Assessing the risk and opportunities in global farmland investment
When exploring opportunities to invest in farmland, a detailed evaluation of the factors that influence the long-term asset viability and inform the implementation of effective risk mitigation strategies is important. Beyond land prices and agricultural yields, broader national conditions, such as the political and economic stability, as well as the legal environment, can significantly impact the success of investments. At a more local level, other considerations may include the availability and quality of agricultural infrastructure, soil composition and fertility, rainfall patterns, temperature ranges, topography, and ease of transport access to the land. These can vary widely within a country.
Savills global index of investible farmland quantifies the key macroeconomic factors that influence a decision to invest in farmland on an international level
Jonny Griffiths, Savills Head of International Farmland
To provide an indication of the level of risk associated with investing in farmland across different countries, the Savills Global Index of Investible Farmland quantifies the key country-level factors that influence a decision to invest in farmland. This measure utilises assessments of socio-political performance, financial rigour, and currency stability, alongside any regulatory barriers to overseas investment. The measure also takes into account a country’s position with regard to regenerative agricultural policies as an indicator of an investment’s potential to fulfil environmental elements of ESG (environmental, social, and governance). It also considers future improvements in soil health, which can be an essential factor in enhancing the long-term agricultural productivity and value.
While this index offers a useful indicator of the investible landscape of a country, it focuses only on those 15 countries within the global index. The risk/return profile of any individual investment prospect needs to be thoroughly assessed.
Read the articles within Spotlight: Global Farmland below.
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