Agriculture as an Alternative to the Stock Market

Why do investments in agriculture make sense? Agro-investment specialist Agri Terra Group provides an answer

MUNICH, GERMANY, May 14, 2020 /24-7PressRelease/ -- The Food and Agriculture Organization of the United Nations (FAO) estimates that continuing growth of the world population as well as an increase in economic prosperity will lead to a doubling in global demand for food by the year 2050. The growing wealth of the middle class in Asia and Latin America is also boosting demand for a greater variety of crops. However, due to fast expansions of urban areas (including space required for transportation), less and less agricultural land is available. On top of that, water resources needed for agriculture are reaching their limits in many regions of the world.

"Most of the arable land that is suitable for agriculture is currently already being used for cultivation. The decrease in farmland per capita is met with an increase in demand for food worldwide. Whenever goods experience an increase in demand together with a decrease in supply, the price tends to go up, an effect well observed in agriculture over recent years," says Carsten Pfau, Managing Director of Agri Terra Group.

Agriculture is a shield against inflation and low interest rates

A conservative approach to agro-investing is of course the acquisition of stock of food producers and agricultural companies. Also, some investment funds have set their focus on agriculture. Commodity investments usually come along with a number of variables, some of which may cause significant headaches to investors. Quite often, the performance of an investment in this field is sensitive to climate change. A rather secure strategy includes the acquisition of the underlying land. Farmland is a tangible asset that is limited in its supply yet high in demand, and it is has almost no correlation with the international stock and bond markets.

Agricultural investments may well be profitable for several generations. Millennials who are just beginning to build up wealth and whose savings are threatened by negative interest rates, may just be well advised to invest in a hard asset that will most likely increase its value over time. Agricultural land meets these criteria perfectly. If the investment is structured wisely, in addition to the passive land component, annual income is generated by an active agricultural operation.

Generation X, which is approaching retirement age, is well advised to shift its focus from volatile investments to rather secure alternatives. However, considering inflation and a severe drop in interest rates, traditionally safe investments such as savings accounts and bonds perform poorly, sometimes even negative. At the same time, Baby Boomers face the challenge of not having saved enough money for retirement, mainly due to a lack of preparation and several stock market crashes.

By investing in the production of fruit and vegetables (e.g., in greenhouses), investors can generate income fast, usually already in the first two years. Agricultural investments can therefore not only fill financial gaps in retirement provisions but also be passed on to children and grandchildren to ensure financial prosperity for the next generation. The creation of generational wealth through agro-investments is an interesting alternative to the stock market, bonds and savings accounts.

About Agri Terra

The Agri Terra owners, German brothers Carsten and Michael Pfau, invest and conduct business in Paraguay since 1995. Successful real estate investors, the brothers shifted their focus towards agriculture over the years. Starting out with the purchase of farmland and small cattle investments, the brothers now manage under the Agri Terra umbrella large agro-projects all over Paraguay. The company is among the largest 1% of cattle owners (out of 142,000 total), and it operates the country's third largest orange plantation. Substantial investments in greenhouses (vegetable production for supermarkets) as well as other citrus plantations complete the portfolio. In addition, the group develops residential country clubs and invests in the field of landbanking.

Agri Terra only offers projects to investors if the company invests ist own funds into the project as well. Most of the times, Agri Terra is the single largest investor in a project.

Key executives in the company count with decades of experience in their respective fields of expertise. A combination of experience, expertise and dedication provides a solid base for the company's investments.

Headquartered in Munich, the Agri Terra Group is also registered in Austria, Panama, Paraguay and Hong Kong. In addition, the company counts with representatives for the US and Canada, Switzerland and Romania.

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