Finding the best managed farmland near bangalore investment can be tricky for the inexperienced investor with little or no knowledge of the sector, but there are of course many different options available including agriculture investment funds, direct agricultural land investment, and purchasing equities in agricultural companies. In this article I will go some way to investigating the different options, the risks they present to investors, the mechanics of how each type of agriculture investment works, and the returns that are currently being achieved.
Firstly we will look at the relevance of agriculture investment for the current economic climate, and whether this particular sector shows us the signs of being able to generate growth and income.
The global economy is still in a state of turmoil, and the UK in particular is cutting back public spending to reduce an unmanageable national debt, the population is growing, and quantitative easing is likely to lead us into a period of extended inflation. Also, the lack of economic visibility means that it is very hard to value assets such as stocks, and interest rates being so low means that our cash deposits are not generating any tangible income to speak of.
So what does this mean for investors? It means that we need to buy assets that have a positive correlation with inflation i.e. they go up in value quicker than the rate of inflation, these assets must also generate an income to replace the income we have lost from cash, and finally any asset that we purchase must also have a strong and measurable track record.
It is very clear that agriculture investment, especially investing in agricultural land, displays the characteristics of growth, income, a positive correlation with inflation, is easy to value, and has a clear and evident track record to analyse, and as such agriculture investment ticks all of the relevant boxes to potentially become the ideal asset class for investors today.
The fundamentals supporting agriculture investment are pretty easy to measure; as the global population grows we need more food, to produce more food we need more agricultural land as this is the resource that provides all of the grain and cereals that we eat, and all of the space to graze the livestock that end up on our plate. So we are dealing with a very basic question of supply and demand, if demand increases and supply can’t keep up, the value of the underlying asset increases, so let’s look at some of the key indicators of supply and demand for agriculture investment.
For seven of the last eight years we have consumed more grain than we have produced, bringing the global store down to critical levels.