Thursday, March 11, 2010

Agricultural Investment India

Investors choosing to buy up agricultural land now, will benefit not only from the growth in the value of the land itself, but also from the high yield earned from leasing the land to a farmer. So the best agricultural investment in 2010? direct investment, buying farmland, owning the asset, however you want to put it, those investors choosing to buy up farmland now will be well rewarded, very well rewarded indeed.So, what could be considered the best agricultural investment? Well the options for investor are two-fold, firstly you could invest in one of the many agricultural funds available on the market, these agricultural funds offer the investor the opportunity to participate at lower levels and enjoy the lower risk element of spreading their investment over a vast portfolio of crops and locations.

Smaller investors can take part in Agriculture Sector by buying farmland and then renting to a farmer to manage the growth and sale of crops. The investor will own the land and will receive a rental income from the investment of up to 7% per annum, whilst the farmland will be professionally managed, harvested and the crops sold on by the farmer. This type of buy to let deal structure allows smaller investors to participate in agricultural investment in much the same way as institutional clients have done, provided that the smaller investors can source investment farmland.

There are agriculture investment products that design risk out of agricultural investment, with tenant rent to buy options, allowing the farmer tenant to buyback the farmland form the original investor after a fixed time period. This provides the investor with an exit strategy and it is also possible to build in further risk mitigation by securing a minimum buyback price into the rental contract with the farmer.

No comments:

Post a Comment