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Agriculture Investment – A Must Read Article

A Must Read Article

Finding the best investment in agriculture can be difficult for the inexperienced investor with little or no knowledge

of the sector, but of course, there are many different options available, including agricultural investment funds,

direct investment in agricultural land, and buying shares in companies. agricultural. In this article, I will delve into

the investigation of the different options, the risks they present for investors, the mechanics of operation of each type

of agricultural investment

First, we will analyze the relevance of agricultural investment to the current economic climate, and if this sector, in

particular, shows us signs of being able to generate growth and income.

Agriculture Investment – A Must Read Article

The current economic climate

The world economy is still in a state of turmoil and the UK, in particular, is cutting public spending to reduce an

the unmanageable national debt, the population is growing, and quantitative easing is likely to lead us into a period of

prolonged inflation. Also, the lack of economic visibility means that it is very difficult to value assets like stocks, and

that interest rates are so low means that our cash deposits

So what does this mean for investors? It means that we need to buy assets that have a positive correlation with

inflation, that is, that go up in value faster than the inflation rate, these assets must also generate an income to

replace the income that we have lost for cash and, finally, Any asset that we buy must also have a solid and

measurable track record.

Agriculture Investment – A Must Read Article

A Must Read Article
A Must Read Article

It is very clear that agricultural investment, especially investment in agricultural land, shows the characteristics of

growth, income, positive correlation with inflation, is easy to value and has a clear track record to analyze, and as

such, agricultural investment Check all the relevant boxes to potentially become the ideal asset class for today’s investors.

Fundamentals of agricultural investment

The fundamentals that support agricultural investment are fairly easy to measure; As the world population grows, we

need more food, to produce more food we need more agricultural land, since this is the resource that provides all the

grains and cereals we eat, and all the space to graze the livestock that ends up on our plate. . So we are dealing with a

very basic question of supply and demand, if demand increases and supply cannot keep up, the value of the

underlying asset increases, so let’s look at some of the key agricultural investment supply and demand indicators.

A Must Read Article

For seven of the last eight years, we have consumed more grain than we have produced, which has reduced the global

store to critical levels.

Since 1961, the amount of agricultural land per person has decreased by 50% (0.42 hectares per person to 0.21

hectares per person in 2007).

The world population is expected to grow by 9 billion by 2050.

Most think tanks and experts believe that we will have to increase the amount of agricultural land by 50% to support

that growth, essentially a productive field the size of Greater London that needs to be found every week.

Virtually no more land has been bought for production in the last ten years due to climate change, degradation and

development and a host of other factors mean that there is little or no new land that we could use for farming.

demand food.

A Must Read Article

A Must Read Article
A Must Read Article

The value of farmland increases when the food it produces can be sold at a higher price, making farmland ownership

more profitable, and food prices are at a 40-year low, which leaves room for price inflation of around 400%. A bushel

of wheat cost about $ 27 in the early 1970s and is now only $ 3.

Farmland in the UK has increased in value by 20% from June 2009 to June 2010, and by 13% in 2010 alone

according to the Knight Frank Farmland Index.

Therefore, the fundamentals supporting agricultural investment are strong and very clearly demonstrate a good

image for potential investment. But can we absorb price inflation? Well, there is a myriad of studies that tell us very

clearly that as a population we absorb almost 100% increases in food prices and sacrifice spending in other areas, so

yes, we can.

Agricultural investment methods

Agricultural investment funds

There are many types of background

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