Elsewhere, the price of agricultural land has held up better than most commodities. However, land values fell in most countries in 2015 and rental growth has slowed in the past couple of years.
Investment flows into commodities have revived in 2016, although price progression in agricultural commodities has been mixed, reflecting differences in fundamentals.
Agriculture appears more attractive given the low-to-zero-to-negative yields prevailing in many other asset classes. Its role as a diversifier is also intact as long as the focus remains on fundamentals. Agriculture’s share of global GDP has more than halved since the mid-1990s, accounting for around 4 per cent in 2014, but only 1-2 per cent in Europe and the US.
Frances Hudson is global thematic strategist at Standard Life Investments
