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USA Agricultural / Food & Bio-Fuel REITs: Sector Focus
Monday, 29 September 2014 03:51

Agricultural / Food & Bio-Fuels: As the world's population continues to grow, there is ever growing demand for food, bio-fuels and agricultural commodities such as cotton. To better understand world food production (which includes both acres and productivity), the OECD-FAO agricultural forecasts (Link), which includes both acres and productivity), the OECD-FAO agricultural forecasts for coarse grains provides a good proxy for staple crops, which shows that from now to 2022 the supply is expected to increase by 12% whilst the demand by 17%, which assuming a constant ratio of farmland rent to revenue suggests that rentals should outstrip inflation, although various technological advances (such as GM food and hydroponics), could slightly reduce the global demand for farmland through higher yields per hectare.

  • The USD$35bn per year organic market has grown by an average of 14%pa year since 1990, and now represents about 4% of the US food budget. The main factor holding back this market from even more rapid growth is the limited supply of land used to produce organic food because only 1% of crop-land is certified as organic, and the pace of conversion is only 8%pa, producing a shortfall worth about USD$80bn.
  • Global cropland area grew by 78m acres between 1991-2011, compared with the 238m between 1971-1991, yet but by 2050 the supply of global cropland is projected to grow by less than 5%.

 

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Last Updated on Tuesday, 04 August 2015 11:13