How To Make Money Investing In Agriculture
There are many options available when you have money you want to invest and grow. Clients often ask how to make money investing in agriculture? Most agricultural businesses have many variables that affect profit margins. Ag is considered a low-risk investment that grows at a rate that accounts for inflation, which means, your investment increases in value over the long-term.
Why Invest in Agriculture?
it is a tangible asset that provides benefit to the community, and it can diversify a portfolio.
Returns vary depending not only on commodity prices, but on how much and how fast the land appreciates. Depending on the farm’s location, current commodity prices and other factors, returns on investment range from 3-5% for commodity based land, or 10-15% for specialty crops. Because agriculture investments are long term, they can be set up to be kept in the investor’s family and passed down to future generations. Agricultural investments can appreciate indefinitely.
People are growing more and more selective in the food that they put in their bodies. Farm to table style restaurants and markets are extremely popular right now, and especially more so if they’re local.
Investors can make money from cash flow from crops that are harvested.
Crop insurance protects the farmer and the investor in the event of a catastrophe. Therefore even if crops are destroyed or their revenue declines due to declines in commodity prices, the farmer will still receive funds with which they can pay their lease.
Farmland is appreciating value, which is beneficial for investors. if the land is located close to a residential area, the land value increases with the potential to sell the land as development encroaches.
There is much less volatility in farmland and timberland than in other types of investments, meaning adding agriculture to your investment portfolio can provide continual stability with the potential for an annual income.
Learn how to save on income taxes with agriculture investments in Qualified Opportunity Zones.