The article was something of an intro piece to buying actual farmland and leasing it out. The context I've been writing about has been buying a farmland stock of some sort or including the possibility of plantation companies in Asia. This has simply been an exploration on my part in an attempt to try to learn about the space to see if there is any viability within an equity portfolio. For now it is a work in progress but it is intriguing to me.
Farmland stocks, in the context I am thinking, would be part of the more-protein theme and at the sector level could either be thought of as staples or maybe materials companies, this would be in the eye of the end user.
The chart captures two stocks I've written about before; Black Earth Farming (BLERF on the US pinks) which trades in Sweden and Marine Harvest (MNHVF) which is traded in Norway. Black Earth is a farm stock and Marine Harvest is, still a part of the more-protein theme, a fishery.The two have obviously had much different results in the last two years which doesn't have to be important. For purposes of this post let's assume they are real companies with real assets (I believe they are) and not out and out frauds. From there anyone believing in the more-protein theme would need to assess what they think would be the best way in to the theme, then sort among the choices available and then buy one if there is one that is suitable. There is nothing easy about that of course but that process would yield an addition in a portfolio to one of the above mentioned sectors in such a way as to hopefully add a benefit versus just owning a domestic sector fund.
We know that a fishery ETF has been filed for and something like the also filed for small cap Malaysia or small cap Indonesia could, by virtue of index methodology, be a relevant proxy.
As far as actually buying land, I think that is a completely different form of investment and personally I would not think of it as part of my equity portfolio. For people who understand the undertaking or are willing to pay a management company who does then I am sure there are ways to succeed but I do believe there is a different type of study required.
6 comments:
Also, got to be careful how Katla plays in to it (perhaps, net positive for agri but -ve for Europe agri?). If it has a negative impact on agri in Europe, one might be better off with something in Latin American or elsewhere in Asia.
Boy, now I feel kind of dumb. I guess I am a bit too literal, huh? To me, farmland = farm + land. I always thought of what you describe today as agribusiness like Monsanto, Archer Daniels Midland, Deere, Tyson, Terra, and so on. Semantics.
As for Rogers' comment, I concur. Spend some time in California's central valley...Ferraris are their work vehicles, you should see what they drive to town to get groceries! You won't see Ferraris in Nebraska though, but you will see some tricked out F-350 pickups!
Roger, as a longtime farmland owner, I'd like to comment the WSJ article is pretty much on the money including the caveats. Farmland has been a good buy and a good investment in the past and the risks of ownership going forward should be properly assessed. It isn't risk free by any means. Investing (in land) outside the USA seems to be extremely risky-IMHO of course.
After reaching out to farmer back in the home state of Indiana, I've learned that purchasing farm land as an investment is particularly difficult. The complexities stateside is difficult enough, layer in gov't abroad and the task is overwhelming unless you are a full-time professional.
Roger - how close to the horrific Flagstaff fires that we see on TV are you? Keep safe.
so if i wasn't clear this is about whether or not there is an equity market solution. one the stocks i've mentioned before could but i don't know. I've learned about a few of them but havenot bought a Russian farm or Indonesian plantation.
Buying an actual farm in another country sounds very complicated on multiple levels but if you can pick 100 hectares in Tunisia for a thousand bucks; go for it (humor attempt)
Paul relative to Northern AZ the fires are not close. THere is also a big one in Williams that is a few days old. The Schultz fire is apparently a spot fire from the Harty fire (as I heard it anyway), yikes.
SCP.TO has a stake in one earth farms which has farmland in Canada
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