The reasons behind investing in this sector are compelling:

Population Growth: Worldwide population growth is running at approximately 200,000 people per day . All these extra mouths have to be fed for a lifetime. Clearly this will impact the demand side of the equation.

Rising commodity prices: Rising commodity prices are not short-term phenomena.  Except for a brief deflationary blip in 2008 after the collapse of Lehman Brothers, the CRB Index of 17 essential commodities has been rising steadily all decade (see the chart below).

Rising Farmland Prices: Arable land has again become a hot commodity—despite the struggles of the broader real-estate industry. It’s attracting buyers ranging from wealthy individuals and institutional investors to farmers themselves. Many are investing in farmland funds, though some farmers are expanding operations.9This is not though a short term phenomenon. For example, over the 22 years to 2009, capital growth in Farmland in Western Australia increased by an average of between 14 and 16% per annum.

The Western Diet: Changes in diet and demand for protein from countries with growing economies such as China, Brazil and India, is one factor that has contributed to higher demand for grain through increased demand for cattle feed. The extent of this is such that in China  Lifestyle changes such as increased urbanization and sedentism and “Western” diets high in fat and junk food have caused an increase in heart disease, diabetes, cancer and other “lifestyle diseases”.

When assessing your direct, passive investment into farmland, there are a few questions you should ask yourself before you go ahead. Get them wrong and you may find what you had thought was an easy ride, becomes very bumpy indeed. Don’t forget, farming itself is a risky business. There is much that can go wrong, but mitigate the risks well, ensure you are committed for the long haul, and you may reap the rewards.

Geographical location: The pro’s and con’s of location are clearly wide ranging, but also crucial. What you should be looking out for is:  Weather patterns, look longer term, not just recently. Weather is rarely very consistent, so look over long term averages. Infrastructure, how will your product get to market? Will transportation costs impact on your returns? Is there a tried and tested long terms infrastructure in place? Political Stability, how certain are you that country you are producing in will be consistent with its approach to issues such as taxation, exporting and indeed land ownership? Things can change rapidly in less developed nations.

Product: The ability to sell what you rear or grow on your land is clearly the key to success. Food prices may be increasing over the longer term, but it does vary from product to product. It may be sensible to steer clear of any new or fashionable produce in favour of staple products, where there is stable and consistent market, and certainly you should find a commodity where you are able to track the price.

Management: Without experienced and motivation farm managers you are unlikely to succeed. Try to avoid new schemes or projects where the skills of the management team are untried. While they are gaining experience you are the one that will pay the price. Don’t forget that farming has input costs. A good manager will know when to spend your money in order to get the best returns. Also make sure they are properly motivated by sharing in the profits, rather than just being paid a set fee. This will ensure they get the best both for you and for them. Make sure you do your due diligence on the manager. Ask to see his C.V.!

Ownership/Legal system: Easily overlooked, but important. Make sure you use a solicitor that you can trust to make sure you gain proper ownership to your land. NEVER send money directly to a supplier. All direct farming investments should go through an escrow arrangement to ensure you gain the beneficial ownership of your land. Furthermore, what happens if something does go wrong? Do you really want to be fighting a legal battle in a foreign language and in a legal structure that you don’t understand?

All in all, when it comes to green investments, often personal preference overrides many other aspects, including returns. For the investor who likes to get involved, to be able to quickly see the benefits and to literally touch and feel the product, then you’ll struggle to beat installing a solar panel on your roof. However, if you are really interested in sustainable long term returns, and don’t feel the need to walk over your property on a regular basis, then agricultural investment may be the dish of the day.

The rates of return advertised for the scheme appear to be generous:

“Solar panels: a tax-free return of 10pc pa”

“Tariffs for solar panels pay eight per cent a year”

“Investment in solar energy producing panels will pay a tax-free return of six to eight per cent per annum. That is more than double the best High Street savings accounts”

“If you’ve got the money and a sunny, south-facing roof, you can earn a 7%-10% tax-free return”

The initial outlay for the solar panels is generally speaking somewhere between £7,500 and £12,500. Clearly the more panels you have installed, the more power you can produce. The returns are generated by the government FIT scheme, which will pay you 41.3p per kilowatt hour (kWh) generated. For a typical 2.1kW PV system this should provide a reward of up to £750 a year. Interestingly, this payment is made regardless of whether you use the electricity, or export it into the national grid. In addition, for exported electricity pays an additional 3p per kWh. Further benefits are that the payment is tax free, guaranteed for the next 25 years and also linked to inflation!

