Agcapita Update – Canadian Growing Season Lengthens 2 Weeks Over Last 50 Years, Farmland Values to Benefit?
Calgary, Canada, April 19, 2014 --(PR.com
)-- According to a recent Bloomberg article: "Corn is the most common grain in the U.S., with its production historically concentrated in a Midwestern region stretching from the Ohio River valley to Nebraska and trailing off in northern Minnesota. It had been ungrowable in the fertile farmland of Canada’s breadbasket. That is changing as a warming climate, along with the development of faster-maturing seed varieties, turns the table on food cultivation. The Corn Belt is being pushed north of what was imaginable a generation ago. Growing seasons on the Canadian prairie have lengthened about two weeks in the past half-century. The mean annual temperature is likely to climb by as much as 3 degrees Celsius (5 degrees Fahrenheit) in the region by 2050, according to Canadian researchers."
Stephen Johnston, founder of Agcapita, a Canadian farmland investment fund, commented "Agcapita believes that prices of Canada farmland, in particular Saskatchewan farmland, are deeply discounted to world averages for a tonne of productive capacity. Part of our investment premise is that this gap will close and with the attention that Canadian farmland is receiving from investors it can obviously happen quite quickly. It is this "margin of safety" return driver that attracted us to Canada and Saskatchewan in the first place. In the event that the Canadian growing season continues to lengthen, additional upward pressure should be placed on Canadian farmland prices as productivity increases, providing yet another return driver to the investment premise.”
Agcapita believes that farmland funds continue to show great appeal to conservative investors concerned with inflation and the volatility of their existing public equity investments. Canadian farmland has similar inflation hedging qualities to gold but with an ongoing cash yield that gold lacks. Canadian farmland returns have exhibited low volatility and this combined with higher absolute returns equate to a favorable Sharpe ratio. Agcapita’s funds directly hold diversified portfolios of farmland in western Canada, and in particular in the highly price competitive province of Saskatchewan. Agcapita’s fund’s give investors the benefit of a direct investment in farmland combined with a model of front-end loaded cash rents. Agcapita believes farmland is a safe investment, that supply is shrinking and that unprecedented demand for "food, feed and fuel" will continue to move crop prices higher over the long-term. Agcapita is one of Canada's most experienced farmland fund managers, launching its first fund in Q1 2008.
This news release may contain certain information that is forward looking and, by its nature, such forward-looking information is subject to important risks and uncertainties. The words "anticipate," "expect," "may," "should" "estimate," "project," "outlook," "forecast" or other similar words are used to identify such forward looking information. Those forward-looking statements herein made by Agcapita, if any, reflect Agcapita's beliefs and assumptions based on information available at the time the statements were made (including, without limitation, that (i) the demand for agricultural commodities will continue to grow at a pace that is unlikely to be matched by growth in agricultural productivity, and (ii) investment demand for tangible assets such as agricultural commodities and farmland will continue to increase for the foreseeable future). Actual results or events may differ from those anticipated or predicted in these forward-looking statements, and the differences may be material. Factors which could cause actual results or events to differ materially from current expectations include, among other things: risks associated with the ownership and operation of farmland, including fluctuations in interest rates, rental rates and vacancy rates; general economic conditions; local real estate markets; supply and demand for farmland; competition for available farmland; weather; crop diseases; the price of grain and other agricultural commodities; changes in legislation and the regulatory environment; and international trade and global political conditions. Readers are cautioned not to place undue reliance on any forward-looking information contained in this news release (if any), which is given as of the date it is expressed herein. Agcapita's undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.