Agriculture Sector – A Lucrative Investment

Cash Flow Vs Agriculture Sector

Investment in agriculture has a huge possibility for healthy dividends from multiple sources. The steep hike in farmland prices has been of major concern over a few years. World has witnessed prices have doubled, tripled, and even quadrupled of farmland since 2004. Prices of almost every commodity and basic needs have risen multiple times due to inflation. Under these circumstances cash flow that branches from leased agriculture and from the commodities can provide a sustainable and solid return. Investment companies can cut down the trouble by renting land to the farmers who handle the farmland and pay monthly lease to owners of the farmland. In addition, cash flow can also be driven by contracting land owners or investing in funds for the management of farms. It may catapult the risk, but the great returns in cash flow make it an attractive opportunity.

A Haven In Inflation

Inflation is all time high in the recent years and lavish lending trends has resulted in critical global economy. Increase supply of money can be the partial solutions practiced by government of different nations. In addition, rat of interest have gone down to almost nil. This all will lead to a higher inflation in the near future. Under these circumstances farming appeared to be a lucrative option. It has performed extremely well in high inflationary times. Agricultural investment also can protect from inflation as well as it also pays you for the same.

Diversification

Farmland also gives the investors the opportunity to diversify from bonds and stocks, as agriculture is not highly related with these volatile asset resources. It also offers the stability to the portfolio in the vulnerable markets in an effort to enhance a portfolio’s risk adjusted return.

Synopsis

The above scenario has established that under the heat of rising inflation and reducing resources, investment in agriculture is the most lucrative industry attractive investors.

Investment Opportunities in Indian Agriculture Sector

The primary source of employment in India has been agriculture for several years having more than 65% of the population trusting on it. Indian agriculture has always been the major contributor when it comes to the Indian economy, playing a lead role in supporting the country’s sustainability and growth.

Size of Agriculture Market in India

India has been the highest supplier of jute, milk, jute, pulsed and organic fibers in the global market. It’s the second biggest supplier of wheat, rice, sugarcane, groundnuts, vegetables, and cotton. It also supplies the biggest chunk of spices and plantation crops across the world. Apart from all these, India also leads the supply of poultry, livestock, and fisheries.

Considering the growing population and other factors, the growth of the agricultural sector in India manifests a huge impetus with growing demand for agricultural products from the international market. The demand for rice from countries like western Asia, Southeast Asia, and some countries in Africa has been growing immensely.

Investment Opportunities in the Indian Agricultural Sector

Demand of agricultural products like hybrid seeds and high quality fertilizes has received an overwhelming demand.

Tons of food in India gets wasted each year because of lack of proper storage facilities. The investment opportunities in the food storage facilities are also a promising sector for both private and foreign investors.

Opportunities of Investments in Food Storage Infrastructure:

In 2011-12 year budget, an automatic route by 100% FDI has been allowed for the investment companies in food storage infrastructures.

Service tax has been fully exempted along with the 5% concession on stamp duty for the companies investing in cold storage expansion plans in India.

In addition, the refrigerator units for the storage vehicles like vans, trucks are also totally exempted from customs duty.

Foreign companies that are investing in the Indian agricultural industry will require investing minimum half of the total investment amount on infrastructure and support facilities.

Synopsis

The Indian government is working towards transforming the agriculture sector a promising investment industry for global players. With the Food Security Bill introduced in parliament, the need for better investments in this sector of India has gotten new impetus. Investment in agriculture in India is one of the most promising opportunities for global companies as well.