December 9, 2010
Picton, New Zealand
The ferry from Wellington across the Cook Strait to New Zealand’s beautiful south island was a bit rough today. I’ve mentioned before that I’m not particularly seaworthy, so I asked my friend Chris, a New Zealand native, to step in today on my behalf and give you a bit of his local perspective.
Chris is an international investor like me, and we share a common outlook on the world; while we’re both fundamentally optimistic, it makes sense to hedge your bets given all that is going on in the world.
One of the outcomes that we see is food and water scarcity– this is a function of multiple factors, including monetary inflation which bids up commodity prices; overpopulation and urban crowding; soil erosion; reduction in worldwide arable land; and cultural shifts towards more meat consumption.
Consequently, I’ve been writing for a long time that offshore farmland is a sensible investment, both for its potential financial return as well as being an ultimate insurance policy for you and your family’s livelihood.
The following is a compelling argument that Chris makes for land in New Zealand. From Chris:
“For anyone that has had the pleasure of visiting New Zealand, it’s probable that you have encountered the friendly, honest attitude of the local population.
New Zealand doesn’t have any large cities to speak of, at least not in the multi-million population ranges that exist in many other parts of the world; those New Zealanders who do live in the cities often have roots in farming and rural living.
The entire country boasts a whopping 4 million people. Britain, a country of roughly the same size, is home to 61 million! Call me simplistic, but in my experience these sorts of numbers have an impact on how people live and treat one another.
In a small community, news spreads fast of any misdeeds that are committed, and the unscrupulous will find themselves quickly ostracized from the community. In a large city of many millions, misdeeds are obscured and absorbed into the population.
This is one of the factors that I look at when assessing agricultural land investments; just about every country in the world has farmland… that’s easy. But if we look to history for clues as to how the world might react to food shortages, we should expect serious social problems.
Needless to say, these social problems will hit major urban sectors far more severely since the populations are wholly unprepared for such events. Large cities don’t impress me as the wisest places to reside in a food crisis.
I remember when I was living in London some years back, I rarely had more than a week’s supply of food in my freezer or cupboards, and I had absolutely no way of obtaining food should the supermarket shelves have run empty. The neighbor’s cat would have begun to look tasty.
Now that I’m back in New Zealand, I’m much more self-sufficient, as are my local friends and neighbors. It’s a way of life here to grow your own food and raise your own livestock… and it means that neighbors have less of an incentive to rob each other.
Agricultural land in New Zealand sells at a premium compared to South America, but that’s due to the higher output that New Zealand farmers achieve on their land. Furthermore, New Zealand has a stronger legal system than most of South America, and that means secure property rights.
Given New Zealand’s incredibly low population levels (the sheep to human ratio is over 8:1!), vast tracts of rich farmland, reliable infrastructure, rule of law, agricultural traditions, and honest culture, I think it’s a strong contender as a place to locate oneself during a time of crisis.
Chris makes some very interesting points, and I would also suggest that New Zealand is worthy of consideration. If you’re interested in more information about the country, Chris and his partner Mark have co-written a fantastic e-book about immigrating and investing in New Zealand, and I recommend it.