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An expanding population, scarcity of resources and a changing climate happen to be three trends that define current land farms. Alone, each factor constitutes a major issue, but when combined and intertwined as they are, they become all the more serious. As time passes, the paths of these factors will become all the more linked and their effect upon the global economy will become ever more pronounced. Sectors at the nexus of this coming together offer investors the best prospects for capital growth and income in the short, mid and long-term.
The agricultural sector is perfectly positioned to take advantage of these fundamental changes in demand for food and our apparent inability to deliver it. Demand for agricultural commodities is ballooning, and will continue to do so as demand for food from an extra 75 million people per annum, a shift to high protein diet in developing nations, and the use of food crops as an energy source by way of biofuels drive fresh demand. Yet at the same time increasing our ability to supply these commodities is diminishing, a fact that can be blamed on a multitude of factors including climate change, a definite lack of further farmland and diminishing yield increases from the green revolution.
Production of grains, as measured on a per capita basis, started to decline around the mid 1980’s and the availability of agricultural land per person started to fall in the very early 1960’s. Two years ago In 2008, grain stocks were at their lowest level for over four decades and resulted in the biggest spike in agricultural commodity prices since records began.
Of course we saw these price correct themselves towards the end of the year. Yet since then price have continued their rising trend despite the recent financial crisis reigning in demand. The global food supply sits in a precarious position, pressured from above. And below by both increases in real demand and limits to increasing supply.
It could therefore be argue that the land that is capable of producing. Such commodities will become a more valuable resource as time passes. It is then safe to say that Investors savvy enough to look at land farms investing by way of investing. Farmland will be best position to take advantage of this supply and demand mis-match.
The current population sits around 6.7 billion people. There are approximately 1,402 million hectares of farmland, 138 million hectares of perennial agricultural land. And 3,433 million hectares of meadows or what could be termed pasture to feed this amount of people.
The grand total of food-producing land on the planet amounts to about 4,973 million hectares. this means that each person. The planet has about 0.74 hectares when you include all types of agricultural land. Bear in mind that this land must also continue to produce all of our cotton and rubber. As well as every ounce of grain and meat. And grain to feed the meat, and the biofuels that we all require.
These calculations lead us to conclude that, based on current levels of agricultural productivity. We require an extra 148,460 hectares of land every single day to feed. The 200,000 or so new mouths to feed. This equates to a total area of land, solely to grow crops, that is approximately. The size of Greater London, or 100% larger than New York City, Tokyo and Singapore land farms.
The real picture is alarmingly different. Where we should be adding a huge amount of land to agricultural production on a daily basis. We are in fact reducing the amount of land available for agricultural purposes and for the last three years. The total area of farmland has diminished substantially.