Calgary, Canada, January 24, 2012 --(PR.com
)-- Agcapita Farmland Fund is pleased to announce it has signed a purchase agreement for 1,920 acres in the RM of Chesterfield Saskatchewan as part of its fall 2011 acquisition program. Agcapita Farmland Fund III is currently raising $20 million via a RRSP eligible offering with a minimum investment of $5,000. Agcapita Farmland Fund III is open to investors in BC, Alberta, Saskatchewan, Manitoba and Ontario. Investors outside of Ontario do not have to be accredited. Agcapita Farmland Fund is part of a family of funds with over $100 million in assets under management and is the only RRSP eligible farmland fund in Canada.
Farmland has been demonstrating its unique features as an asset class since the financial crisis with solid absolute returns coupled with low volatility. A recent EU World Agricultural Outlook report says that agriculture is expected to cope better than other sectors with the economic crisis due to the relatively low income elasticity of demand for food. The report suggests that, once the recession ends, grain and oilseed demand will accelerate in Asia, Africa and the Middle East, driven by population growth, the expansion of livestock production and increased demand for biofuel feedstocks.
Stephen Johnston, partner at Agcapita Partners, commented that “Agriculture has high energy inputs in the form of fuel and fertilizers. Therefore, in a market of rising energy and agricultural commodity prices do farm operating margins increase, remain flat or decrease? This is where the question of the elasticity of demand for food versus energy becomes interesting. Historically food demand has been more inelastic than energy demand. If this relationship were to continue then we would predict that in a secular bull market for commodities, agricultural commodity prices would rise more quickly than energy prices and therefore farm margins should improve. In general our belief that the prairie price discount and increased demand for 'food, feed and fuel' will exert additional upward pressure on regional farmland values over the next decade remains unchanged. Farmland in Saskatchewan continues to trade at a substantial discount to similar farmland in neighboring Alberta on a productivity normalized basis – i.e. price per bushel of productive capacity. When we launched our first fund over four years ago we predicted that all prairie farmland would increase in value as commodity prices increased, but Saskatchewan would increase more rapidly because of its unjustified discount to similar land in Alberta and Manitoba. We are pleased to report farmland across the prairies has been increasing in price and Saskatchewan has been increasing the fastest – more than 50% faster than either of its prairie neighbors. We believe that farmland is a superior long-term investment – one of the few, genuine 'buy and hold' assets that investors can add to their portfolios and if structured properly (with limited leverage leverage) has minimal counter-party risk."
Agcapita’s funds directly hold diversified portfolios of farmland in western Canada, and in particular in the highly competitive province of Saskatchewan. Investors are provided with the comfort of a direct investment in farmland combined with a model of front-end loaded cash rents. Agcapita is part of a family of alternative investment funds with a focus on generating commodity linked returns and with over $100 million in assets under management. 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. Actual results or events may differ from those anticipated or predicted in these forward-looking statements, and the differences may be material. 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.