'Hedge Farmers' Send US Farmland Prices 20% Higher in Q1

Posted by Adam Sharp - Friday, June 3rd, 2011

The WSJ reports that American farmland prices rose 20% in the first quarter of this year.

Soaring grain prices are a major factor driving land prices higher. But if recent inflation is only "transitory", as Bernanke assures us, what else could explain the sudden interest?

Low yields and a general lack of investments considered to be "safe" are also boosting interest from unlikely farmers.

Consider Graham Birch, formerly England's top natural resources fund manager. In 2009 he traded his job at BlackRock, where he headed a team managing $36 billion, for a 2,300 acre farm.

Birch said of his transition from running money to planting seeds, "The stress as a fund manager was relentless. Every day you have to beat the stock market again. With farming, it’s physical challenges and practical challenges."

Those with a bleak outlook for the world economy are also seeking shelter on the farm.

Last year Scion Capital Founder Dr. Michael Burry gave a rare interview in which he said, "Productive agricultural land, with water on site, will be very valuable in the future." You may not recognize the name, but Mr. Burry is the trader who made billions shorting sub-prime and was the focus of Michael Lewis' best-seller The Big Short.

Burry has since liquidated Scion Capital, and is focused on personal investments. He has been favorable on gold as well as agricultural land. In the clip below, he discusses the attractiveness of these alternative investments. It's worth watching (from Sept 2010).

Legendary investor Jim Rogers has been buying up farms and land since at least 2009, as he explains in the CNBC interview below. Mr. Rogers has positioned himself remarkably well in a crazy market, once again.

Farming was once the heart of the world economy. Over recent decades, it has been viewed almost as a relic of the old economy. That view is changing.

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