According to Futuregrowth Asset Management, the venture capital arm of Old Mutual, the returns seen from investments in South African farmland consistently outstrip returns from both local and international equities, bonds and real estate. For example, local farmland has beaten the BEASSA All Bond, the FTSE/JSE all share, the MSCI world equity and IPD real estate indices from 1999-2009 measured over three, five and ten years. The Furturegrowth Agri Fund’s model is based on buying farms with solid potential and leasing them to well established operators. Futuregrowth owns the land, equipment, infrastructure, trees and plants, and the farmer owns the crop and pays the lease, the operational and labor costs. Farmers typically pay 8.5% of the land value yearly to lease it with a built in escalation for inflation.
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