Reflet_2015_05_14

Agri-food supplement

How to explain tHe explosion in agricultural land prices?

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The price of agricultural land around the globe has exploded in recent years. The rising price of agricultural land around the globe is both surprising and worrying. For example, in several of the American states where grain corn and soy production is common, the value of agricultural land has risen by two digits over the last few years. France is also suffering from this phenomenon, with increases of more than 6 percent since 2010. The same applies to Canada, where the value of land has increased an average of 8 percent since 2006. But how can the explosion in prices be explained in a global context, where stagnating economies are prompting ex­ treme caution? From the outset, analysts have pointed out that food requirements are increasing from year to year, especially in China and India. These developing countries are now

consuming more, and better quality, food products. The United Nations forecasts that there will be more than nine billion mouths to feed around the world in 2050. Other experts in this domain attribute these recurring price increases to low interest rates, higher crop prices, and low returns on financial markets. The scarcity of good agricultural land is also an important factor, as is the appearance of speculators who have decided that land is a profitable safe haven in the present economic context. Many people have purchased land to rent out and are expecting to make profits. This situation is one of concern to many agricultural organizations, which realize that arable land has become too costly for many commercial crop producers. Indeed, it is worrying to many just to think about the situation future generations of farmers will find themselves in.

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