So, what are the drawbacks? Although the current government has guaranteed the scheme for 25 years, clearly they won’t be in power for that long, and subsequent budget changes could potentially change the tax free status. Furthermore what are the chances of the government sticking to this for such a long period? Perhaps public sector workers experiencing forced changes to their pension plans might have their own view on this.

However, the real downfall that is quietly overlooked by all parties concerned, government, suppliers and commentators alike, when looking at the real returns on this as an investment, is the wholesale disregard for any capital write down with the investment.

One recent national newspaper article claims:

“It costs £12,500 to install solar cells on your roof, but new tariffs should give you a return of at least £25,000. So what’s the catch? There isn’t one” and “If the government offered to pay you £1,000 a year for the next 25 years, in return for an up-front investment of £12,500, you’d snap it up in a second”

This is very naive. Solar panels last 20 to 30 years. After this period they are perhaps likely to be worth nothing at all. So your original investment is lost forever. On the figure above, paying £12,500 up front in exchange for £1000 a year for 25 years is equivalent to putting your money in the bank at an interest rate of 2.8% per year and letting the interest accrue for the period, so after 25 years you have £25,000 in the bank.

So realistically, that is your net return, circa 3% (though with inflation guarantees, it might be a little more). Clearly then, installing solar panels is reserved for those doing it for ethical reasons, rather than also looking for a great investment return.

THE GLOBAL PROPERTY SUPPORT NETWORK PLC

(the “Company”)

MISREPRESENTATIONS BY 3^RD PARTIES TO SHAREHOLDERS

The Directors would like to advise that it has come to their attention that certain of its shareholders have received emails and correspondence from 3^rd parties making erroneous claims and misrepresentations as to transactions involving the Company’s ordinary shares in which shareholder details have been requested.

The Directors should like to advise that any suspicious emails should be reported to the Company and no action should be taken by any shareholder in relation to any transaction that has not been formally announced on PLUS.

The directors of The Global Property Support Network plc accept responsibility for this announcement.

- ends –

Contacts:

Feb. 8 (Bloomberg) Demand for wheat from Australia, the fourth-biggest shipper, is strong, said exporter AWB, as buyers from Europe to the Philippines battle for supplies amid prices near their highest level in more than two years.

Importers are seeking milling wheat for bread and a lower-grade feed variety used to fatten livestock, said Mitch Morison, general manager commodities at Melbourne-based AWB today.  Buyers are using feed wheat as an alternative to corn, he said.

Governments from Beijing to Belgrade are raising imports, limiting exports or releasing supply from state stockpiles to curb food inflation.  Countries probably spent at least $1 trillion on food imports last year, with the poorest paying as much as 20 percent more than in 2009, the United Nations says.  Corn soared 88 percent in the past 12 months and wheat 76 percent as drought in Russia and floods in Canada ruined crops.

“High corn values are encouraging feed grain customers to focus” on Australian Wheat, Morison said.  Agrium Inc., based in Calgary, bought AWB last year and said in December it would sell the commodity management business to Cargill Inc.

Prices of feed barley are strong too as supplies run low in Europe, the AWB said.  Saudi Arabia, the largest importer, is making enquiries, “which is supporting our market because Australia represents the only significant supply prior to the northern hemisphere new crop,” Morison said.

The American author Mark Twain said, “Buy land, they’re not making it anymore”.

More that a century after his famous quote, an increasing number of investors in the United States seem to be following his advice.  Investment managers in the US report rising interest from pension schemes and retail investors in funds that buy and run farmland in developed countries.  Investors are looking for a better rate of return than that available from bank accounts, bonds and an uncertain stock market.

“People have seen that the farmland asset class has performed very well, especially during the 2008 volatile period,” says Jeff Conrad, chief executive of Hancock Agricultural Investment Group based in Boston in the US.  ”There’s just more interest from institutions to buy farmland and add it to their portfolio.”  Mr Conrad’s investment firm owns land in the US, Canada and Australia and grows a variety of crops including corn, peanuts and apples.  Its fund has returned 13% in the three years to the end of 2009, compared with a 5% loss an investor would have made on S&P 500 index of leading US Companies.

