Saturday, May 15

How you can Measure the Greatest Agricultural Investment.

Agricultural investment has performed much better than most other asset classes throughout history as growing populations demand more food to consume, more feed for livestock and now biofuels. At the same time, climate change, land degradation and development have eaten into the way to obtain farmland, pushing the scales of supply and demand in the favour of these holding farmland for investment.

Investment into agriculture has consistently provided stable annual returns returns averaging 10% to 15% per annum throughout the last decade กระทรวงเกษตรและสหกรณ์, since the human race has consumed more grain than we have produced for seven from the last eight years. Institutional investors like Jim Rogers have now been using farmland investment as a successful inflation hedge for a long time and Mr. Rogers has been often quoted as saying that agricultural investment, in the proper execution of farmland investment, has become the best overall asset for investment this of the new decade.

Just what exactly is the best agricultural investment, and how do investors with access to smaller pots of capital be involved in agricultural investment and utilise the lower risk, high returns investment strategy that’s been employed by institutional investors for many years?

Many structures can be found on the open market for retail investors, with options to decide on form including farmland investment, investment funds and operating a farm yourself and selling crops. You might also need a variety of geographic area where to focus including Eastern Europe, the UK and the US. Selecting the most appropriate agricultural investment depends on how the length of time you wish to tie up your capital and your attitude to political risk.

After carrying out extensive research and due diligence on the the sort and structure of every form of agricultural investment as well as past performance of your target farmland or fund manager, you can narrow down your selection to a small number of investment projects or strategies.

Deal Structure for Smaller Investors

Smaller investors may take part in Agriculture by buying farmland and then renting to a character to control the growth and sale of crops. The investor will own the land and will be given a rental income from the investment as high as 7% per annum, whilst the farmland is going to be professionally managed, harvested and the crops sold on by the farmer. This kind of buy to let deal structure allows smaller investors to be involved in agricultural investment in quite similar way as institutional clients did, provided the smaller investors can source investment farmland.

You can find farmland investment products that design risk out of agricultural investment, with tenant rent to get options, allowing the farmer tenant to buyback the farmland form the first investor following a fixed time period. This allows the investor having an exit strategy and it is also possible to construct in further risk mitigation by securing the very least buyback price into the rental contract with the farmer.

So, I think, the very best investment in agriculture would include a deal structure that designed out the risks of agricultural investment by choosing to purchase farmland with farming tenants already set up paying rents and with the choice to get the land for the very least price in many years time. Within my search for the best farmland investment, location is vital and the fundamentals of the UK farmland market are very favourable right now.

The most effective agricultural investment then, with regards to timescale and risk would for me personally, be farmland investment in the UK, with a package structure set up to ensure the very least risk level for the investor.

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