[Sixstrings]

Who says the only investable assets are equities, fixed income or commodities? Not TIAA-CREF - the Teachers Insurance and Annuity Association has figured out that one of the arguably best fat tail investments has nothing to do with America's megabroken capital market structure, and is instead going back to grass roots... Literally. The FT reports that "TIAA-CREF, an asset manager, is ramping up its exposure to agriculture by buying a specialist investment firm, in an effort to double its activities in the emerging area of “real asset” investing.

Westchester, in which the US pension fund has taken a controlling stake, manages about $1bn in assets and nearly 320,000 acres of farm land, as well as acquiring land on behalf of large clients. About 80 per cent of its holdings are managed on behalf of TIAA-CREF, one of the world’s biggest money managers." In other words, farms (or "real assets" as they are known in polite company) are about to become the next big bubble, and the "you have two cows..." joke is about to make a very violent comeback.
http://www.zerohedge.com/article/tiaa-cref-investing-farmland-harbinger-next-asset-bubble

Gee, maybe the good folks at Goldman Sachs will find a way to split farms up into securitized "financial products" that little towns in Norway can invest in.

[dolanbaker]

I suppose it would only become a bubble if the sheep rush in and graze, if ho one follows their lead, they'll just find themselves with a lot of land that they may find few buyers (mugs) to take off their hands.

[Outcast_Searcher]

I don't see the advantage of doing this for the likes of a TIAA-CREF sort of entity. So there aren't enough commodities and resource related stocks to invest in? So they have to risk dramatically rising costs like land taxes and the hollowing out of American wealth (negatively impacting the real value of land in the long run) in order to diversify more?

For an individual/family to invest in a doomstead or bug-out place is one thing. I wonder if down the road we won't be seeing something about an outsized real estate fee scandal or some such thing, if this becomes a big trend.

[pup55]

Farmland, anywhere in the world, is a function of the value of the crops you can grow on it.

Most places in the US have quite detailed records on what their yield per acre was and for what crop in the local area....so it's a simple math problem, if you know the future price of the crop.... That is where the real bubble is: These guys are actually speculating on the prices of the crop, usually corn and soybeans going through the roof....

[Pops]

I've been talking about this for a while.

Half the farmland in MO is rented, somebody owns it and it's more than likely a bank. Iowa land is $2-3k/ac and rents are $175/ac - what's that, 6% after taxes?

In the next 50 years the population is going to increase by 50% - 3 billion people gotta eat too so the price of a bowl of gruel is going nowhere but up..

[hillsidedigger]

You all know the number of people in the world

but did you know there is only 4 billion acres (decreasing every year due to desertification, erosion and other reasons) of good, arable land

plus 2 billion more temporary acres that are cropped by heavily engineered and energy intensive irrigation and drainage.

There's also another 3 billion acres of high to low quality pasture and range.

That doesn't seem like enough for 7 billion people, much less 10 billion.

[Pops]

In the US there is the same amount of farmland (being farmed) as there was in 1945.

Small parcels and marginal land just aren't viable as "farms" anymore. Plus, there was a good amount of nice soil ruined by our first forays into "modern" farming - think straight-line tilling and dust bowls. Around my farm in southwest missouri there are lots of silos but we don't grow grains anymore - the fields are just too small for efficiency. Even on my property, which has one of the best soil types in the area, there is a huge difference in topsoil depth, up near the house it's nice black silty-loam down maybe 3 feet, out in the fields maybe 18-24 inches. But on many older places like mine, the topsoil is just about gone. This place was not worked as cropland after the '20s so it escaped the damage that lots of places suffered.

[Ludi]

A lot of fields that used to be worked here are also very small, Pops. They're impossible to work with the giant modern equipment, so they are victims of the "Get Big or Get Out" trend of farming. There's still a lot of farmable land around here, not being farmed. Of course in our climate here of Central Texas, maybe it shouldn't be farmed. Most of it was developed during the cotton boom, which was extremely brief. But this land could still grow food, just not with agriculture. Perhaps with horticulture or permaculture. Those methods of food-growing can be practiced on even the worst kind of marginal land, given enough available labor and some time. But most folks aren't jumping up and down for a chance to grow food by hand.

[dinopello]

Some guy that directed that HBO Documentary "Gasland" was saying how many dairy farms closed up and also that the dairy farmers in upstate NY and Penn were getting more for their land for hydo-frac'd nat gas than producing milk. How this goes maybe will affect the valuation of some farm land. But maybe it's just a drop in the bucket.

[Serial_Worrier]

I've been talking about this for a while.

Half the farmland in MO is rented, somebody owns it and it's more than likely a bank. Iowa land is $2-3k/ac and rents are $175/ac - what's that, 6% after taxes?

In the next 50 years the population is going to increase by 50% - 3 billion people gotta eat too so the price of a bowl of gruel is going nowhere but up..

You know I don't automatically see a 50% rise in world population. I see things leveling off at 7.2-7.5 billion.

[Pops]

You know I don't automatically see a 50% rise in world population. I see things leveling off at 7.2-7.5 billion.

That would be a good thing, what makes you think so?

[Serial_Worrier]

You know I don't automatically see a 50% rise in world population. I see things leveling off at 7.2-7.5 billion.

That would be a good thing, what makes you think so?

I think the 3rd world is really getting a handle of birth control! At least I'd like to think so...

http://en.wikipedia.org/wiki/List_of_co ... rowth_rate

At least India & China have.

[Ludi]

I think the 3rd world is really getting a handle of birth control! At least I'd like to think so...

Most projections of population growth are based on the the idea that 3rd world nations will increase their standard of living to the point where it is advantageous to have fewer children. Increased standard of living is generally considered to be largely based on the availability of relatively cheap energy. Which some people think is going away. Population growth is slowing but not stopping. For things to level off at 7.2-7.5 billion would require many nations to have static or negative population growth, which we tend to see only in the most affluent nations. Only in the case of extremely devastating pandemic (ie The Black Death) or massive famine (possibly) do we see negative population growth not linked to affluence.

"The world population increased from 3 billion in 1959 to 6 billion by 1999, a doubling that occurred over 40 years. The Census Bureau's latest projections imply that population growth will continue into the 21st century, although more slowly. The world population is projected to grow from 6 billion in 1999 to 9 billion by 2044, an increase of 50 percent that is expected to require 45 years."

http://www.census.gov/ipc/www/idb/worldpopgraph.php