Investing in farmland may not be negatively affected by a potential recession, as farmland returns have a positive correlation with inflation and the industry has low leverage, making it a wise investment opportunity, according to Bruce Sherrick, a professor at the University of Illinois. Additionally, the steady supply of land sales and strong demand from farmers have likely supported the resilience of real estate values in 2023, despite higher interest rates.
The grain markets are influenced by multiple factors such as yields, the U.S. economy, seasonals, early harvest yields, geo-politics, the September WASDE report, and more, which can have a significant impact on prices until the end of 2023.
Global prices for staple foodstuffs have reached a two-year low in August, driven by declines in dairy products, vegetable oils, meat, and cereals, while sugar and rice prices have increased due to export restrictions and extreme weather conditions.
Higher grocery prices on P.E.I. due to inflation can be mitigated by careful shopping, with beef prices seeing significant increases while produce prices have remained relatively stable.
The UK economy is expected to slow in 2023 and 2024 due to high interest rates, continued uncertainty, and low productivity, with GDP growth predicted to drop to 0.4% this year and 0.3% in 2024, according to economists at KPMG and the OECD.
Supermarket competition in the UK has led to the first monthly drop in food prices in over two years, with prices down 0.1% in September, according to the British Retail Consortium (BRC). The BRC also reported that grocery inflation fell to 9.9% in September, down from 11.5% in August, while overall shop price inflation decreased to 6.2%. Although prices are still rising, the rate of inflation is slowing, providing some relief for households. However, the BRC warned of potential risks such as high interest rates, climbing oil prices, and supply chain disruption.
Global economic growth is expected to slightly increase in 2024, but the United Nations warns of a precarious situation and significant economic headwinds that may lead to a slowdown in the U.S. and a potential recession in the eurozone. The UN also highlights the escalating debt distress among frontier economies and calls for more oversight and regulation of food companies in the global trade system.
UK grocery price inflation has reached its lowest rate in over a year, with the price of butter dropping by 16p compared to last year, according to Kantar, although prices for items such as eggs, sugar confectionery, and frozen potato products are still on the rise.
The global smart agriculture market is projected to grow at a CAGR of 15.55% from 2023 to 2030, driven by factors such as technological advancements, the presence of key technology providers, and the increasing availability of farmland.
