Behind the rise in farm prices is the strong grab for land. It is happening in the US, South America, Africa, and the steppes of eastern Europe. This is the result of lower supplies and the expectation that population growth is not going to abate. Don't buy building or housing, buy producing land. With interest rates low, the cost of financing land purchases is low. Buy farmland, develop it, and you have a greater inflation hedge and productive asset with potential high returns. Now farming has traditionally been very volatile but those flush with cash will find this a great potential opportunity; however, prices are matching all time high is many areas.
The question is whether this is good for the farmers especially in developing countries where property rights are unclear. Corporate farming has never been good for existing small landholders but it is a way to solve consumer problems. So what is more important traditional farming or feeding the masses? We may not be able to have it both ways.
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