One of the best investments that can be made is in Agriculture. Why? Because there is always a need for food. Farming can be described as recession-proof in the sense that it is not generally affected by economic recessions. We see this at a clearer view of the Caribbean islands, where the main industries are usually tourism and agriculture. In Antigua and Barbuda, tourism takes the cake. But what about agriculture? Is agriculture a good investment? Just how beneficial is the agricultural industry in Antigua? And how does one go about investing? In this article, we will answer some of those questions as well as highlight the benefits, opportunities, and risks of digging into Antigua’s soil.
What is an agricultural investment?
In essence, agricultural investment is any investment in agricultural land or business. This includes investments by private and government agencies directly into the various segments of the agricultural sector including development, education and training, and infrastructure.
Why invest in agriculture and farmland?
You may be wondering just how stable the agricultural industry is to even consider a long term investment. Well for starters, the fact that land increases in value over time automatically makes it a low-risk investment. Furthermore, there is the advantage of consistent income from yield, forced equity, and special features that can enhance the attraction for other potential investors, renters, or buyers. Altogether, Farmland is one of the most profitable tangible assets.
Unparalleled demand and Inflation
Food. We can’t live without it. We need it just as much as the air we breathe. To better understand the gravity of how the demand for food affects the sustainability of the agricultural sector, we simply must take a look at the factors that influence demand.
- Growing Population– In the past century, the world’s population has more than quadrupled with the demand for food strongly increasing. In simple terms, more people= more mouths to feed. There is a greater demand also for farm-grown organic produce and by-products as the world shifts into a more health-savy mood. Therefore, some farmers are forced to expand to meet the needs of manufacturers, and opportunities are created for new investors.
- Rising incomes– Another factor to consider is the gradual transition of low people in developing countries to the middle class- ultimately when people make more, they try to eat better. This means that the consumption of high-quality foods including organic produce is growing.
Altogether, agriculture acts like a hedge against inflation and the growing demand brings new opportunities to every segment of production making it a great atmosphere for investors.
Multiple ways to invest
An array of farm investment oppurtunities is one of the things that make the industry stable and reliable:
- The quality of the land determines the value that is built over time
- Gains are made off of profits from annual crops and purchases secured through contracts between farmer and customer.
- Structures built on the land can also aid in the growth of land value.
- The rise in demand for food allows for secure long term farm investment
Choosing to invest in any of these areas will not only bring profits but will help diversify your portfolio.
Crop Insurance protection for investors
Crop insurance is the policy that protects producers and investors against unexpected losses such as lower yields than expected, losses due to fluctuations in the agricultural market, or natural disasters. Produces and investors are also provided with the means for disaster recovery.
Let Relocate Antigua get you a trusted crop insurance policy. Our agents are on standby to guide you through the insurance aspect of your agriculture investment.
How to invest in agriculture
If you’re wondering how to invest in farmland, you will be pleased to know that there are multiple ways:
Investing in farm REIT
Investors can invest in a Real Estate Investment Trust (REIT) to benefit from profits gained from farmland without actually having to own the land. These companies purchase farmland and lease it to farmers. Benefits of REIT investment include diversified investment in multiple farms across Antigua instead of just one. Liquidity is also a benefit as shares can be sold like stocks. Investors will benefit from farm yield and capital appreciation. Global Bank of Commerce is an organization that offers REIT investment in Antigua.
The most common way to invest in farmland is to purchase it. Land ownership allows for direct management and the ability to oversee production. However, purchasing a farm may not be the smartest agriculture investment strategy as it entails a substantial input of funds only into the farm.
Other options of investing are:
- Agriculture stocks
- Equity funds
- Soft Commodity
How to make money with agriculture investment
Considering that the main intention for farmland is for farming, one of the ways to profit as an investor is through profits gained from yield. Yield is defined as agricultural output and can be described as a measurement of crops, and bi-products such as wool, meat, or milk produced per section of land. Agricultural output can be influenced by several factors including:
- Agricultural education
In many ways, yield contributes to the farm, the investor, and ultimately the country. For one, more food being produced means that the demand is met. Furthermore, if the harvest return is constant, the farm can operate at a lower cost. Yields can be secured by customers through long-term contracts, allowing for a more reliable purchase and profit.
The fact of the matter is that we can produce almost anything on land, except land itself. For this reason, it is a highly favored commodity and is almost impossible to depreciate. It’s simple- As the population grows, and drives the demand higher, the price rises. In real estate, a property can easily depreciate through wear and tear, but the land on which it stands can only increase in value. Some factors that contribute to the appreciation of the land are:
- The position and location
- The potential for development
- Market drivers
- Population growth
Risks and consideration in agricultural investment
Of course, there are things to be taken into consideration when planning to purchase farmland in Antigua. One should be informed and educated about the risks and uncertainties that can hinder profits from farmland.
Think about it….What are the main components needed for a plant to grow? Soil, water, and sunlight. For a single plant, failure to grow may be a minor hiccup but on a large scale, these three aspects can hinder production and cause major losses for the investor. Some of the factors that affect agricultural production (yield) are:
- Climatic factors: Inclement weather can be a major hindrance to production. Major natural disasters such as hurricanes and tropical storms which are common during the Atlantic Hurricane Season can destroy a farm entirely. Antigua and Barbuda are also known to have droughts, and water availability can prove to be a very serious issue. Likewise, animals need the right amount of water and will also be affected by inclement weather. Other climatic factors include wind velocity and temperature.
- Soil: Plants need the right type of soil and the right care for that soil to thrive. The moisture of the soil, the aeration which it receives, the mineral and organic matter it holds, and the soil’s chemical reaction all play a role in the plants’ growth and overall performance.
- Biotic factors– Certain plants, animals, and insects are known to hinder productivity. These include disease, pests, and larger animals that may eat or destroy plants.
Market and financial risks
Market risks refer to the uncertain rise and fall of prices and demand for produce. Agricultural prices fluctuate according to season, availability, and demand. For this reason, farmers are expected to grow exceptional produce and raise more attractive and large animals that will give them the best bi-products on the market. Political factors also play a role in the financial risks of agricultural investments. This includes tariffs, quotas, and taxes imposed and regularly amended. This can in turn affect cash flow and put pressure on the amount of expenditure in the budget.
Agricultural Investment in Antigua
You may be wondering why you should invest in agriculture in Antigua? Well for one, there are multiple investment options. The benefits of investing in Antigua are the same as listed above. i.e a high demand for food, land appreciation, and contribution to the local economy.
Some areas that are certainly worth investing in Antigua agricultural sector are:
- Antiguan Black Pineapple
- Sea Island Cotton
For more in-depth information, you can read more on our website or give us a call. We are eager to provide you with investment advice.
The availability of very fertile grounds and vast plots of unutilized land, as well as a strong and willing workforce, are just some of the factors that make agriculture a profitable industry for investment in Antigua. Relocate Antigua remains committed to providing quality guidance and assistance in all areas of your agriculture investment processes.