Agricultural investment has performed much better than almost every other asset classes throughout history as growing populations demand more food to eat, more feed for livestock and now biofuels. At the same time frame, climate change, land degradation and development have eaten in to the way to obtain farmland, pushing the scales of supply and demand in the favour of those 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, because the people has consumed more grain than we’ve produced for seven out from the last eight years. Institutional investors like Jim Rogers have been using farmland investment as a successful inflation hedge for years and Mr. Rogers has been often quoted as saying that agricultural investment, in the shape of farmland investment, has become the best overall asset for investment this of this new decade.
Just what exactly is the greatest agricultural investment, and just how can investors with usage of smaller pots of capital take part in agricultural investment and utilise the reduced risk, high returns investment strategy that’s been employed by institutional investors for many years?
Many structures are available on the open market for retail investors, with options to select form including farmland investment, investment funds and operating a farm yourself and selling crops. You also have a range of geographic area which to focus including Eastern Europe, the UK and the US. Deciding on the best agricultural investment depends on the way the amount of time you desire 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 in addition to past performance of your target farmland or fund manager, you are able to 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 player to manage the growth and sale of crops. The investor will own the land and will be given a rental income from the investment all the way to 7% per annum, whilst the farmland will undoubtedly be professionally managed, harvested and the crops sold on by the farmer. This type of buy to let deal structure allows smaller investors to take part in agricultural investment in quite similar way as institutional clients have inked, so long as small investors can source investment farmland.
There are 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 initial investor after a fixed time period. This gives the investor by having an exit strategy and it can also be possible to construct in further risk mitigation by securing the very least buyback price in to 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 buy farmland with farming tenants already in place paying rents and with the choice to purchase the land for the very least price in many years time. Within my search to find the best farmland investment, location is vital and the fundamentals of the UK farmland market are extremely favourable right now.
The most effective agricultural investment then, in terms of timescale and risk would for me, be farmland investment in the UK, with an offer structure in place to make certain the very least risk level for the investor.