Calgary, Canada, September 18, 2011 --(PR.com
)-- Agcapita Partners is pleased to announce that Agcapita Farmland Fund III has been opened to investors with is a $20 million offering.
Agcapita Fund III is the only farmland investment fund eligible for Registered Retirement Savings Plans (“RRSP”).
Agcapita Fund III will shortly begin its acquisition program of row crop farmland in Canada. Agcapita believes that western Canadian farmland, particularly Saskatchewan farmland, is an undervalued asset. “With an average price of approximately $500 per acre, Saskatchewan farmland is some of the least expensive in the world – on both an absolute and a productivity cost basis,” said Chief Investment Officer Stephen Johnston.
With growing populations and declining arable acres, the ratio of people to farmland has been deteriorating steadily over the last 50 years, says Johnston: “In 1960 there were 2.6 acres of arable land for every person on the globe, by 2006 this had fallen to 1.2 acres per person and by 2030 it will have fallen to 0.8 per person.” Agcapita believes that this supply-demand trend will put upward pressure on farmland prices.
Agcapita will appeal to conservative investors concerned with inflation and the volatility of their existing public equity investments. “Our analysis shows the risk of inflation increasing hence our continued interest in farmland investments. Farmland has similar inflation hedging qualities to gold but with an ongoing cash yield that gold lacks. Farmland returns exhibit low volatility and this combined with the high absolute returns from farmland equate to a favorable Sharpe ratio,” said Johnston.
Agcapita believes farmland has many unique and attractive investment characteristics:
Over the last 15 years, farmland investments have exceeded stock market returns with up to 60% less risk.
Farmland cannot be manufactured or replaced and is steadily disappearing. 25 million arable acres are permanently lost each year.
The global population continues to grow and diets continue to improve. Based on current farmland productivity growth levels global food production shortfalls could reach 30% by 2020.
The government mandated biofuels targets of 5 of the world’s largest oil consuming countries/regions require as much as 440 million acres of farmland to be taken out of food production and put into energy production. These targets are increasing all the time.