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Agro pools provide investors with the possibility to participate in a diversified pool of agricultural production. There are several reasons, both regarding macroeconomic variables and in respect to the particular of these vehicles which make them a compelling alternative for returns and diversification in the long term.
World population is increasing, and emerging economic powers like China and India are changing their eating habits, demanding better quality and bigger quantities of food. Global food demand could double by 2050, according to a projection reported in the journal Proceedings of the National Academy of Sciences (PNAS).
Grain prices may have some volatility due to short term conditions, but over the long term the rising demand for these products is a powerful force driving profitability growing sales for the agribusiness industry. At the same time, arable land is decreasing as a percentage of total land due growing cities over the rural areas in most emerging markets, so the productive resources are getting scarcer in a period of growing demand.
Monetary policies are another positive factor for these kinds of businesses; countries like the US, the Euro Zone and Japan are embarking in aggressive monetary policies in order to reinvigorate their uninspiring economic growth. Lower currency values means higher commodity prices and agro products have an excellent track record of performance during inflationary times.
From the perspective of an investor, agro pools provide access to returns from the farming business with a much smaller initial investment and higher liquidity than direct ownership on a farm. The investor also has access to a diversified investment in terms of different kinds of crops and geographical – climatic – exposure.
When the business is managed by seasoned professionals with many years of successful experience, investors also gain exposure to the advantages of an experienced management team with deep knowledge about the fundamentals of the industry.
In times of uncertainty and economic volatility, investing in the agribusiness sector provides an attractive alternative in terms of safety, diversification and potential for long term returns. In the same sense, investment pools are convenient vehicle to gain access to this business in an efficient way suitable for investors of different kind.
Contact the Gateway to South America team to learn about the best investment opportunities in the region. The company is a benchmark for foreign investors wishing to invest in Argentina, Brazil, Chile, Paraguay, Peru and Uruguay, providing expert advice on property acquisition and investment tours.
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