In times of a rapidly expanding population, low interest rates, inflation, and murky stock markets, investors seek assets that will grow in value, produce regular income, and retain value in the event of a crash. Essentially, we need a safe haven for our cash and that is driving many investors into the agri sector, as 75 million new mouths to feed each year and a changing diet in developing economies support the theory that agribusiness will do just fine. in the medium and long term.

There are a number of options open to investors who choose this sector, from agricultural investment funds, ETFs, direct investment in agribusiness companies or trading soft commodities such as wheat. My problem here lies in the fact that these investment strategies do not meet all of our requirements. Funds incur management fees, and over the life of a mutual fund, investors lose 80% of their earnings to management fees, commodities can be volatile in the short term, and investing in agribusiness companies provides some level of non-correlation.

so what is the alternative? More and more astute investors, both private and institutional, are grabbing what little good-quality farmland is left in the hope that as time passes and the population continues to grow, the land we do have will become more valuable in the face of a increased demand for food. We also know that well-tilled land will produce an income each year from growing and selling crops, replacing the loss of risk-free income that we no longer achieve by holding cash. Of course, if someone somewhere finds an alternative to food, the value of farmland will drop, but I think we can all agree that we will all have to eat at some point, and therefore arable land. It retains its value even in the worst circumstances.

So how does the small investor get a piece of farm land large enough to grow commercially? And how do we reduce overall farm risk, such as exposure to bad weather, commodity prices, and quality farm management? There are opportunities for the smaller investor to participate in large farmland investment transactions, whether it is pooling capital with other investors to buy bigger and better parcels of land, and other very interesting structured vehicles that allow the small investor to buy a small piece of land. of a lot. largest commercially managed farm, with the farmer assuming the overall agricultural risk and paying the investor who owns the land a fixed annual income. This methodology provides the farmer with much-needed liquid capital to expand their operations and invest in their business, while providing the investor with risk-managed exposure to high-yield farmland, steady income, capital protection, and market growth. capital.

Where should one consider buying farmland? The European Union, Latin America, and Australia are all investment locations and have achieved consistent returns of 10-20% on revenue and growth, depending on farm location and investment structure.