Productive land is the ultimate hard asset. Unlike a lot in a development community or a plot in the middle of a commercial district, productive land always retains the potential for yield.
By definition, productive land is land where you could produce something of marketable value. When whatever you plant or herd reaches maturity, you harvest and sell. That sounds like farming, but we’re not suggesting you pick up a hoe. Set up the agricultural investment properly, and you can be effectively a landlord for the crops.
Cash flow from a hard asset is the primary investor objective right now, and the best case we’d say is when that hard asset produces an agricultural product to feed a growing market demand.
The reasons for investing in agriculture are fairly straightforward…first and foremost is the rising global population that isn’t slowing down. It’s estimated that the human population will reach nine billion by the year 2050.
In addition, global incomes are rising, fueling increases in global food consumption. The rate of consumption growth is reported at 2.5% per year, with supply increasing only 1.5% annually. The UN estimates that 95% of total cropland is already being used in one form or another—which is to say that arable land is a diminishing global asset. Some UN studies estimate a need to double agricultural output by 2050 to accommodate the projected population increase. Plus, bio-fuels could reduce available cropland by 8% to 20% by 2050.
Should any world crisis strike, food and water will immediately become scarce and us, like you, we’re sure, want to be prepared for anything by making sure we can sustain ourselves and our families, should the need arise. We don’t want to be left to the mercy of whoever has control of farm land in the event of global crisis. We don’t see this as paranoia, just good sense.
As Jim Rogers put it, back in 2009:
“The best sector in the world that I know right now is probably agriculture. Everybody should become a farmer. Farming is going to be one of the greatest industries of our time for the next 20 to 30 years. I’m convinced that farmland is going to be one of the best investments of our time.