2013 Spring - Financing the future of farming

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FPJ1003E - Ducastel & Anseeuw - Situating Investment Funds in Agriculture

Ducastel, A, Anseeuw, W (2013), Situating Investment Funds in Agriculture, Farm Policy Journal, Vol. 10, No. 3, pp. 23-31, Spring, Surry Hills, Australia.

The ‘multiple food-energy-climate-finance crisis’, triggered in 2007–08, led to a renewed interest in agriculture on the part of the private investors. The projections surrounding the agricultural sector (population growth, pressure on natural resources, dietary changes and energy and environmental tendencies), coupled to the food price crisis of 2008 are questioning the myth of the permanent low cost of food commodities and are pushing investors towards agricultural activities. A reversal of the risk/profit relationship appears within the production chain: whereas primary production constituted until now the main risk factor, with profits returning particularly to downstream actors, the increase in agricultural prices now tends to invert this relationship. Such reversals predominantly fuel large-scale global land acquisitions. The financial crisis of 2009 strengthened this dynamic and brought new participants to agriculture, particularly from financial markets. Confronted with uncertainties affecting ‘traditional’ financial assets (eg bonds, equities), these new participants diversified their investment portfolios, integrating more ‘emerging concepts’ and/or physical assets in investment classes such as agriculture.

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