Farmland: An answer to inflation

1) Why farmland is “the answer” to an inflationary future and also to any future depression

Craigmore is confident that agricultural commodities, which are in tight supply, will benefit more than the authorities would like from the significant money-printing that is occurring and likely to continue. The largest money-creation in history was executed by the ECB yesterday.

Money printing is the only alternative western countries have to a financial melt-down.

If our confidence is misplaced then a financial and economic Armageddon will occur. Real economies would soldier on (basic goods such as utilities and transport fuel and supermarket and hospital services would, one hopes, still be supplied). But the financial sector and securities markets would collapse. In this scenario a share of a pool of farmland assets (with very low cyclicality – given that people have to eat even if they give up on luxury cars) is one of the rare forms of savings that is going to hold its value.

In fact world outcomes are seldom right at one extreme or the other. At least they have not been since the 1930s. It is therefore possible that both inflationary money-printing and financial collapse will occur and off-set each other to some extent (in fact that is exactly what the ECBs LTRO is achieving – it is printing money to prevent European financial melt-down). In this scenario investments in farmland may benefit from both its favourable inflationary and its defensive profiles.

2) The environment: contributing to the United Nations Principles of Responsible Investment (UNPRI) PRI

The Financial crisis does not absolve us of responsibility to interact prudently with our planet’s environment. World leaders haltingly recognised this with an “agreement to agree” at Durban.

Craigmore has become a signatory to the UNPRI and joined its Farmland Working Group to help design policies for responsible investment in farmland.

3) A big thank you. Many thanks to the 25 investors who have now invested in our farming and forestry funds

Across the Funds Craigmore is now responsible for over NZ$70 mm of client capital. Thank you also to the Craigmore team for bringing their judgement and hard work to bear on behalf of our clients. A special thank you to my Partner (and brother in law) Mark Cox for joining me in this endeavour.

Warm seasonal greetings, Forbes Elworthy