Benefits of Investing in Agriculture
The only asset that is preferable to own is one that
appreciates over time and keeps up with inflation. Investing in agriculture not
only puts money in your pocket but also, keeps farmers in the business. In
contrast to stock assets the value of land and only increases. You
can be sure that your money would be safer in agriculture compared to the stock
market.
Why
invest in agriculture?
A potential investor should take interest in
agriculture for several reasons. Agriculture is a low-risk investment
that increases in value over time and keeps up with inflation. Agriculture
investors can make money in several ways based on their investment and the
nature of the farm.
Investing in agriculture may diversify an investor's
portfolio, as it is a tangible asset that benefits a
whole community. Investing in agriculture may provide a sizable
return for the investor.
By buying or investing in a farm, you are
contributing to the prosperity of a neighborhood and securing a plot of
property that will increase in value over time.
Farmland is a finite resource. As a result of
urban expansion and land development, the amount of land that can be used for
agriculture has been declining, increasing the value of the remaining land.
Farmland values are rising as a result, which is good news for investors,
according to experts. For instance, if a property is in
proximity to a residential area, the value of the land increases with the
possibility of selling the land due to urbanization. Process of urbanization
can also increase the value of farm fields.
Similar to real estate, an investor can increase the
value of their land by making improvements. In agriculture, this could
mean converting bare land into pastureland.
Additionally, converting lands from traditional
agriculture to organic farming, which yields better returns, can raise the
investment value.
When improvements are made, the land's value will
rise, which could mean higher profitability when the investor wants to sell it.
According to experts, an investor's secondary source
of income could be agriculture. They claim that there are several ways to make
money on farmland, many of which have nothing to do with the crops being
raised. This is possible through agribusiness.
Investing
in agribusiness
Agriculture and business are combined to form the term
"agribusiness". It refers to any enterprise engaged in agricultural
production or activities closely related to agriculture. Agribusiness is, in
essence, the production, processing, and distribution of agricultural products
to markets and consumers. All facets of agricultural production are covered by
agribusiness companies, and investing in this sector has several advantages.
Since the need for agricultural products rises along
with population growth, agribusiness is a crucial part of the economy in most
nations. Because of this, investing in agribusiness entails supporting a sector
that has a significant positive impact on society.
i.
Rising
demand for agricultural products
A market is always going to be in demand for
agricultural products because of the ongoing expansion in world population. In
addition, cutting back on food is one of the last things that individuals are
prepared to do. The most advantageous course of action is to invest in agribusiness
because we need to assist the food sector in scaling up and taking advantage of
growth prospects. Agriculture investing helps farmers access the supplies
or machinery they need to increase production and yields, and it also provides
financing for agripreneurs.
ii.
High
yielding profits
When agriculture is practiced properly, even with
minimal investment, a bountiful harvest is inevitable. Farm returns have a
minimal risk factor and an average annual return of 11.5%. As a result,
investing in the agro sector has low volatility and high yield potential.
iii.
Increase
in global food demand
The production of food and agriculture are essential
to society's operation. The primary global factors that are influencing this
industry's growth, innovation, and potential are population increase, rising
demand for protein-rich foods, technological advancement, and sustainability. By
2050, there will be 9.7 billion people on earth, an increase of 33% from 2015.
By 2030, this expanding population is anticipated to increase food demand by
35%. Therefore, agricultural production will need to quadruple in order to
sustain that population, and Africa is perfectly suited to become a premium
agriculture products supplier.
iv.
Diversification
Farmland investing is distinct due to its advantageous
diversification characteristics. This means that farming delivers both
beneficial diversity and diversification. This is due to the fact that farmland
has a weak correlation with real estate and a negative correlation with other
asset groups. This implies that farmland typically performs well when markets
are down and that farmland values rise as inflation lowers the purchase power
of the currency. Farmland is therefore said to benefit from advantageous
diversification because it performs better when other common assets may
underperform in terms of value. Of course, your choice of acreage will also
have an impact on this. Depending on the crop, yield costs can be higher or
lower, and they may be more or less impacted by market volatility.
In conclusion, agriculture investing is a solid
and successful business decision. In addition to financial profits, it produces
tangible results that are advantageous to the investor. You can contribute to a
community's prosperity by making an investment in agriculture.
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