Major Investors, Including New York's BlackRock Group, Boost Agriculture Investments

June 5, 2008 7:43 a.m. EST

New York, NY (AHN) - The age of agriculture is back. The global food shortage has spurred businesses to invest billions into food production.

A foresight to anticipate increasing demand for food has led to investments in facilities involving food production such as farmlands, fertilizer, grain elevators and shipping equipment.

Three institutional investors, counting the BlackRock fund group in New York, plan to purchase acres of farmlands in various parts of the world from Africa to Europe. Brad Cole, president of Cole Partners Asset Management, which manages hedge funds mainly on natural resources, said, quoted by the New York Times, "There is a considerable interest in what we call 'owning structure' - like United States farmland, Argentine farmland, English farmland - wherever the profit picture is improving."

The investors would apply economies of scale by consolidating small parcels of land into larger units, apply new technology and fund modernization of grain storages and fertilizer supply chains.

However, there are questions if it will be just the money of these investors talking or would they be involved in the production process? The sudden surge in agricultural investments may not be very healthy for the industry, warned Mark Lapolla, an adviser to institutional investors.

Meanwhile, the global food crisis has challenged the international community to rethink policies on food aid in view of the high cost of food production and transportation. Former United Nations Secretary General Kofi Annan told the International Herald Tribune, "The era of food aid is over - there is no more sending food from America to Africa."

In lieu of food assistance, Annan batted for UN agencies to assist African and Asian farmers hike their output. Donor nations are advised to instead send farming tools, fertilizer, seeds, silo and know how.