Sat, Jul 2, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Opalesque Radio

Investing in Farmland
Radio Feature 95: Sona Blessing in conversation with Stuart Donald
 
Thursday, April 03, 2014

radio Insights from Stuart Donald, head of agriculture, GMO Renewable Resources, LLC, (GMORR). GMORR is the forest and farmland investment arm of Grantham, Mayo, Van Otterloo & Co. LLC, (GMO), which has USD116 billion in assets under management as of 31.12. 2013.
  • Why invest in farmland?

    It is a real asset that combines solid fundamentals: there is a growing demand for food, energy and fibre, with a potential for inflation hedging. Farmlands have maintained their value over long time horizons. By providing yield in the form of marketable commodities, the value of the yield is protected from local currency devaluation.

    Farmland fundamentals are driven by positive demand forces (growing populations and incomes globally) vs. a fixed supply of land. According to the Food and Agriculture Organization of the United Nations (UNFAO) there are 1.5 billion hectares of arable land. It estimates that by 2050 world food production will need to increase by 60 percent - for the most part, from land that is already being cultivated. Besides when you invest in farmland, and to a certain extent, you can be in control of your own destiny. An investment in farmland could provide an annual income stream coupled with potential capital appreciation opportunities. You could make money by growing and selling that crop - but the way you manage that process also can influence the capital appreciation of land.



  • What is your investment approach?

    It is important to identify farmlands at prices reflecting their biological yield and the productive capacity of the land. By employing such a value-oriented approach, we seek to invest in attractively-priced farmland where productivity can be improved and returns enhanced through the addition of capital, optimising the mix of activities on the farm and achieving scale. Carefully managed land-based assets can also be a good fit for investors committed to responsible investing.



  • How does GMORR define farmland investments?

    Farmland investments are investments in the land, the crops and livestock that are on the land. They are not investments in commodity-traders or in companies such as John Deer or Syngenta that provide services or products to the agro-industry. Institutional investments tend to be focused around three different areas of agriculture:

    • - Row crops (corn and soya bean are the most common ones in the U.S.) wheat, cotton.
    • - Permanent crops - nut and citrus (especially in the State of California, New Zealand, Australia, South Africa).
    • - Livestock - in the dairy - beef, sheep, dairy farming (especially in New Zealand).


  • How do you make money from investing in farmlands and what are your sources of return?

    GMORR targets investments in both row and permanent cropland, as well as in livestock. The focus is on agricultural properties in lower-risk geographies where commercial agriculture is well-developed and good title, high-quality management, and adequate infrastructure are available. As we invest in agriculture globally, we leverage our timber operations and long-standing relationships with property managers and other local service providers in each region.

    Properties are either leased to local farmers for a stable cash rent, directly operated where GMORR assumes yield and price risk, or some combination of approaches where both GMORR and the operator share in upside and downside potential. Because of our long experience in timber investing, we believe we can find value in mixed use properties by optimising land use between timber and agricultural operations. As in our timber operations, we are opportunistic buyers and sellers.



  • Where are you seeing investment opportunities?

    In the U.S. (excluding the Corn Belt), South America, Australia and New Zealand.




Radio Link
  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Soros, Druckenmiller among hedgies profiting in market plunge, Hedge funds were most bullish on bonds since 2004 before Brexit, Surprise Brexit vote unleashes scramble for dollars, High-yield hit on Brexit but no panic selling, Scientist turned hedge fund founder lured to pound, euro, Hedge fund avoids commodities, posts big gains[more]

    Soros, Druckenmiller among hedgies profiting in market plunge From HITC.com: Bullish positions in gold and volatility and well-timed short bets on China and emerging markets, among other areas, were some of the trades that benefited hedge funds on Friday as markets digested Britons' s

  2. Manager Profile - A 26-year old hedge fund manager called Brexit — here's what he thinks about the historic vote[more]

    From Businessinsider.com: Taylor Mann is not your typical fund manager. The twenty-six year old Texas A&M graduate manages Pine Capital in Larue, Texas (population 160), where he resides with his three-year old daughter. Also atypical compared with many of the largest funds out there, Mann makes

  3. Chesapeake Partners to liquidate hedge fund amidst 'hostile environment'[more]

    Komfie Manalo, Opalesque Asia: Chesapeake Partners Management, the hedge fund run by woman fund manager Traci Lerner said it would return investors’ money after 25 years because the market environment has become "hostile" to manage other people’s money, reported

  4. Europe - George Soros says Brexit has ‘unleashed’ a financial markets crisis, Brexit—what we know, Will the UK’s departure be a ‘soft-Brexit’ or a ‘hard-Brexit’?, Brexit: Six-point action plan for asset managers[more]

    George Soros says Brexit has ‘unleashed’ a financial markets crisis From Bloomberg.com: Britain’s decision to leave the European Union has “unleashed” a crisis in financial markets similar to the global financial crisis of 2007 and 2008, George Soros told the European Parliament in Bruss

  5. Hedge Fund Due Diligence Exchange offers complete due diligence reports at $1500[more]

    Matthias Knab, Opalesque: HFDDX is offering complete alternative investment due diligence reports at $1500 US. Industry professionals can simply go to www.hfddx.com and indicate their interest in sponsoring one or more DD Reports for $1500 each.