What are the features of investing in agriculture? How to invest in agriculture correctly? What profitability can investments in agriculture bring?
Promising investments are investments that do not depend on market fluctuations, luck, intuition and fashionable trends in the economy. The land and what it gives are values that people will always need. No digital technologies, even the most advanced, will replace bread, milk and meat.
That is why investors counting on long-term and stable profits invest in agriculture. It is always relevant, reliable and profitable. Today we will tell you about what profitable agricultural investments are.
There are dozens and even hundreds of investment instruments. Some of them bring enrichment only to the investor (for example, investments in stock market speculation), others also benefit the country's economy, so they are encouraged in every possible way at the federal and regional levels.
More and more private investors and investment companies are choosing investments in agriculture and the agro-industrial complex as a long-term development strategy. This is a rewarding, useful and profitable business if you approach it wisely.
It must be said that until recently, investors tried to avoid this industry. From an economic point of view, agriculture is an area where investments by definition cannot provide quick profits.
To get income from the harvest, you need to prepare the soil, plant the seeds, grow the crop, collect, preserve and successfully sell it. Not every investor has enough patience and knowledge to control each stage.
It is much faster to invest in shares and sell them at a higher price in a couple of weeks. Even production pays for itself much faster than, say, starting a farm from scratch.
Agriculture is an industry that ensures national interests, so the state does its utmost to support and encourage investment in this area;
High-quality and natural food products are in increasing demand - no one wants to eat cheap Chinese "plastic" tomatoes anymore;
The cost of food (on an international scale) is steadily increasing every year - the population is growing, and the area of fertile land - on the contrary;
Agricultural products are in demand all year round;
Competition in the agricultural sector is relatively low.
If in the sphere of industrial goods production most of the profitable niches are already occupied, then in agriculture there is a free rein for enterprising and far-sighted investors. If you want, modernize what is already working, if you want - create your own from scratch, attracting innovations, technical achievements and the latest developments.
Inflation and currency devaluation significantly reduce the profitability of investments in the agricultural sector;
there is too big a time gap between the formation of the initial price and the receipt of actual revenue for the product;
low growth of labor productivity in the agricultural sector;
no effective insurance mechanisms, but the risks are high;
no well-established mechanisms for selling products;
dependence of profit on seasonal factors - one bad year, and the result of many months of work of dozens and hundreds of people will be reduced to nothing.
And yet the advantages outweigh the disadvantages.
If you invest in agricultural assets, consider the import features, the prospects of these investments, the benefit, interventions in the grain market, export barriers, covering the price of fertilizers and fuel. It is very important to invest money correctly.
First of all, you should decide in what form you can make investments. You have three ways to invest.
The first way involves managing the enterprise in which you invested yourself.
The second way is to invest finances in an existing agricultural business in order to receive certain dividends.
The third way is to use funds to place them in a consumer cooperative, or in a financial institution, for example, a bank, which already invests in agriculture.
The fourth way involves investing funds in securities of large agricultural enterprises.
In the first case, if you decide to open your own farming enterprise, then you need to prepare for a huge amount of paperwork, including reporting and direct work on the farm.
In the second way, when investing money in an enterprise, you need to have a competent contract drawn up from a legal point of view, which will be checked by a qualified lawyer.
In the third and fourth methods for investing in agricultural assets, you need to have investment experience.
More and more agricultural enterprises are now entering the securities market in order to increase their own capitalization, as well as to self-promote their brand.
With the help of such tools, the agricultural sector is one of the most promising sectors of the economy, in terms of investments and increasing their own capitalization.
Investment volumes can vary from the most minimal to very large, thanks to which the investor can influence the enterprise itself. Once you have figured out the forms of investment, you should move on to the next important piece of advice.
You should assess your financial situation. An adequate assessment of your financial capabilities for an individual will not be difficult, but for large companies you will have to resort to professionals.
Both a private investor and a company need to have a "financial cushion" or reserve funds to minimize risks. If your own reserves are not enough, you need to think about ways to attract borrowed funds, preferably on favorable terms.
Knowing your own financial potential, it is much easier to choose the direction of investment. Make a goal of the investment project and the time frame for achieving the goal.
To summarize, it can be said that investments in the agricultural complex in our country, although it has certain disadvantages and risks, but at the same time has a huge potential for development and profit in the long term.
If you plan to create a small farm, then three or four able-bodied people will be enough, for example, your own family. You can start with breeding cattle, as well as ducks, geese, chickens. Beginners in the agricultural business can engage in growing vegetable crops, after accumulating the necessary experience, move on to grain crops.
Young farms can function only with continuous financing. In the absence of continuous financing, such a business model may fail. Therefore, you need to take a responsible approach to this issue.