Agriculture Investment – Handy Information and facts to get Investors
February 14, 2021 Business
The US produces 40% of the world’s corn. On the 30th of June the US Department of Agriculture (USDA) made two significant announcements, which together with the news in July that Russian corn production was down 30% and exports from the nation have been halted, created for great news for those investors who have chosen to buy agriculture with a well-placed farmland investment.
The announcements from the USDA were important in they noted both corn production was down, and also that fewer acres have been sown to corn. These factors had a marked influence on values, both of corn itself and therefore also of the land used to produce it.
I genuinely believe that those folks choosing to buy agriculture by means of commodity trading will always enjoy such peaks, in addition to กรมส่งเสริมการเกษตร the troughs, both typical in commodities markets notorious for brief term cyclical volatility which will be driven consequently by rising and falling supply levels. Buying farmland, the underlying asset that creates such commodities allows the investor to take advantage of the highs, whilst smoothing out any lows, and at the same time frame enjoy long haul capital growth while the expanding population drives demand for more food.
The long run fundamentals supporting agriculture investment are impressive. Around 30% of all corn stated in the US now goes to biofuels, and it’s contributed to the truth that after one of the largest harvests in recorded history there is still a global shortfall and China recently became a net importer of corn. After decades of self-sufficiency, and despite growing 20% of world corn, China cannot grow enough food to feed their growing population, which will be another fundamental driver that’ll cause the worth of good quality farmland rising as a result countries scramble to get up land overseas to make certain their own food security. The Saudis, Qataris and other nations such as for example South Korea are buying up farmland in Australia and Latin America right now.
When all is said and done, we’re staring a potentially global food security concern right in the facial skin, and the only way to sure up supplies and give agricultural producers the capital to buy improved infrastructure and new technologies, is to pay more for the produce they grow, and while the land produces a greater annual revenue, thus does the worth of this land rise, making agriculture investments an ideal asset class under current economic circumstances.
My investment philosophy is to acquire non-correlated assets offering principle protection, consistent income and perform well in an inflationary environment, where growth is supported by solid long haul fundamentals. Agriculture investment, specifically farmland investment ticks many of these boxes for me.