In the last few years investors have poured millions of dollars in to farmland, farming businesses, commodities and companies supplying farmers with machinery, fertiliser, seeds and pesticides.
In Fortune magazine, Shonda Warner explains why she launched an investment firm to buy farmland.
She says “…..The simplest metric to consider is the amount of farmland per person worldwide: In 1960 there were 1.1 acres of arable farmland per capita globally, according to data from the United Nations, By 2000 that had fallen to 0.6 acres. And over the next 40 years the population of the world is projected to grow from 6 billion to 9 billion.
“Land is scarce and will become scarcer as the world has to double food output to satisfy increased demand by 2050. With limited land and water resources, this will automatically lead to increased valuations of productive land. And it goes hand in hand with water. Water scarcity will probably increase even more than land.”
The article goes on to say that the biggest investors in farmland over the next decade will probably be sovereign wealth funds and governments of crop-starved countries eager to secure food supplies for their rapidly growing populations. In 2008, China announced a $5 billion plan to develop agricultural assets in Africa. That’s just the start. Given that it has 20% of the world’s population but only 7% of its arable land and 7% of its freshwater resources, China has no choice but to look beyond it’s borders. And the global recession has hardly slowed it’s appetite for crops. In the first four months of 2009, China imported a record 13.0 million tons of soybeans.
Slowly, people are realising that some biofuel crops can increase carbon emissions and reduce food production. It is so important that only crops with a good energy balance are grown, but government targets and incentives for the inclusion of biofuels do not set any standards for the type of crop or demand any kind of energy audit.
In a new study, Joseph Fargione of the American Nature Conservancy points out that clearing forests, grass and peatlands to make way for biofuel crops like corn and soybeans causes the carbon stored in the soil to escape to the atmosphere. He says that the conversion of peatlands to palm oil plantations in Indonesia has caused the greatest losses, and the conversion of land in Brazil for soy production was also very damaging.
Fargione says, “You release about 280 tons of carbon to the atmosphere for every hectare you convert, and that is compared to the saving you get when you use biodiesel, which is about 0.9 tons of CO2 for every year. So you would take 319 years just to get back to where you started by using biodiesel grown on that land.”