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Population growth and westernisation of consumption patterns as secular trends
One of the trends underpinning the value of farmland in general is world-population growth. Further, as more and more in the BRIC nations escape poverty and join the middle-class their consumption patterns Westernize.

Most importantly this means a replacement of plant-based staple-food with meat. As a rule of thumb, meat requires about seven times the amount of corn or wheat and substantially increases the amount of water and energy per calorie consumed.

Consequently,  the demand from population growth on food production is further compounded by changes in the quality of food. Furthermore, past yield gains were attributable to increased fertilizer usage and greater capital intensity in agricultural production.

Attractive investment case: Uruguayan farmland
Global issues aside, Uruguayan farmland is attractive in its own right. Firstly, as many would not expect, Uruguay is politically as stable as it gets. Its an old democracy, it ranks better than Italy and Spain in corruption terms,foreign investors have equal rights to domestics and this is guaranteed by the constitution.

Economically, Uruguay has decoupled from Argentina. It has been the previous dependence on the larger neighbour that “imported” recession. Since then Uruguay has been upgraded and now has a sovereign debt rating of BB, one notch below investment grade. Uruguay’s prudent governmental financial management reflected in their low public debt to GDP ratio, social stability, free education and strong growth make an upgrade to investment grade quite likely.

Compared to its larger neighbours, Uruguay’s soils are just as good if not better. The domestic service industry is so well developed that practically any service can be outsourced at competitive prices. Transaction numbers are very high which makes Uruguayan farmland a reasonably liquid investment.

Climate is mild and conducive to agriculture and, importantly, there is sufficient water in the aquifers. In contrast to many other countries large plots of high-quality land can be bought up that allows to build-up economies of scale quickly. Last but certainly not least, prices are still well below those of Argentina and Brazil, not speaking of the USA.

Asset Classes Corporate Venture Capital Fund Renewable Energy Real Assets Commercial Property Residential Property Agriculture