Wednesday, January 4, 2012

Farmland and Agriculture - Immune to Drops in Commodity Prices?

Well, maybe not entirely, but it is our opinion that the agriculture sector sector is less sensitive to the ups and downs of commodities and the global economy than such other areas as metals and mining. This article on the investing website Seeking Alpha made much the same point. The article states:

"Agricultural commodities on the other hand face much less elastic demand. Less housing in construction in China hurts copper demand, but it does not change the fact that people will not stop eating. Emerging economies may be facing slowdowns, but they are not contracting or halting to the point that consumers will be forced to change back to a grain based diet from their newly acquired meat based diets."

This captures exactly why we favor agriculture as our favorite commodities sector. We prefer to play the sector by investing in farmland, as we believe that farmland as an investment brings a certain stability and peace of mind to a portfolio that agriculture stocks and futures may not achieve/ However, anyway you decide to play it, if you are investing in commodities do try to make sure that agriculture is is included.

Finally, we are very pleased to note here in this press release that the African farmland project Green World represents recently paid an initial yield of 16.2%!

1 comment:

  1. Hi Cohn,
    All you are trying to tell us that the investments have new options now, rather than old conventional options (like banking, gold or oil) now we have new options that could keep our world more greener and also a safe investment?
    So should we pickup farmlands as an investment optoin? But pleasee will you explain how safe is to invest here. I'll be waiting for you next post regarding security issues in this kind of investment.