Move over commercial and residential, the new kid on the block...

Move over commercial and residential, the new kid on the block is farmland ...

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Green acres
Canadian farmland, cheap by world standards, the place to be
December 1, 2007
By PAUL JACKSON

After working for a number of banks and investment houses in Britain, the Calgarian decided to return to Canada when he realized the worldwide demand for energy would create an unprecedented, long-term economic boom here.

Johnston, 42, then hit on what could turn out to be a once-in-a-lifetime idea.

Farmland in Canada is incredibly inexpensive and the growing demand for "food, feed and fuel" by newly industrializing Asian nations can only push up the price to realistic levels.

"Farmland in Iowa costs on average $2,300 an acre, and in Idaho $1,800 an acre. In Alberta the cost on average is $900 an acre, and in Saskatchewan, $350 an acre. We have the cheapest farmland in North America, but it won't remain like that much longer."

So, his company, Amcapita Inc. -- amcapita.com -- decided to start searching for investors large and small willing to put their money into farmland. That's how the seeds for Farmland Investment Partnership LP were sown.

Yet why would city folk get into the farming business?

Well, Johnston isn't getting people into the farming business, but rather into the land-appreciation business.

"Over the past 15 years, returns on farmland investments have exceeded stock market returns with up to 60% less risk. Now, with growing demands for grains and beef from Asian, nations with growing prosperity and a new emphasis on biofuels, land values are rising dramatically."

Johnston unfolds charts of statistics and trends.

"Population growth means world food production shortfalls could reach 30% by 2020. Global biofuel targets are currently 12 billion gallons a year, which will require as much as 154 million acres of farmland to produce.

Meanwhile, some 25 million arable acres of land are lost each year to urbanization.

"Land is a finite product, and, in the laws of supply and demand, scarcity puts a premium on a product."

Or as author and humourist Mark Twain put it a century ago, "Buy land, they aren't making any more."