New York, June 23 - Recovery from the global economic downturn is already in sight for agriculture, with strong commodity prices and growing investment interest in the sector seen from Asia to the Americas, a leading international agricultural analyst said on Tuesday.
"Concerns about food supply shortages amid growing population and moves by public and private entities to secure both land and water, as well as agriculture-related infrastructure, should translate to both sustained price strength for agricultural assets as well as gradual changes in government policies and trade," said Michael Whitehead, executive director of the food and agribusiness research and advisory unit at Rabobank International, which operates in 43 countries.
"When the crisis hit, the market became nervous about commodities and we saw the market pull away. We're now seeing that recover," said Whitehead in an interview on the sidelines of an agriculture investment conference in New York.
"This is a sign of the overall big structural change in commodity prices. Even while the crisis is there, the fact that the long-term averages are up is a good sign for ag," he said. "It would appear they seem likely to hold at these higher averages."
Whitehead said a recent influx of capital into the farm sector is being noted in countries around the globe with South America, New Zealand and Australia particularly appealing for reasons ranging from their crop production potential to favorable levels of government oversight.
Rapidly growing China is particularly aggressive in securing land and resources, Whitehead said, and despite criticism for Chinese efforts to acquire large-scale farmland in Africa, China is seen continuing to aggressively pursue acquisitions in other countries.
"The Chinese are looking at a range of agricultural options around the world. Food security continues to be a big issue for the Chinese because food security means social stability," Whitehead said. "If China can't in the long term supply its own food needs, it's got to go offshore."
New Zealand, Australia and Brazil hold particular appeal for China as well as private investment groups, with less opportunity seen in North America and Europe where government policies are less friendly for foreign direct investment, Whitehead said.
There is likely to be an easing of restrictions seen around the world on foreign direct investment, Whitehead said, though he expects such changes to be gradual.
At the same time, battles over trade restrictions are expected to remain an issue, and Whitehead said he expects a renewal of trade challenges against the United States over policies impacting sugar, ethanol and possibly cotton.
Overall, Whitehead said agriculture was benefiting now from a fresh look by investors who see the sector as a hedge against inflation and of tangible value as world population expands.
The United Nation has projected that world population will reach reach 7 billion early in 2012, up from the current 6.8 billion, and surpass 9 billion people by 2050.
"Finally agriculture is sexy. For many years the world took food for granted," said Whitehead. "But the world has woken up to the fact that it definitely has to plan for the future."