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.
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.