Successful investment takes industry insight
The agricultural sector faces great challenges in feeding the world in the future. Population growth and rising global incomes are increasing the demand for food, livestock feed, and fiber. While demand is increasing steadily, supply is constrained by limited arable land. Access to water is increasingly constrained as the impacts of climate change mount.
The downside risks are limited by underlying land prices, which have proven remarkably stable even in times of market turmoil. But overall returns on agricultural investments are influenced by a wide range of factors: from weather risks to political interventions to the inherent illiquidity of farmland. Hence it is very important to understand what drives and influences return.
A precondition to successful investment is to have a substantial level of agricultural expertise and experience in sourcing investments and managing operations. In addition, it is crucial to acquire local know-how at the operational level. Farming is a low-margin business and only the best farmers can achieve superior returns, navigate their way through challenging periods and improve the productivity of the land.