Where are the future tangible investment opportunities for investors?
How about the agricultural sector?
Even with the worst recession in decades, the agricultural sector is still relatively strong, as seen in the following imperial statistical data. While it would be misleading to say that the sector is completely immune to the financial down turn, the overall picture of the sector is strong. The majority of commodities are still profitable and real estate land values for farm land are holding.
The relative strength of the agricultural sector is not an anomaly or luck. The fundamental strength of the sector is attributed to 1) the necessity for a quality food supply and 2) the responsible lending practices of the agricultural lending industry.
The necessity of a quality food supply – “People have to eat”
During this recession, consumers have changed their food purchasing patterns; however, the agricultural sector is very accommodating and makes the appropriate planting adjustments. Farmers operate as profit maximizing producers. When a commodity decreases in profitability, farmers make an adjustment to their planting decisions. In the case or open land commodities, farmers can alter the crop planting decisions annually if not semi annually for double crops. In the case of permanent plantings, this production cycle may take a few years at times to remove enough acreage of the over supplied commodity to get the supply and demand factors back in balance.