For farmers in Britain, Mark Twain might have been early with his advice of “buy land – they’re not making anymore”.

The real – ie, inflation adjusted – worth of UK agricultural land hardly changed from the 1950s through to the mid-1990s. Then, as the country’s housing market started booming, farmland prices joined in the fun. But unlike British residential property, which has since stuttered, agricultural values have kept on climbing. So is this the peak, or is buying farmland still a good idea? We’ll take a look below – but the good news is, there’s a stock you can buy that’ll make you money either way.

Farmland looks expensive compared to stocks

UK farmland prices have almost trebled in the last decade, climbing from £2,000 per acre in 2001 to £5,500 at the end of 2011. Indeed, values in Wales have doubled in just the last five years, according to a RICS survey in February. So is farmland still good value? One of the best ways to value agricultural land – as with most other assets – is to see what return it’s generating. In other words, you compare its yield against a benchmark, such as the yield on the stock market.

Despite rising prices, even as recently as 2005 buying farmland still looked a good deal. At the time it was yielding only slightly less than the FTSE 100. Here at MoneyWeek, we advised investors to get a slice of the action. However, farmland has got a lot more expensive since then. By contrast, the stock market is hardly any higher now than either 2001 or 2005. This means the yield ratio is right out of kilter. Farmland yields have dropped as values have soared, while the yield on equities is higher than it was. British farmland now looks very pricey compared with the dividends you can get on shares.

Outside the UK, it’s a similar story. US farmland prices have doubled over the last decade. A month ago, Reuters reported that a farm in eastern Nebraska sold for $12,000 an acre. That’s around £7,500, which puts even the prices in Britain in perspective. That level of land prices is high enough to make life tough for aspiring American farmers. If they’re buying the land on borrowed money, they could struggle to make enough profit to service their loan interest. Just to pile on the pressure, the US corn harvest now looks set to be better than was expected a month or two back. That’s because they had plenty of rain in April. That means that corn prices could drop as low as $4.20 per bushel, according to the US Department of Agriculture (USDA). This compares with last year’s average price of $6.20 per bushel.

It’s good news for consumers of corn, of course – but this would really put the squeeze on American farmers’ incomes. Further, the USDA expects that this year, US farmers will plant the most corn since 1937 (inspired by last year’s high prices), which would lead to a record harvest.

Corn prices would then drop further. There would be a knock-on effect on farm prices that would stop the US bull market in agricultural land in its tracks. And the downswing would soon filter across to Britain.

So should you now forget about farmland, and look to invest your money elsewhere?

Original Article : MoneyWeek
By Associate Editor David Stevenson May 16, 2012

The FSA is considering forcing Sipp providers with riskier investments to hold more capital than those with less risky assets under proposals to be outlined later this year.

In June last year, Money Marketing revealed the FSA was planning to increase capital adequacy requirements for Sipp providers. Currently, providers are required to hold capital reserves equal to at least six weeks of annual audited expenditure.

Speaking at the Association of Member-directed Pension Schemes annual conference in London today, FSA pensions and investment policy manager Milton Cartwright said Sipp providers who hold more risky esoteric investments are more difficult to wind-down than those with less risky assets. He said: “It seems to us that the problems in orderly wind-down that we have encountered in the last couple of years have largely been as a result of the types of asset that the Sipp operator in question has held within a Sipp.

“There is a very strong correlation between the more esoteric types of asset that are held and the ability of a firm to wind-down in an orderly manner. Six weeks has certainly proved inadequate. “One of the things we are looking very carefully at is the amount of assets held within the Sipp that are esoteric.” Cartwright said while the regulator would not ban any particular asset from Sipps, providers should consider the risk of reputational damage if investments fail.

He said: “Frankly, Sipp operators are holding more Ucis investments than any other type of provider. “There is a reputational issue for the Sipp industry here. These investments are quite often high risk, carry opaque risks and have low governance requirements”.

Mr Cartwright went on to say “But we are not in the space of stopping people investing in what they want to.”

Original Article : Money Marketing

15 May 2012 2:09 pm | By Tom Selby

As Argentina’s experience after 2002 shows, when an economic crisis hits it is often best to go it alone.

IP are delighted to announce that from now on our Alternative Investment Masterclass training session will carry the Continuing Professional Development (CPD) accreditation. CPD seeks to formalise what most professionally qualified members are already doing and encourages individuals to maintain professional competence and develop further skills and capabilities.

