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.
