Agcapita Agriculture Update
2	 Farmland	Priced	in	Gold
3	 Food	Price	Update
4	 Wheat	Supply/Demand	Update
Demand	for	western	Canadian	farmland	continues
to	grow	along	with	overall	interest	in	the	asset
class.			Increasingly,	investors	perceive	farmland,	and
particularly	Canadian	farmland	through	the	following
Inflation Hedge:	Farmland	is	an	excellent
inflation	hedge	like	gold,	but	unlike	gold	farmland
–		 Diversification:	Farmland	returns	are	not
correlated	to	stock	market	returns.
–		 Low Risk Exposure to Growth in China:
Canadian	farmland	is	a	low	risk	way	to	invest	in
growth	in	China’s	economy	-	farmland	prices	are
being	driven	by	at	the	margin	by	food,	feed	and
fuel	demand	from	China.
–		 Competitive Prices:	Saskatchewan	has	some
of	the	lowest	price	farmland	in	the	OECD	on
both	an	absolute	basis	and	more	importantly	on
the	basis	of	the	cost	of	a	bushel	of	yield.	The
low	price	base	is	generating	solid	appreciation
as	investment	capital	enters	the	market.
Saskatchewan	farmland	returns	-	quick	summary:
-	2007	–	values	increased	11%
-	2008	–	values	increased	15%
-	2009	–	projected	increase	11%
-	Cash	Rents	>	7%	pa
FARMLAND PRICED IN GOLD
The	Saskatchewan	farmland/gold	ratio	is	significantly
below	its	50-year	long-term	average	of	0.8	times	–
and	in	fact	is	almost	at	the	lows.	If	the	ratio	were	to
reach	a	similar	peak	to	the	last	inflation	period	of	the
1970’s	of	1.1	to	1.2	times	–	Saskatchewan	farmland
would	have	to	almost	triple	from	current	levels
assuming	gold	is	properly	pricing	inflation.
It	is	interesting	to	note	that	both	gold	and	farmland
are	excellent	long-term	inflation	hedges	with	similar
correlations	to	inflation	of	around	positive	0.5	times.
However,	gold	tends	to	be	is	a	leading	inflation
indicator	while	farmland	tends	to	be	a	coincident/
lagging	inflation	indicator.
Based	on	trailing	5-year	maximum	prices	(average
annual	gold	price	versus	annual	price/acre)