CII CPD event accredited ‘Demonstrates the quality of an event and that it meets CII member CPD scheme requirements.’

The CII is the world’s largest body dedicated to the insurance, savings and financial services sector. Employers, agencies and the industry in general recognise that  qualified members are required to undertake a programme of CPD.

IP are committed to providing the highest level of support and training and are very pleased that we can now offer points towards attainment of a CPD accreditation.

Scandinavians are in the vanguard of wealthy foreigners buying up vast tracts of British countryside. But what’s the appeal, asks Christopher Middleton.

We knew the Scandinavians were dominating our television schedules with their dark detective dramas – but the news that they are buying up large swaths of real-life British countryside has come as an unexpected plot twist. Not only does Swedish tycoon Stefan Persson (boss of the H&M fashion chain) own 10,000 acres of land in Wiltshire and Hampshire, but Danish billionaire Anders Holch Povlsen has been putting together a collection of Highland estates like a set of Lego bricks.

Thirty-nine-year-old Povlsen, whose family owns the 12,000-employee fashion chain Bestseller, is reported to have bought two giant new pieces of land in Sutherland (the 24,000-acre Ben Loyal, and 18,000-acre Kinloch estates), in addition to the 47,000 acres he already owns in Inverness-shire (bought in 2006) and the 30,000 acres near Fort William (bought in 2008).

This brings his total acreage to about 120,000, just behind our own Dukes of Westminster (133,000), Cornwall (aka the Prince of Wales, 134,000), Atholl (146,000) and Buccleuch (240,000). Not bad going in the space of just six years.

What is going on? Given that the past century has witnessed a stampede of homegrown British aristocrats desperate to divest themselves of their family acres, why are these new, Scanda-bred squires champing at the bit to take them over? The answer is – money. While we conventional homeowners have been looking on in horror as our house prices plummet, it seems that people who have put their faith in mud and grass, rather than bricks and mortar, have been reaping a rich financial harvest.

According to the latest Rural Market Survey from the Royal Institute of Chartered Surveyors, the price of agricultural land has nearly doubled since 2006, from £3,304 per acre to its current level of £6,514. On top of which, that land has become much more scarce; the estate agents Savills says that whereas 650,000 acres per year used to change hands in the 1950s, today that figure is down to 100,000 acres. In other words, not only are people holding on to their green pastures for longer, but they are charging a lot more when they do decide to sell.

“The price has pretty much trebled in 10 years,” says Alex Lawson, Savills’ director of farms and estates sales. His counterpart at the estate agents Knight Frank takes an even longer perspective.

“If you bought in the early Nineties, you’ll have made something like a sevenfold profit,” says Clive Hopkins, head of estates and farm sales. “For many years, land in this country was significantly undervalued, and overseas buyers, the Danes in particular, stole a march on their English rivals.” In fact, it’s estimated that, in 2008, some 15 per cent of people buying UK agricultural land were foreign investors, attracted by the waft of underpriced farmland.

“Over a 10-year period, the only commodity to have outperformed agricultural land is gold,” says Hopkins. “If you invested in farmland, you’ll have done better than investing in the FTSE 100.” That comes like a sudden dunking in the village pond to those of us who had assumed that rural properties were being afflicted by the same economic blight as has been eating away at the value of our urban and suburban homes.

Far from it, though. Whereas most people’s investments have been withering in barren bank soil, owners of UK farmland have seen their portfolios blossom and bear fruit. And, rather than being squeezed dry, profits look like they are going to get even juicier.

“The future actually looks good for farming,” says Christopher Miles, Savills’ director of farms and estates sales in the east of England.

“Farming income was up by 25 per cent last year, and food prices globally rose by eight per cent. As a result, land is very much in demand; the other day, we put a 1,000-acre block of land on the market in Norfolk, and it sold within a week.”

It’s not just the value of the land that brings in the buyers, either; it’s the fact that you can pass it on to your family without HM Revenue wanting a slice.

“The agricultural element of your estate is inheritance tax-free,” explains Miles. “You have to have owned the land for two years, and although you have to be farming it yourself, you can, in fact, contract that work out. There are always farmers wanting more land, and if they don’t have to buy it, they can make more profit.”

