02/23/2010 Agricultural investment
Picture of
Bulgarian farming district of Dobrudzha, near North Bulgarian coast.
Investments in agriculture, which is consistently steady annual returns give an average of 10% to 15% annually over the past decade, as mankind consumes more corn than we produce for seven of the last eight years. Institutional investors such as Jim Rogers are the use of agricultural land investment as an effective inflation hedge for years and Mr. Rogers is often quoted as say that agricultural investments in the form of farmland investment, probably the best overall resources for investment in this new decade.
So, what is the best agricultural investment, and how can investors who have access to small pots of capital involved in agricultural investment and use the low risk, high yield investment strategies that are employed in institutional investors for years?
Many structures are available on the open market for retail investors with options to choose form, including agricultural land investment, investment funds and operating a farm himself and selling crops. You can also have a range of geographic areas on which to focus, including Eastern Europe, UK and USA. Choosing the right of agricultural investment will depend on how the length of time that you want to tie their capital and their attitude to political risk.
After conducting extensive research and due diligence on the type and structure of each kind of agricultural investment, and past performance of their target land or fund manager, you can narrow your choice of several investment projects and strategies.
Structure work for smaller investors
Smaller investors can participate in agriculture by purchasing agricultural land, then rent the farmers to manage the growth and sale of crops. Employer will his country and will receive rental income from investment to 7% per year, while the farmland professionally managed, harvested and sold on the crops of farmers. This type of buy to let deal structure allows smaller investors to participate in agricultural investment in much the same way as institutional clients do so, provided that small investors are a source of investment land.
There are agricultural products that the design of investment risk of agricultural investment, with rental tenant options to purchase, which the tenant farmer to buyback barns original form of investors after a fixed period of time. This provides the investor exit strategy, and also it is possible to build on further reducing the risk by securing minimum buyback price of the rental contract with the farmer.
ALS Comment
There’s little doubt investing in good quality agricultural alnd in a stable country is going to prove a sound investment over the coming years. Fast rising world population and increasing purchasing power of that population will push food and land prices inexorably up.
| 
