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Saturday, February 26, 2011

CANADIAN FARMLAND--THE NEW (AND CHEAP) INVESTMENT





Canadian farmland is cheap compared to prices asked elsewhere.  In fact Saskatchewan, the 4th largest grain exporting region, is the cheapest at $450 an acre as reported on Business News Network (BNN) yesterday.  Compare that to Manitoba at $690/acre, Alberta $1,100, the USA at $2,900 and the UK at a whopping $10,000 and acre!  No wonder Canada is being eyed up as the place to park some money.  Some emerging markets are starting to take protectionist steps to curb future out-of-country investment in their arable land.  Take Brazil for instance.
In the last 6 years Brazil has had $5B in foreign investment buying up farmland.  That is now prompting legislative moves to bar any further foreign buyouts.  Currently they are trying to make the law retroactive which in effect is expropriation. 
Such is the risk of investing in emerging markets in times of increased sensitivity in agriculture and food supply.  Political risk is a key determinate factor in return. 
 From that standpoint alone, stable Canada is an oasis in a world of uncertainty. 

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