Agriculture currently represents an almost $9 trillion market globally with historically high returns and low volatility. A growing population, driving demand for high-quality food coupled with a finite and decreasing supply of land means that agriculture will only become more essential over time.
Savvy institutional investors have already taken notice, and the asset class has been attracting such sophisticated investors as Bill Gates and Michael Burry (the founder of Scion Capital made famous in “The Big Short”). However, for most investors, agricultural business remains fragmented, confusing, and costly to enter.
Agriculture has historically been a great bet and an excellent addition to any investment portfolio. It is inflation-resistant and contra-cyclical to many conventional equity investments. Most importantly, it is a real asset that will always maintain some level of intrinsic worth. For instance for the past 47 years, farmland has yielded in the US returns of over 10%.
One common misconception is that agriculture is highly volatile due to the volatile nature of the crops. By applying the latest technologies such as hydroponics and with a focus on high value crops with existing market infrastructure and access to key markets, it is possible to achieve significant growth potential and reduce risks related to differing supply/demand fundamentals and crop care issues.
So why aren’t more investors betting heavily on agriculture?
Part of is just lack of awareness and access. Secondly, the market is fragmented, geographically constrained, and often requires specialized knowledge and scale to effectively find and manage agriculture businesses. Small and medium-sized investors, in particular, have struggled to enter the market due to high barriers to entry. Please check out our Hydroponic Greenhouse Program to consider productive agriculture real estate asset as a smart addition to your diversified investment portfolio.
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