Wow
The article & charts do a great job at proving that technology can be deflationary. Fertilizer improvements, herbicides, pesticides, large combines, irrigation, satellite crop assessments, tillers etc. have immensely improved Ag production in the past 50 years and in the process driven the price of the commodities into the ground.
The interesting thing that might be changing is that world demand is increasing. There is an interesting TED talk from a couple months ago done by an African woman who was a commodity trader. She did a world calorie balance (# of calories needed to maintain life * population * pop. growth rates..etc.) to determine that the world will be at a net deficit in approximately 10 years. To overcome this deficit she concludes that marginally arable lands in Africa and Asia will need to become productive. This is no small task given soil issues, lack of water etc. Solutions like clearing and plowing more of the Amazon Basin are meeting resistance. Likewise war and/or famine are unacceptable answers.
Bill gates has been doing a lot to support 3rd world issues. He may have an eye to the developing problems in Africa. However, I doubt that he is not currently leasing the land. I bought some FPI last week since farmland like timberland tends to perform well during inflationary periods. I like the dividend and the commitment to maintaining it. However, I'm not crazy about the amount of leverage utilized to maintain the payout. I've rationalized that if a cash crunch develops the REIT manager can always sell some assets (farms) and trim the Div while still maintaining an attractive payout (at least at my entry point). Since the Fund is trading well below the NAV of the acres held, it seemed like it was worth some investment in the interest of portfolio diversity. It is easier than trying to buy raw farmland.
Regards FL