So let’s get this right. Not only are you buying a commodity that increases in value by £44 per acre per month, but you can hand it down tax-free to your children and grandchildren. Sounds like a bargain. Wait, though, it gets better; on top of all that, the European Union will give you money.

It’s called the Common Agricultural Policy direct payment, and although we don’t know what each UK farmer gets (the European Court of Justice has declared it illegal to publish how much is given to individuals), we do know that the National Trust got £2.6 million last year for its farmland, and that there are 13 people in the UK who each got more than a million euros, plus one who got 1.97 million euros.

“This idea of wealthy people accumulating large entitlements to receive income support from the state is rather uncomfortable,” says Jack Thurston, a campaigner for greater EU openness, and co-founder of farmsubsidy.org. “If I were in the business of providing income support to farmers, I’d make it means tested, like the rest of the welfare system.”

This idea summons up the vision of foreign billionaires hiding their Ferraris in the forest and pleading poverty when the means-testers call. For besides Swedes and Danes, there are plenty of other nationalities who, in recent years, have bought chunks of the British countryside: French, Norwegians, Swiss, Germans, Russians and even Indians.

Among the best-known names are Chelsea football club owner Roman Abramovich (an £18 million estate in Sussex), his fellow Russian, the oligarch Boris Berezovsky (a £10 million estate in Surrey) and the al‑Maktoums, the Dubai royal family, who have grouse moors and estates in Scotland and the north of England.

Not surprisingly, locals don’t always appreciate rich foreigners buying up large bits of their land (six per cent of Scotland is in overseas ownership). Suspicions have been voiced about Anders Holch Povlsen’s claims that his motives are environmental and ecological, rather than financial, and there was criticism of the vigorous red-deer culling on his Inverness-shire estate.

That said, Scottish Natural Heritage has applauded the deer-control policy, and the way it has allowed the landscape to recover, resulting in what the Highland Foundation for Wildlife calls “excellent regeneration”. As to the benefits a wealthy patron can bring a local economy, you have only to visit the small Northumberland village of Blanchland, in early autumn, when an estimated 55 per cent of the population is involved in catering for the needs of the wealthy Russians, Arabs, Americans and London City types, who come for the grouse shooting.

Not that owning a big estate is all about champagne and canapés and banking your EU subsidy cheque. If you’re going to keep up the value of your investment, there’s a lot of unglamorous re-planting and ditch digging, and, let’s face it, those grouse won’t feed themselves. And of course, not everyone is a foreign billionaire.

“Just my water bill for the year here is £5,000,” says 42-year-old Tom Allen-Stevens, who didn’t buy his 450-acre Oxfordshire estate a couple of years ago, but inherited it from his father and grandfather.

“Staying afloat is a constant battle, everything is not so much for now as for the long term. Sure, I get £35,000 a year from the EU, but without that, this place would be running at a loss.

“You never have any cash, but you do have land; that’s your capital investment. That’s the thing you hold on to.”

Yes, in the words of the financier Warren Buffett, land is an even better investment than gold. After all, people can always dig more gold out of the ground, and make more gold bars, but they’re never going to make any more land.

7:21AM BST 14 May 2012

The Australia-based University of Queensland has announced its researchers have planted 5 hectares (12.36 acres) of pongamia trees at Hope Vale in northern Queensland.

The project aims to create a commercially viable plantation for sustainable regional development and biofuel production in northern Australia. In conjunction with traditional land owners and partners, the university’s ARC Centre of Excellence for Integrative Legume Research is planning to plant an additional 3,000 hectares (7,413 acres) within the next three years. The resulting oil could be used as feedstock to produce an estimated 10 to 15 million liters (2.64 to 3.96 million gallons) of biofuel.

According to Peter Gresshoff , CILR director, professor and project leader, the 5 hectares of pongamia planted to date will be used to evaluate environmental issues, such as pest load, wind effects, rain during harvesting period, tree management and superior tree genetics selection.

Activities related to growth analysis, life-cycle analysis, seed oil and protein analysis, and nitrogen fixation will also be carried out. “We are currently seeking external funding to increase the plantation size for commercial production and in-depth research at different tropic sites in the Cape York Peninsula,” he said.

Gresshoff said that pongamia trees are expected to yield approximately 3 to 5 metric tons of oil per hectare per year. That equates to approximately 363 to 612 gallons per acre on an annual basis. The oil has been shown to be a good feedstock for both biodiesel and biobased jet fuels, he continued. Oil produced through the trails will be converted into biodiesel as part of the proof of concept.