‘Regulation required’

But not everyone agree with investing in agricultural land.  Critics of the practice say it contributes to rising food costs, artificially pushes up the price of land and so adversely affects rural communities.  ”There should definitely be regulation on who owns farmland,” says Professor John Peck, who runs an organisation called Family Farm Defenders, which campaigns for more small, family-owned farms in the US.  ”We should not have hedge fund managers dictating farmland prices in the US.”

Food Crisis

The value of agricultural land in the US has doubled over the past decade to $2,140 (£1,350) an acre, according to the US Department of Agriculture.  The price of food has also been rising because of an increasing global population and growing demand for higher value products, such as meat, from a growing middle class in developing Asia.

Professor Peck says people “speculating’ by buying farmland are exacerbating this trend.  ”We cannot have another food crisis,” he says.  ”This farmland land rush that’s going on is the second wave food crisis waiting to happen.”  Mr Conrad says that in theory it should have the opposite effect.  ”We are bringing capital and technology to the sector;” he says.  ”This will allow farming to become more efficient, produce grater supply and lead to lower food prices.”

Rural Development

The United Nations has been examining the practice of selling farmland to investors. The UN Special Rapporteur on the Right to Food, Olivier De Schutter, says it raises a serious question for rich nations.

“It can be very tempting to sell off the land for a very good price, but it all depends on which kind of future we want for agriculture,” he says.  ”Do we want this to be only large scale plantations dominated by very large corporations, or do we want to preserve the function of small farms in contributing to rural development?”

It follows a Russian ban on wheat exports after much of this year’s crop was destroyed in droughts and wildfires.

In America wheat farmers have been enjoying bumper crops – however this is no guarantee that world food prices will come down.

Jeremy Cooke reports

UN calls meeting over fears of a looming food crisis (Link to BBC News article)

Source: BBC News US & Canada 23/09/10 23:13 (http://www.bbc.co.uk/news/world-us-canada-11402255)

price	change	%
663.75	+0.00	+0.00

Wheat prices have hit a 22-month high after a severe drought and ensuing wildfires in Russia devastated crops.

Chicago Board of Trade (CBOT) wheat for September delivery broke through the $7-a-bushel level in US trade for the first time since September 2008, before falling back to $6.93.

Prices have risen 50% since late June.

Concerns are growing that the rise will lead to an increase in prices of flour-related products such as bread and biscuits.

Gary Sharkey, head of wheat procurement at Premier Foods, which makes Hovis bread, told the Financial Times that the industry would be “unable to ignore a 50% rise in wheat prices”.

Digging into reserves

UN Food and Agriculture Organisation’s Abdolreza Abbassian: “I think we have hit the worst of it”

Wheat prices dropped back slightly from their highs after Russian Deputy Agriculture Minister Aleksandr Belyayev said that there was no need for Moscow to restrict its grain exports at the moment.

“[Restrictions] will not be imposed yet. The government is to decide, but the situation today does not demand this. It is very easy to reduce exports, but it is very hard to increase them,” he said.

Russia has high levels of grain in reserves and will start using those.

But Mr Belyayev said that production levels would be lower than forecast.

“We will manage to produce 70-75 million tonnes, I think,” he said.

The Ministry of Agriculture had forecast the grain crop to come in below 85 million tonnes, compared with 97 million tonnes in 2009.

Picking up the slack

Kona Haque, commodities strategist at Macquarie Bank, said that Kazakhstan and Ukraine, who have also been affected by the drought along with Russia, would see their export levels go down, but there would not be a global wheat shortage.

“The crop declines we are seeing [in the former Soviet Union] are very real, 20-25% drops in production leading to equivalent decline in exports,” she said.

“But the fact remains that there are still big exportable surpluses in other parts of the world, particularly the US, that will be able to pick up some of the slack.”

But she admitted that headlines of droughts and fires meant that it was inevitable that prices would go up in the short term.

