In a nutshell, agribusiness relates to agriculture related investments such as wood and food. There are currently large tax incentives offered for investment in this sector. Coupled with the recent increase in stockmarket volatility, many investors are looking to agribusiness as a way of diversifying their portfolio.
Diversification – Agribusiness returns show little correlation with the stockmarket and as a result are a good way of spreading the risk of your overall portfolio.
Product prices are expected to continue to rise – Global demand for land to build on, a surge in the global population and the use of ethanol from plant materials as an energy source are all increasing our demand and the resulting prices of agribusiness related products.
What to look for when investing in Agribusiness –
There are a wide range of investment opportunities being marketed, from Almond and Olive growing to some of the more established wood and timber product schemes. It’s easy to get confused when comparing one product with another. Our guide has been designed to simplify it for you.
Compare apples with apples – When you’re looking at some of the agribusiness investment opportunities it’s easy to get carried away with the anticipated returns on some of these funds. Bear in mind that some products such as almonds are not as established as forestry investments and as a result carry a higher investment risk, ie the projections used are just that and there may not necessarily be a track record to rely on. That’s not to say that a new tree or plantation won’t produce the anticipated returns, just that there’s a higher inherent risk and it’s unfair to compare these returns with those of established more stable agribusiness sub-sectors such as the wood chip offers.
The track record of the investment manager – Consider this, with many agribusiness products, you’re effectively locked in for a period of 12-25 years. Who do you want managing your money, a long term established provider that has had time to learn from their mistakes or a new company with little or no track record and a small balance sheet to back up their operations?