There seems to be a direct relationship between the prices of commodities and Farmland prices. The prices of the commodities are driven by the productivity on one side and demand for agricultural produce vs. its supply on other side. The current European crisis and severe inflation of commodity prices have made land attractive to investors. Farmland has become extremely expensive because of the vibrant demand for agricultural products, both in the home country and abroad. And yet, speculators feel that land is precious and irreplaceable when it comes to long term investment.
Farming regulations and policies, especially the restriction on farmland expansions, droughts affecting the production and strong export protocols, have created an acute shortage of commodities such as wheat and coffee. Even with all the industrialisation, countries are facing challenges to meet the growing food demand. In order to escape this crunch and evade further crisis, governments are coming up with new strategies to encourage agriculture. This has also added to the acceleration of farmland prices. The commodity price charts clearly reflect the agricultural product volatility and inflation. Even a few points variation on the commodity price chart create an equivalent impact on land costs.
The question now is will the farmland value keep increasing. Many feel that as land is a limited resource; there can be no decrease in its value. However, if there is an increase in crop production or a fall in crop prices, the farmland prices could take a small cut. For now, though, there is no better investment option than farmland.
Farming regulations and policies, especially the restriction on farmland expansions, droughts affecting the production and strong export protocols, have created an acute shortage of commodities such as wheat and coffee. Even with all the industrialisation, countries are facing challenges to meet the growing food demand. In order to escape this crunch and evade further crisis, governments are coming up with new strategies to encourage agriculture. This has also added to the acceleration of farmland prices. The commodity price charts clearly reflect the agricultural product volatility and inflation. Even a few points variation on the commodity price chart create an equivalent impact on land costs.
The question now is will the farmland value keep increasing. Many feel that as land is a limited resource; there can be no decrease in its value. However, if there is an increase in crop production or a fall in crop prices, the farmland prices could take a small cut. For now, though, there is no better investment option than farmland.
