"It may be a poor harvest of peas and spuds but the soil itself...

"It may be a poor harvest of peas and spuds but the soil itself is turning into a gold mine". Got agricultural land in your portfolio?

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Britain may be soggy, but its soil is golden

CARL MORTISHED

July 12, 2007

LONDON -- It is the return of the great British summer, and nobody seems to like it. After several years of abnormal heat, parched lawns and water shortages, the weather pattern has reversed.

Last month was the wettest June on record. Swollen rivers have inundated parts of Yorkshire, insurers are chalking up losses, the government is worried about flood defences, strawberries look anemic and farmers are fretting.

For those whose memories stretch back further than a decade, this is how it should be. The British summer was a mild place of mildew, showers and long periods of rain. Sunshine was a blessing to be celebrated by rolled-up sleeves and an ice cream cone - but real heat was a foreign country.

Few recall that strange world before climate science became a fashionable discipline. Back then, weather just happened and was usually depressing, but today it is blamed for everyone's economic ruin. It's not just the £1.5-billion ($3.2-billion U.S.) bill for the Yorkshire flooding; every shopkeeper in the nation has taken a wrong bet, led astray by a few years of torrid Augusts and daydreams about England transformed into a Provencal playground of pavement cafés and scented lavender.

Marks & Spencer Group PLC, Britain's biggest clothing retailer, is warning about a mountain of unsold summer frocks and shorts. Its chief executive officer, Stuart Rose, achieved superstardom by fending off a bid from Sir Philip Green, the owner of Topshop and then dragging his company back from frumpy doldrums to the front line of high street fashion.

This week, however, Mr. Rose was forced to eat humble pie for comments made last year when he sneered at shopkeepers who complained about the weather. "I know I said weather is for wimps but we didn't anticipate people going shopping in boats," he said.

Climate change forecasts must have crept into the purchasing plans of outdoor furniture retailers, and there are now enough unsold barbecues to fill London's Albert Hall. No one is shopping while the rain lashes across the windowpanes. And to cap it all, food prices are soaring.

Hapless and drowned Yorkshire families who seek solace in a plate of fish, chips and mushy peas will find the cost is soaring. Cod has almost disappeared from the menu, fished to extinction in the North Sea. And even the humble chip looks threatened by a poor potato harvest. The pea crop is devastated by waterlogged land, and the price of wheat - already up a third thanks to the bio-fuel industry - is set for further gains due to flooding of arable farmland.

Even land is becoming more scarce. There is a headlong scramble by wealthy urbanites to invest their spare cash in a piece of rural England. Within just three years, the average price of an acre of farmland has risen 50 per cent to £3,500.

The purchase of a second home in the country has always been a middle-class day-dream. The reward for the director of a merchant bank or the senior partner of a City of London law firm was a Georgian rectory on five acres. But a new class of affluent townie has raised the stakes; hedge fund managers, partners in private equity firms and assorted wealthy expatriates are snapping up country estates of 500 acres in prime agricultural farmland, including farm workers' cottages.

England's countryside is experiencing a new revolution; instead of the cotton mill owners of two centuries ago, there are proprietors of money mills; but their ambition is the same, to create a landed estate and ape the behaviour of a rural aristocracy that has all but faded into insignificance.

Against that tide of new urban money are wealthy established farmers, anxious to add to their holdings at a time when commodity prices are on the move. There is almost universal agreement that food prices, stuck in a rut for decades, are now set for a period of rapid upward momentum. Even the dairy sector, abandoned by thousands of British farmers, fleeing years of uneconomic prices, is perking up as Asian demand for milk and cheese erodes European surpluses.

Foreign capital, invested in the City of London is fuelling this rural boom, so it is only fitting that foreign agricultural investors are buying up rural England. Danish and Irish farmers are bidding for estates in East Anglia. Prices in those countries are even higher than in England. It may be a poor harvest of peas and spuds but the soil itself is turning into a gold mine.

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