Is Farming Poised to be the Next Bubble?

Paul Kedrosky gathers some research pointing to an uptick in agricultural investing:

It’s interesting to see a major university endowment get behind the idea of farm investing in a fairly significant way:

George Washington University’s investment office, which manages the university’s $1 billion endowment fund, will lift farm investments to 10 percent of its portfolio, said Rodney Lake, an analyst at the university.

…The university’s investment office sees 10 percent to 15 percent as “the appropriate rate of return prospect” on its agriculture investments, according to Lake.

This makes sense when you look at what food importing governments are doing as the Economist pointed out in May:

The Saudi programme is an example of a powerful but contentious trend sweeping the poor world: countries that export capital but import food are outsourcing farm production to countries that need capital but have land to spare. Instead of buying food on world markets, governments and politically influential companies buy or lease farmland abroad, grow the crops there and ship them back.

Supporters of such deals argue they provide new seeds, techniques and money for agriculture, the basis of poor countries’ economies, which has suffered from disastrous underinvestment for decades. Opponents call the projects “land grabs”, claim the farms will be insulated from host countries and argue that poor farmers will be pushed off land they have farmed for generations.

One of the United States' many competitive advantages internationally is the fact that we are blessed with an abundance of water and farmland, enough to feed our entire population and then some. As China and India demand more and more food, the value of these resources internationally will only increase.