With the right product in the right place, farmland and agriculture in the US can offer real opportunities for top investment performance. This is underpinned by the fundamentals of food and energy security.

However, commodity price fluctuations are likely to have a more direct effect on value growth in the US where values are closely related to farm profits, this is in contrast to areas where the demand from non-farmers is a real driver such as the UK.

As reported, variations in current value and growth over the past decade have been significant. The main grain producing areas have recorded the fastest value growth. However, we expect the current fall in commodity prices to reduce profits and for cash flow pressure to have the greatest impact here. Also around a third of corn production is used to produce ethanol. Therefore, any falls in ethanol and overall fuel use is likely to add more pressure to prices.

Levels of debt are now lower than in the 1980s and the latest five-year farm bill signed in February 2014 will reduce exposure to commodity price volatility. When combined with relatively low farmland supply all these factors will help support any short term downward pressure on values.

Serious consideration

US farmland should be a serious consideration for investors looking for scale, high value niche markets, and the opportunity for a reasonable income yield, these are difficult to achieve in the UK, as well as medium to long term capital growth in a mature and transparent market.

In addition, the US is accessible in terms of trade, travel, and finance, and purchasing US farmland can preserve UK tax advantages for the UK investor. We expect demand from these buyers to also add a level of support to the US market, especially as there are significant sums of money available to diversify relatively small proportions of total investment portfolios.

Other opportunities to enhance value including strategic development and minerals should not be discounted. Although, due to the size of the US, these are significantly fewer than in more densely populated countries such as the UK and tend to be long term in nature.