as the fertilizer industry's woes, have bleeped only faintly only the radar.

Investors seem fascinated by stuff they aren't making any more.

"It seems the only game in town this year," one attendee from the soft commodities lobby told

'Like gold'

Another said: "People just don't seem so interested in trading contracts.

"But maybe that is not so surprising. These are difficult times and land is something you can touch, you can feel. Like gold."

Especially in Illinois, where farm land price have correlated 88.6% with those of the commodity of kings since 1957, fund manager Porter Martin told investors. They have correlated 92% with the commodity of sheikhs, oil, too.

"Tell that to your next client who wants to invest in gold," Mr Martin added.

'Big things with new paint'

It appeared they might already have done so. There was some glad-handing going on from fund raisers, such as Agro Terra Partners, a London-based private equity fund, and Australia's SLM Partners.

But for most, the issue was about where to spend it which, indeed, highlighted the difference between the farmer and the farm investor.

"US farmers like tractors, they like big toys," US farm management representative Jerry Warner said.

"They like big things with new paint."

Investors, meanwhile, covet the stuff that has appreciated four times faster than shares in the last 60 years, on Mr Martin's figures.

Out of favour

The big question is, where?

Not Europe - too expensive, with German land at $22,000 a hectare.

And delegates seemed less interested in US land than the speakers. (Sorry Mr Martin.) "You can't, as a foreigner, buy more than 300 acres in some states and build scale," one investor told

But at least you can buy some. Indeed, Ukraine, all the rage among landophiles last year, appears to have slipped outside the top tenures because of its insistence on acquisition through 15-year leases rather than ownership outright.

Dairy exodus

So what was left? Well, Australia appears to be winning the hearts of dairymen, attracting New Zealand farmers by the herd, according to Craig Swanger, a big cheese at Macquarie Agricultural Funds.

Canada wins on price, according to Doug Emsley, a Bank of Canada director as well as president of Assiniboia Capital, with prime Saskatchewan costing $1,000 a hectare.

"We have the lowest price land in the G8 and some of the most productive land in the G8," in the province, he said.

Shame foreigners can't buy it.

Brazil vs Argentina

What they can buy, however, are vast tracts of South America. And in particular, swathes of Argentina and Brazil, which did appear for delegates top for their crops.

Brazil seemed especially attractive to investors that spoke to. It won on cost - as little as $1,500 or so a hectare, if you're willing to spend the same amount on fertilizer on top – and on its farm-friendly policies.

President Lula, after all, has embraced farmers. In one of the latest moves Brazil has allowed farmers to plant rubber trees on land they are forced to put aside as ecological reserves.

Argentina's government seems keener on taxing them, placing big levies on crop exports.

Quality question

Still, Argentina may have the last laugh, one South American delegate said.

"Governments come and go but the land stays. And Argentine land is far better quality than Brazilian land."

Even a delegate from a little further north and east of Argentina's dry plains concurred with that one. However, he added, quality was only part of the story.

"What use is land without rain, however good it is?" he said.

It is a fair question. And the right answer is... well that may depend on whether it is delivered by someone speaking in Spanish, or in Portuguese.

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