Agriculture Investment — Important Material meant for 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 had been halted, designed for great news for those investors who’ve 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 had 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 believe that those people choosing to buy agriculture by way of commodity trading will always enjoy such peaks, along with กรมส่งเสริมการเกษตร the troughs, both typical in commodities markets notorious for brief term cyclical volatility which can be driven in turn by rising and falling supply levels. Buying farmland, the underlying asset that produces such commodities allows the investor to take advantage of the highs, whilst smoothing out any lows, and at the same time enjoy longterm capital growth as the expanding population drives demand for more food.
The future fundamentals supporting agriculture investment are impressive. Around 30% of most corn manufactured in the US now goes to biofuels, and it’s contributed to the fact 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 can be another fundamental driver that may result in the value of top quality farmland rising as a result countries scramble to purchase up land overseas to make sure their own food security. The Saudis, Qataris and other nations such as South Korea are typical buying up farmland in Australia and Latin America right now.
When all is said and done, we are staring a potentially global food security concern right in the face area, and the only path to sure up supplies and give agricultural producers the capital to buy improved infrastructure and new technologies, is to pay for more for the produce they grow, and as the land produces a greater annual revenue, thus does the value of that land rise, making agriculture investments an ideal asset class under current economic circumstances.
My investment philosophy is to get non-correlated assets that offer principle protection, consistent income and perform well in a inflationary environment, where growth is supported by solid longterm fundamentals. Agriculture investment, specifically farmland investment ticks all of these boxes for me.