Investing in agriculture may appear to be a smart strategic move, after all everyone requires food, right? And as the population grows, so will the need for food. However, even if farming is your passion, purchasing land may not be the greatest decision for you. Land prices have progressively risen in recent years, making it harder for small farmers and first-time purchasers to get started.
Fortunately, there are several alternative ways to invest in agriculture without owning a property. Hydroponic farming in India is one simple option. Hydroponic farming is a form of agriculture in which plants are grown without the need for soil. Instead, they are cultivated in nutrient-rich water.
In this post, we will look at some of the options for investing in farming, as well as the advantages of doing so.
Hydroponic Farming
Hydroponic farming is a method of agriculture in which plants are cultivated in water and nutrients rather than soil. This agricultural system has several advantages, including greater yields, lower water consumption, and little to no pests or diseases. Hydroponic farming is also perfect for metropolitan settings with limited and expensive land.
There are several methods to begin hydroponic gardening without owning property. Joining a commercial hydroponic farming enterprise is one alternative. These companies have the infrastructure and knowledge to get your crops off to a good start. Another option is to establish a hydroponic partnership with another farmer or company.
This may be an excellent method to share costs and resources while also learning from the experiences of others.
If you do not want to develop your own hydroponic business, you can invest in an existing one. This might be a great way to get started in the field without having to deal with the difficulties of running your own business. There are several commercial hydroponic farms searching for investment. These companies often have a strong business plan and a proven track record, making them a secure investment.
It is critical to conduct thorough research before investing in a hydroponic farm. Make sure to properly investigate the firm and ask questions about its operations.
Real Estate Investment Trust
A Real Estate Investment Trust, or REIT, is a great method to invest in farming without owning any land. Farm REITs are a subset of real estate investment trusts that hold and operate farms and other agricultural properties. Rather of buying land or a farm, you might purchase shares in a farm that is leased to tenants. Each REIT will have exposure to a certain sector of agriculture.
The primary benefit of investing in a farm REIT is that it allows investors to diversify their portfolios and gain exposure to the agricultural asset class without dealing with the complications of owning and maintaining a farm.
Agriculture Commodities
Investing in agricultural commodities is another option to gain exposure to the agriculture business without owning any land. Agricultural commodities are raw resources used in the manufacture of food and other products. Corn, wheat, soybeans, rice, and livestock are all examples of agricultural commodities.
Agricultural commodities can be invested in via exchange-traded funds (ETFs) or commodity futures contracts. ETFs frequently minimise the risk of investing in volatile commodities markets while increasing exposure. Product futures contracts are agreements to acquire or sell a specific amount of an agricultural commodity at a specified price and date in the future. These contracts can also be used to hedge against rising prices or to experiment on market direction.
Crowdfunding
Farmers have traditionally had difficulty raising funds. Small farmers may find it difficult to get started due to the high cost of land and pricey equipment. Farmers, on the other hand, can use crowdfunding to raise funds from a group of smaller investors. As a consequence, investors may diversify their portfolios by include farming.
Agricultural ETFs (Exchange Traded Funds)
Agricultural ETFs (Exchange Traded Funds) are mutual funds that invest in a basket of agricultural commodities or companies that produce food and other goods. You enjoy the benefits of diversity and liquidity as with any other ETF. You don't have to pick and choose which companies or commodities to invest in with an agricultural ETF. The job is done for you by the fund manager. Agricultural exchange-traded funds (ETFs) are a great way to obtain exposure to the farming industry without having to deal with the hassles of land ownership.
Agricultural mutual funds
Agricultural mutual funds hold a portfolio of companies that produce food and other goods. Diversification and professional management are available, as they are with any other mutual fund. However, it's crucial to understand that, in addition to agriculture, many of these funds have exposure to other sectors.
Before investing in any mutual fund, investors should think about things like fees and performance history. While agricultural mutual funds may not provide the same amount of exposure as agricultural exchange-traded funds (ETFs), they can still be a good method to gain exposure to the farming industry without needing to own property.
Investing in land is complicated by factors such as land availability, location, good water supply, power, and other fundamental necessities. All of these factors contribute to the high cost of purchasing land.
While farm REITs, agricultural ETFs, mutual funds, and crowdfunding can be used to invest in farming without owning land, these instruments are riskier owing to their reliance on stock markets. Hydroponic farming, on the other hand, is a fully risk-free choice. It has several advantages, including increased yields, year-round production, and fewer water consumption.
