How to Invest in Farming Without Owning a Farm
Farming can be a lucrative industry and one that you should try to get in on even if you’re not planning to actually own and operate a farm. There are other ways to be a part of the industry and to make money from it, that will benefit both the farmers and the community they are based in.
This is mostly about finding the projects that worth your time and money and that can turn a profit in a reasonable amount of time. Lately those are mostly about helping innovation and green farming.
Real-estate investment trusts
The trusts that are used to invest in farming are the closest thing you’ll get to actually owning a farm without having it as your own personal property. These real-estate investments truest own the farmland directly and they lease it to individual farmers who operate it and keep the profit from its produce.
From the perspective of an investor this is a better option because it provides you with the ability to diversify your investment by purchasing more than one farm at once. These farms should be diverse in terms of where they are and what kind of produce they grow.
Investing in commodities
This is a more speculative form of investing and it’s not connected to owning actual land. What you purchase here are specific commodities such corn, livestock, coffee, grains, cocoa and many others. In these cases, you purchase these commodities in bulk and sell them while expecting a price change on the market for them.
This is most alike purchasing futures on the stock market where you bet on the future income made by the company you’re promoting. It’s a chance to get a much larger profit share and with a faster turnout.
Mutual funds
Mutual funds related to agriculture are the same as any other mutual funds in terms of how they work. Many different investors put their money together and use them to support the farming industry for the share of their profits once they are made. In these cases, you don’t purchase the commodities directly.
At the same time, it’s important to note that you’re then tangling your investment with the work of these funds and they are often investing in other industries beyond the farming itself and that can be troubling to some.
Publicly traded company
There are also more conventional ways of investing in the industry and that’s true the publicly traded companies that already work in the field and that are traded on the stock market. This is how most investments work and they usually done through a broker.
The downside of these are the additional fees that you’ll need to cover because there are intermediaries that will do so for you. However, it’s also the simplest way of investing in agriculture because it can be a completely passive way of earning and you could do it with little involvement personally.
Supporting industries
Farming isn’t a solitary industry. It’s not a job that you could do without purchasing the goods and products that come from a variety of different industries. Investing in these supporting industries is a way to make money while supporting the farming in your area.
Fertilizer and seeds
Simply put you can’t run a farm without the seeds or without the fertilizer needed to grow your crops. Investing in the companies that makes these will make your profits dependent and based on the agriculture while it won’t make you a farmer per se. Investment in these companies works in the ways we’ve described above, meaning that you can invest in shares or in futures.
Equipment
Farming equipment is a necessary part of the farming experience and investing in the companies that make the equipment means you’ll have a steady stream of income. There’s also a lot of inventive work in this field so you could expect some spikes in your income as well.
Distribution
In the end, farming usually depends heavily on the distribution industry since you need to find ways to bring your produce where they are needed. This industry is now under a lot of pressure from automation and AI and it’s changing rapidly. Now it’s the time to get in on it.
Conclusion
Investing in farming can be a lucrative and long term business move. What’s interesting about that you don’t need to buy a farm or even step foot on one in order to do so. There are many other passive ways of investing in this field.
For instance, you may try: investing in the related industries, buying publicly traded companies that work in the field or you can invest in real-estate investment trusts as a way to purchase the farms without having been the owner personally.
