Ian Watson and his business partner, Jim Slater (the author of the influential 1992 book on growth-stock investment, The Zulu Principle), certainly think so. The two completed the liquidation of their metals company, Galahad Gold, in November, and have set up a new fund, Agrifirma Brazil, to invest in farmland in Brazil.

Galahad Gold was set up five years ago when metals were out of favour. Gold was at $275 an ounce and copper at 63 cents an ounce. Watson and Slater focused on investing in the post-exploration, pre-production area of mining, looking for small public companies in which to take an active position. Returns were significant but two years ago the owners of the fund realized that the run would not last for ever and decided to liquidate.

"It was an unusual move given the success of the company but we began to have concerns about equity markets and mining markets," says Watson. "We have some financial years under our belts and we recognized there was too much leverage in the system and that eventually the markets would collapse."

It was good timing. When Galahad sold its position in a uranium company, uranium was $135 an ounce. Now it is $64 an ounce. Over its lifetime the company generated an annualized internal rate of return of 66% from its investments.

Although agricultural commodities have sold off 50% from the highs in early 2008, Watson and Slater believe it to be an attractive sector. "Farmland is finite and has been declining over the last 20 years," says Watson. "But developing countries’ demand for meat is rising and so too therefore is the demand for crops as feed for cows and pigs. It take eight times as much acreage to produce a ton of beef as it does to produce a ton of corn, and we wanted to participate in this increasing demand."

Watson says direct investments by owning farms is preferable to investing through the commodities market, which is influenced by other factors beside fundamental supply and demand, including speculative interest. The upside from buying and transforming undeveloped land into cropland is greater.

Having considered such countries as Argentina and Malaysia, Watson and Slater decided that Brazil was the best choice. "Brazil has scrubland without trees that can be converted to crop-bearing land with ease. Furthermore, it is politically stable," says Watson. Agrifirma has hired Julio Bestani, the former CFO of Adecoagro, a farmland company founded by George Soros, to find land. The land will be used predominantly to grow soybeans and corn, crops that can be used as feed for cattle, but also coffee and cotton.

Watson says he is unconcerned about Brazil’s stock market declines. "Inflation is containable and the country has liquid reserves. And the political future seems favourable," he says. Agrifirma has so far raised more than $150 million in investor money, with Lord Rothschild’s RIT Capital taking a significant stake.