Turbulent financial markets have coincided with strong agricultural returns in recent years, spurring investors to buy more farmland, according to an environmental think tank.

The Oakland Institute has released a report, "Betting on World Agriculture," that examines investor interest in farming and profiles 23 firms that are making such investments.

Major institutional investors like universities and pension funds have shifted away from putting most of their money into stocks and bonds, and now devote much of their portfolios to "alternative" assets like farmland, the report said.

Their goal is to earn income from leasing the properties and ultimately to resell them at a higher value, potentially by converting the land to other uses, the report said.

With its developed irrigation and transportation systems, pro-biofuel policies and acceptance of biotech crops, the U.S. is a major destination for farmland investors, the report said.

However, investors have increasingly been looking to diversify, with Canada and Australia representing "a natural geographical extension for some fund managers," but countries in South America and Africa have also been attracting attention, the report said.

According to the Oakland Institute, such investments are associated with a "somewhat unknown financial risk," as investors may not really understand agricultural challenges in certain areas.

The think tank also said the phenomenon raises questions about whether investors will protect the "long-term agricultural value of the land" and their obligations to local populations.

To view a copy of the report, go online to www.oaklandinstitute.org and click on the "Publications" link at the top of the page.

-- Mateusz Perkowski