The reality in farming and agriculture

For a very long time 95% of the food will still come from traditional farming. Its just a scale issue. The prospects for agriculture are as rich as the land itself and it continues to be a powerful asset class.

I laughed though at someone who spoke with me yesterday and he actually believed that any investment in farming would be risk free and profitable. I think its just too costly and challenging to start a farm. The majority of prosperous farms are financed by an outside company. The margins that enable multiple parties to profit are found in all farming input businesses and not on farms.

You can lose two steers to strange injuries in just a month. Nothing is guaranteed. It's said that if you own livestock you'll eventually own deadstock. Most farmers are risk averse and conservative. When they're given the option, they will always choose the well known established brand. Invest in businesses that manufacture those machines because they won't be around for very long.

The businesses that use traceability systems and clean production techniques are attracting more and more of the investors and importers are getting more involved. When you combine it with growing input costs, this makes the market more susceptible to supply disruptions. It's clear we are creating joint ventures not looking for assistance.

Smallholder farming is by its very nature communal. Compared to other industries agriculture gives significantly higher returns on investment. The political economy of agricultural digitization needs to be addressed seriously. Agriculture is now seen as a niche for prosperity for everyone rather than a profession for the less fortunate. Things have really changed and a wise man would rather put his cash in agric than gold of he knows the in and out of farming, he's in a more sustainable industry.

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