Why buy farmland in Chile in 2022?

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We have written before about why investments in agriculture seem like a no-brainer, given the fundamentals of supply and demand. Owning farmland can be comparable to owning physical gold, but it also gives you a good income. Thus you should buy as much of it as possible if the price is right.

Farm soils in Chile are incredibly fertile, and the price is right.  Highly dairy farms or productive farmland run between USD 12,000 and USD 17,000 per hectare. By comparison, farmland in New Zealand can cost USD 22,000 to USD 35,000 per hectare for similar quality.

What’s more, the production yields are typically as strong… and in some cases, even stronger. The UN Food and Agriculture Organization estimates that Chile’s corn production per acre is 20.13% higher than in the US and 33.57% higher than Canada. The numbers are similar for wheat.

Hands-on foreign farmers in Chile suggest the difference is even higher.

The three principal wine regions in Chile are the Colchagua Valley, the Maipo Valley and the Elqui Valley

Moreover, because Chile is in the southern hemisphere, its harvests are counter-seasonal to those in the northern hemisphere. Supply is tighter when they harvest, which means the price they fetch is higher.

In addition to better revenue potential, labour costs in Chile are much lower. Labourers in the South command wages of just  USD 4-6 dollars per hour, and even a seasoned manager with decades of experience will barely register more than USD 1,300 per month.

In the NZ, US, Canada, and the UK, by comparison, a veteran farm manager can command USD 60,000 to USD 80,000 USD  or more annually.

So, in addition to achieving optimal revenues, the operating costs in Chile are much lower. Higher revenues. Lower costs. More profit.

And the tax breaks for agriculture here are spectacular. The government allows what’s called ‘deemed income reporting’ for farmers, which reduces not only the tax liability but also the time and costs of compliance. It’s incredibly simple.

Plus, no insane government regulator is breathing down your neck or large multinationals like Cargill mopping up the entire market.

Even if you don’t want to take any operational risks, you can simply buy the property and lease it out to another farmer, achieving yields of between 6% and 11%. Residents of Chile can also obtain low-interest financing, so you can mitigate your risk while generating superior cash on cash return for doing absolutely nothing.

And for foreigners, it’s incredibly easy to become a resident to obtain financing on agricultural property.

For those interested in farm tourism, below is a perfect example of what we are recommending. In Chiles Patagonian region.

Bottom line, if you believe that out-of-control money printing and world population demographics will contribute to significant food price inflation in the coming years, owning farmland is one of the smartest investments you can make.

And considering all the factors– price, production, operating risks, etc., conditions here in Chile are ideal for investors to act right now.

Those investors who have been holding off to see if the new government of Boric will get public support for the negative changes in the status quo of Chiles’s current constitution will be delighted to see that the public has strongly rejected any changes by a large margin. Support for the status quo came from right thought society, from the young to the old, from the poor to the rich.

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.

www.gatewaytosouthamerica.com

Post available in: English