Regarding acres that have already been planted, Gresshoff said the researchers used trees of putative superior parentage. “There are no ‘varieties’ of pongamias yet, as the tree is genetically outbreeding, thus each seed is genetically different,” he said. “However, using DNA fingerprinting using ISSR markers we have determined that offspring from several elite trees, featuring desirable production traits, are highly related. We also have the ability to produce clonal material using rooted cutting, grafts and tissue-culture plantlet.”

According to Gresshoff, there are several advantages of using pongamia oil as a feedstock for biofuel production. It is a nonfood feedstock, he said. It is also native to several regions of the world, including Florida, Hawaii and Georgia in the U.S. “It is very tolerant to environmental stress assuming the summer is long enough and the winters are not colder than minus 5 degrees Celsius (23 degrees Fahrenheit),” he said.

Article : Biodiesel Magazine

By Erin Voegele | May 04, 2012

Ethical consumers do not always become ethical investors, suggesting more advice is needed to overcome perceptions that ethical investments don’t perform well, a survey by Oikocredit has revealed.

A poll by the microfinance provider, conducted among consumers in the UK, found that 61 per cent of women and 53 per cent of men prefer to buy ethically sourced goods, while only 56 per cent of women and 44 per cent of men would seek ethical investments.

More than half, 58 per cent, of respondents, said the level of financial return was the most important factor when investing their money, while only 9 per cent cited ethical concerns.

Patrick Hynes, UK representative for Oikocredit, said: “Most people think ethically when buying products, but seem to take a different approach when it comes to investing their money. This might be because they are simply not aware of the investment options which create a positive social impact. “

“Given many people’s preference for acting in a way that is ethical, those with money to save should consider development finance. This presents investors with the opportunity to attract a positive return on their investment and deliver a positive social impact.”

Ruth Whitehead, principal of London-based Ruth Whitehead Associates, said it would make sense for people who want ethically sourced produce to invest in a way that reflects their beliefs.

She said: “Ethical practice should permeate ever single aspect of our lives. It does for our clients.

“They shop ethically and vote ethically. It also depends on the definition of ethics. As far as my clients are concerned, the only way is ethics.”

By Marc Shoffman | Published FT ADVISOR May 09, 2012 |

Low returns from fixed income products and the rising cost of living mean pensioners can no longer shield themselves from risk if they want to live out their retirement comfortably.

Pressure on your pocket from all sides means the traditional shift towards lower-risk assets during middle-age makes less sense and effective asset allocation is even more crucial.There was a time when most advisers would tell you middle-age was the period during which you should be shifting away from risk to protect the capital your pension had accrued as you approached retirement, which might not have been that far away if you’d played your cards right.

Now four years of low growth, negligible returns on cash savings, the soaring cost of living, stagnant property prices and entirely new costs, such as university tuition fees and unemployed children who cannot afford to leave home, mean investors can no longer afford to slacken the pace and protect their capital.

“Middle-age was a different thing 10 years ago,” says Kerry Nelson, managing director at Nexus IFA. “People were aspiring to the idea of an early retirement – seriously expecting they could get out at 55 – and these days that’s really not feasible for the majority.”

“That age-group is being hammered from all sides and the nature of the environment they’re in means they cannot afford to de-risk at this stage.”

“If you move into bonds you’re pretty much looking at negative returns, the return on cash savings is negligible, you have to go up the risk ladder just to sustain your pot, never mind grow it.” This makes grim reading for off-the-peg pension investors, the majority of who will be in products that are doing exactly the opposite, throttling back their exposure to equities in the traditional manner. For investors who have a self invested personal pension (SIPP) or are looking to transfer their personal pension into a SIPP they control themselves, now is the time to think carefully about asset allocation.

Rob Gleeson, head of research at FE, said: “It’s a tough call, there’s quite a balancing act here. You’ve got about 20 years of savings you don’t want to fritter away, but still have a 15- or 20-year time horizon and the ability to make a real difference to your retirement by taking on extra risk.” “This is basically the only time that attitude to risk really matters – at all other times it’s pretty much overshadowed by time horizon and other situational factors.”

By Pascal Dowling, Group Editor, FE Trustnet
Sunday May 06, 2012