South American Real Estate News
/ All categories of countries are / How does the market crash in oil prices affect South American agriculture

How does the market crash in oil prices affect South American agriculture

How does the market crash in oil prices affect South American agriculture

I have been trying to get my head around the medium to long-term effects of lower oil prices on agriculture. Who would have thought only six months ago we would have oil prices sub-USD 57 dollars per barrel. Now it seems this could last one year or more, which means it will affect the total food and distribution chain. Many companies will try and resist a lowering of consumer prices but in a globalized world this will only work for a short period of time.

As we sell farms in South America the next question is how will it affect land prices? 

Given that most agricultural production today is done by corporates then I believe it will come down to yield. Before the drop a lot of commercial farms in South America were only returning 3% to 4% yield. Logic tells me this number needs to go back up to the norm of 6% to 8%. What do you think?

Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.

www.gatewaytosouthamerica.com

(Visited 32 times, 1 visits today)
Geoffrey McRae

About Geoffrey McRae

Geoffrey McRae is the founder of GTSA - Marketing. He is a New Zealander with a strong Agro-business and Real Estate background spanning over 30 years both in his own country and South America. I hope you enjoy reading our news site. Please share it on your social media below.

Comments from our readers

1 Comments
  • 06/01/2015

    Since this was written we are now talking about 50 USD a baril oil and the suggestion it could drop to 30 USD. Goodbye electric cars ?