have you considered farm Investing yet?

have you considered farm Investing yet?

have you ever dreamt about owning your own farmland? ever wanted to grow your own crop and rear farm animals? it certainly sounds appealing, but agriculture is not a straightforward task. dreaming about it might be easy, but the actual practice demands a lot.

apart from the sheer manual labor required, one should also be experienced enough to take care of production at such a large scale. you may say you are good at both, but even then, there is no guarantee of having a good harvest.

owning a farm, growing crops, or rearing cattle is a complete lifestyle on its own. just the capital expenditure required to even begin is out of reach for many. but one cannot deny the fact that it's an important asset to own.

no matter what situation the economy is in, whether it’s in a recession or a boom, agriculture can never cease. it serves as the bedrock of civilization. after all, it is essential to eat to stay alive. that makes livestock or plants invaluable assets.

how to invest in agriculture

in India, those who would consider themselves well-versed in the workings of the agri-commodity market can trade on the National Commodity & Derivatives Exchange Limited (NCDEX). it is an agri-commodity exchange where you can trade in commodities such as pulses, spices, and guar.

NCDEX has also come up with an agricultural futures index called Agridex, which tracks the performance of the ten liquid commodities traded on the NCDEX platform.

then there are real estate investment trusts (REITs) that focus on farmland which they buy and lease to farmers. such REITs can comprise a basket of farmlands from across geographies. this further helps with diversification and risk mitigation.  

there are agriculture-focused mutual fund schemes like the BlackRock Nutrition Fund, which has over $337 million in assets under management (AUM) and has generated an average annual return of 8.3% in the last five years. In India, the DSP World Agriculture Fund, which mostly tracks the BlackRock Nutrition fund, is another proxy to invest in the agriculture space. it currently has  ₹67 crore in AUM.

globally, there are more ways to invest in this space. for example, one could crowdfund in real farm assets like land, livestock, or trees and earn a profit once the asset matures in the care of an experienced farmer.

agriculture is recession-proof. and as an asset class, it can serve as a good defensive bet against economic downturns.