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Farmland Partners may buy land in Canada, but rules out Scottish deal

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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 short-term "bumps".

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.

Risk table

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".

By Mike Verdin

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