INTERVIEW-Commerzbank fund invests in farmland

By Pratima Desai

LONDON, March 10 (Reuters) - Investing in farmland is becoming a bigger theme for many fund managers interested in agriculture, but Commerzbank Alternative Investments has only a small exposure because there are risks.

Commerzbank's Comas Global Opportunities Fund, which uses macroeconomic themes and trends, manages $66 million.

About 37 percent is allocated to commodities and two-thirds of that -- around $16 million -- is in agriculture.

The fund made 5.5 percent in the two months to end-February.

"(Buying land) is a theme that has been in play for some time and is now starting to pick up real momentum. Prices of arable land have been rising," said Edward Hands, a portfolio manager at Commerzbank Corporates & Markets.

"Our futures positions are slightly greater than our equities holdings ...Land exposure is minimal. There are risks associated with owning land ... you need to extract value."

Prices of arable land have been rising over the last few years. Figures show farmland prices in Britain were around 8,000 pounds a hectare at the end of 2006 compared with 5,800 pounds in early 2004.

"In the U.S. where cropland prices are less expensive, they were around 1,800 pounds per acre in 2004 and in 2006 they were around 2,400 pounds," Hands said.