“Particularly in south east Asia there are a lot grain purchasers who are scrambling to get hold of as much wheat as possible in case prices rise even further,” she said.

Russia’s biggest wheat markets

• Egypt
• Turkey
• Syria
• Iran
• Libya
• Jordan

Source: US Department of Agriculture

Read more at the BBC site here: http://www.bbc.co.uk/news/business-10851170 (Source)

Leading the charge are U.S. and European pension funds, although it is estimated that the amount of institutional money invested is less than 1 percent of global farmland value, with concentration in food exporting regions.

A growing world population, limited water resources and finite amounts of land available have made farmland attractive to investors beyond traditional owners — private families.

U.S. pension fund TIAA-CREF has around $2 billion (1.3 billion pounds) invested in farmland of the $426 billion it has under management and is looking to expand its farmland holdings.

“If we found the right opportunities we’d be willing to double our existing exposure over the new few years,” said Jose Minaya, managing director of global private markets at the fund.

“This is just another asset class that has the potential of going the route that real estate, private equity, hedge funds did in the past,” said Minaya, estimating between $5 billion and $15 billion of institutional money is invested globally.

The way the groups invest is also changing, with some now forming partnerships to access and operate farmland.

TIAA-CREF prefers to own farmland directly rather than through funds, said Minaya. “In general the larger pension funds are moving closer to a more active versus passive investment style,” he added.

Jos Lemmens, senior portfolio manager at Netherlands-based APG, said it plans to raise its interest to around 1 billion euros.

Traditionally the fund manager — which has 220 billion euro (178 billion pound) under management — has invested in agricultural commodities via commodity futures markets, but since 2007 it has also invested in farmland.

“Part of (our) strategy is more efficient allocation to commodities, part of that strategy is to own real assets, especially land,” Lemmens said.

Netherlands healthcare pension fund PGGM, which has around 90 billion euro under management, has said it may raise its allocation of funds to farmland at the next annual review.

Pension funds are known for being risk averse and farmland is no exception, with funds focussed on food exporting countries with a stable political backdrop.

The 2007-08 food price spike, which sparked food riots in some countries and caused governments to review food security policies, has also put a spotlight on food producing assets.

Interest in foreign farmland has come from countries with limited food production, such as Saudi Arabia and China, as they looked to secure future needs.

RISK VS REWARD

The strategies adopted by China and some of the major governments purchasing farmland have been controversial in Africa and parts of Asia where food security is an overriding issue locally, leading some funds to tread carefully.

“If you’re in a country where you’re a net importer of food and suddenly you have foreigners buying land, that could get politically sensitive, so we’ve generally stayed away from countries that are big net importers,” said Philipp Saumweber, managing director of Saumweber Holdings.

Some analysts are also sceptical about how easily pension funds can expand holdings.

“There’s lots of interest but little action. It’s difficult to deliver what these funds want; vast acres of cheap land in politically stable regions,” said Andrew Shirley, head of rural property research at estate agent Knight Frank.

Shirley said Brazilian farmland prices vary dramatically from less than 500 reais per hectare for undeveloped forest to more than 20,000 reais per hectare for double-cropping arable land.

In the United States, where pension funds have been investing for some time, the U.S. Department of Agriculture averaged arable values for the corn belt at $9,562 per hectare in 2008, Shirley added.

“There are undoubtedly opportunities for investors, but finding them is not easy or cheap and requires a huge amount of knowledge and expertise. There is no simple solution for pension funds looking to invest in global farmland,” he said.

AFRICAN PROMISE

Pension funds’ farmland assets are concentrated in grain exporting regions including the U.S., Latin America, Central and Eastern Europe and Australia. As some of these regions are more mature, land scarcity can also help drive up values.

“Seventy percent of productive land is already in use in the U.S. so the expansion of real estate is limited. Whereas in Brazil only 20 percent of arable land is used,” said Suzanne Petrela, partner at private investment firm Red Reef Partners.

Africa is seen as an interesting investment opportunity but the risks have so far limited investments. However, the region’s overwhelming potential is proving a long-term draw.

“As the market develops as a whole people will see opportunities in different regions and there’s always going to be pools of money that are seeking higher return strategies,” said Minaya.

While some of the bigger pension funds in Europe deepen their investments, others have started to latch onto the idea of farmland as an alternative investment.

