Institutions considering farmland investment should examine the opportunities presented by harvesting seaweed and sandalwood, according to a Thai company involved in contract farming.

Arvind Narula told Nina Röhrbein in the February issue of IPE that the harvesting of edible seaweed carrageen would go a long way towards meeting unmet demand.

The chief executive of organic rice company Urmatt also highlighted sandalwood cultivation as a way of diversifying the returns from farmland, as it is used in the production of perfume.

While Narula conceded that accusations of land grabbing were “of course” an issue, he said there were approaches that benefitted both investor and farmer – as long as everyone involved understood supply and demand.

“Out-grower projects that are well thought-out and well manned, with the correct expertise and technical know-how in crops for which demand exceeds supply, can be very rewarding for all players,” he said.

Sweden’s AP2, which, in 2011, invested $250m (€177m) in a joint venture with US institution TIAA-CREF, stressed the importance of sustainability for all farmland holdings.

Christina Olivecrona, sustainability analyst at the SEK248bn (€28.3bn) buffer fund, said its approach was well suited to a partnership with TIAA-CREF.

“To make sure our investments are sustainable, we have to undertake in-depth due diligence to ensure the companies we select share our values,” she said.

The fund in 2012 increased its initial commitment and said last year that it would grow its agricultural and timberland holdings beyond its 10% benchmark.

For more on farmland investment, see the current issue of IPE