Funds’ $40 Billion Bet on Farmland Seen as a Fraction of Market

Agricultural land represents an $8.4 trillion market, of which institutional investors own about $30 billion to $40 billion, according to Macquarie Agricultural Funds Management.

Farmland has attracted “very little” institutional capital, said Sydney-based Tim Hornibrook, an executive director and co-head of the fund that manages 3.6 million hectares (8.89 million acres) of farmland. Agricultural land for investment is valued at $1 trillion, according to the fund, which has more than A$1 billion ($1.05 billion) in the industry.

“There is a perception that there are billions of dollars going into the asset class, but that’s not the case,” Hornibrook said in an interview in London yesterday.

Investors are looking for low political risks in farm investments as they need to get used to agriculture risks first, Hornibrook said. This narrows attractive farmland to a “small universe,” he said.

Macquarie Agricultural Funds Management has farms in Australia and Brazil producing goods ranging from grains to sheep to wool and almonds.

To contact the reporter on this story: Maria Kolesnikova in London at mkolesnikova@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net

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