U.K.-based BMS Group pension scheme and Merseyside Pension Fund, which do not hold farmland, is attracted by the long term investment horizon of between 10 and 30 years for farmland as it helps to manage illiquidity with farmland sometimes proving difficult to buy and sell quickly.

“The investment characteristics I am looking for are steady long-term growth, ideally sound inflation hedge, preferably lower correlation with equities; looking to capture value through active management; socially responsible investment,” said David Larson, chairman of the BMS Group pension scheme.

Source: http://uk.reuters.com/article/idUKLNE65S01K20100629

(Reporting by Sarah McFarlane and Camila Reed; Editing by William Hardy)

By Bruce Hextall http://www.sharenet.co.za/v3/news_disp.php?id=269983

SYDNEY, March 18 (Reuters) – Chinese demand for Australian wheat has surged to levels not seen for at least five years, sucking in an estimated 400,000 tonnes of grain in the past five months, the country’s biggest grain handler said on Thursday.

The estimated exports to China between November and the end of this month would be almost double the amount it imported from Australia for the full 2008/09 marketing year, confirming a trend that official Australian data only tracks up to December so far.

“Shipping statistics reported out to the end of March indicate Australian sales into China will exceed 400,000 tonnes,” said Tom Puddy, marketing chief for the GrainPool marketing arm of CBH Group, Australia’s biggest handler of wheat exports.

Over the same period, total wheat exports from Australia, the world’s fourth largest shipper of the grain, are seen around around 5.3 million tonnes, he said quoting unpublished shipping data available to exporters.

He said China could keep buying Australian wheat throughout the marketing year ending in September.

“There could be another 300,000 tonnes of extra demand to the end of the year,” Puddy said. “It is hard to predict as it is always a mystery about what their actual stocks are.”

China is already one of the world’s largest wheat producers with production for the 2009/10 year estimated by the U.S. Department of Agriculture at 114.50 million tonnes.

Normally it imports only small quantities of the grain but the country is rebuilding stocks, buying on the international market from countries such as Australia, Canada, France, the United States and Argentina.

The purchases are made under a government import quota system that alloww about 9.6 million tonnes per annum. Each flour mill is also permitted to import 960,000 tonnes outside the quota system.

China placed orders for Australian wheat as early as last August, having missed out on securing supplies the previous season, as countries such as Iran booked large quantities pre-harvest, squeezing supplies.

Australia’s 2009/10 Australian wheat harvest, which finished in January, yielded an estimated 21.66 million tonnes, according to the government’s commodity forecaster.

China had built up wheat reserves but since 2003/04 has been auctioning off stocks, mainly Australian Standard White (ASW) type wheat, which has a reputation for quality, and soft red wheat from the United States.

“That wheat is five or six years old now..the quality has diminished a little bit so what they’re doing is replenishing stocks of current season’s white wheat,” said Puddy.

The impact of a drop of 41,000 hectares in Australian wheat sowings will be more than offset by a rise to 1.60 tonnes a hectare in yields, forecasters at the country’s official commodities bureau, Abare, said.

The increase will swell the 2010-11 crop by 284,000 tonnes to 21.94m tonnes.

The estimate follows considerable speculation of a fall in Australia’s harvest this year, as weak prices prompt farmers to cut back more significantly on sowings.

And a City analyst told Agrimoney.com that forecasts were “speculative” at this stage and would depend largely on the timing of rains.

Sheep vs wheat

Nonetheless, Abare, in an annual crop forecast report, forecast Australian growers maintaining their love of wheat despite the improved attractions of sheep, which have enjoyed a revival in prices.

“Over the medium term, competition for land in the wheat-sheep zone is expected to increase because sheep prices are projected to be relatively high,” the report said.

Nonetheless, Australian sheep numbers would remain at some 70m head over the next five years, compared with 110m head in the early 2000s.

Wheat sowings, meanwhile, would expand by some 166,000 hectares, helping production approach 25m tonnes.

Exports will hit 17.4m tonnes in 2014-15, up by one quarter on those in the current season.

Article Source: Agrimoney.com

http://www.agrimoney.com/news/higher-yields-to-swell-australias-wheat-crop–1414.html