Why Jim Rogers is Investing in Farmland

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Legendary Wall Street trader and best-selling author Jim Rogers recently offered this unconventional advice: If you want to get rich, you should be investing in farmland.

Don't laugh. Rogers is good at what he does. Really good.

Together with George Soros, he founded the Quantum Fund in the 1970s and posted returns of 4,200% over 10 years. Rogers retired in 1980 at the age of 37, but is still active as a private investor.

Back in 1999, Jim Rogers recommended gold when it was trading at $252 and silver at $4. You know what happened after that.

Now Rogers thinks investing in farmland will pay off in a big way.

"It's the farmers, the producers, who are going to be in the captain's seat when the prices go through the roof," he told The Australian Financial Review.

Food Demand on the Rise

Consumers in places like China and India – where an emerging middle class suddenly can afford a better diet — are eating more of everything, especially high-protein meat.

But they have a long way to go to catch up to Western levels of meat consumption.

According to Time Magazine, the average American consumes about 250 pounds of meat a year. Meanwhile, the Chinese average roughly 100 pounds a year, while Indians eat less than 10 pounds a year.

As the middle class in these and other emerging markets expand in the coming years, demand for meat will explode.

But to increase meat production, farms will need a lot more grain to feed the livestock. Half of U.S. corn production already goes to feed cattle, pigs and poultry.

A prediction in a recent advertising campaign from Monsanto Co. (NYSE: MON) illustrates the immense demand that's just around the corner. The company said the world's farmers will need to produce more food in the next 50 years than farmers have produced in total over the last 10,000 years.

Soaring demand for grain has already affected the market. Monsanto said global grain consumption has exceeded total production for seven out of the last eight years.

"The world has got a serious food problem," Rogers told Time. "The only real way to solve it is to draw more people back to agriculture."

Milking Profits From Farmland

Meanwhile, new technology over the last 20 years has helped U.S. farmers significantly increase production. Redesigned seeds have increased yields and the use of computers has vastly improved planting techniques.

Such changes have pushed corn production from an average of 91 bushels per acre in 1980 to 152 bushels per acre in 2010. That, along with higher prices, is boosting profits and making farmland dramatically more valuable – and farmers richer.

Net farm income is expected to clock in at roughly $97.1 billion in 2012, the second highest on record according to the USDA.

Meanwhile, the average price for farmland has been rising since 1980, and now exceeds $2,000 an acre. Prices for prime land in some parts of the country have gone as high as $6,000 an acre.

Here's something else to consider.

Farmland typically is held for long periods of time and usually comes on the market only when the owner passes away.

But today the average U.S. farmer is 58 years old. The USDA estimates that over one-third of all farmland owners have less than 15 years left to live.

That aging population represents a window of opportunity for investing in farmland.

Investing in Farmland

Over the last 100 years farmland, based on income and capital appreciation, has consistently delivered positive returns — with only three brief periods of negative returns (1930s, 1980s, and 2008).

And as the saying goes, they just aren't making any more of it. So a severe imbalance is developing in the supply and demand of farmland.

Farmland is also an opportunity to invest in an asset class not directly correlated to stocks and bonds, and one with significantly less volatility.

Jim Rogers believes investing in farmland is "in its third inning." In other words, there's still plenty of time to get in.

He was recently in Australia to launch a new farmland fund with the goal of raising as much as $350 million to buy farms in New South Wales.

That's fine for Rogers. But how can the rest of us start investing in farmland?

One way is to invest in agricultural futures through Exchange Traded Funds (ETFs) like the PowerShares DB Commodity Index (NYSEArca: DBC). The fund tracks an entire basket of agricultural commodities including corn, soybeans, wheat, cotton, sugar, coffee, cattle and pigs.

Canadian citizens can invest in Agcapita Farmland Investment Partnership, a farmland private equity fund, with significant holdings in Saskatchewan, Alberta and Manitoba. Jim Rogers is actually an advisor to the fund, currently open to retail investors for a minimum investment of $10,000.

You might also take a look at Adecoagro S.A. (NYSE: AGRO), a Luxembourg-based company that owns significant farmland holdings in South America. It owns nearly 500,000 acres of farmland, consisting of 23 farms in Argentina, 13 farms in Brazil, and one in Uruguay.

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  1. Indian | July 12, 2012

    Majority of Indians are vegetarians meaning they don't touch meat. So keep Indians out of this equation :-)

  2. pm | July 23, 2012

    U. N. Agenda 21's wildland project could throw a monkey wrench in Jim Roger's investment advice. If these eugenecist nazis get their way, all the farmland will have no uses for human beings, 99%, whatsoever.

    Maybe Jim Rogers has a inside view to this programs failure? Or more probably he sees just short term profits from land sales to the govt and mult national corps that will be buying all this land up for future quarentine by the wildlands projects.

    • clint | October 24, 2012

      He's saying the farmland's value as farmland is going to increase. Our world has a population of 7 billion where the majority is finally having a chance at being meaningfully employed via free-trade. That employment is going to lead to a demand for more food and they'll be paying for it with the wealth they produce through their employment.

  3. Farmer Giles | July 23, 2012

    I was recently at a conference where someone asked Jim Rogers exactly how much farmland he owns. His answer was "none". He prefers liquid positions that he can get out of quickly. So while he talks up the general space (he is long agriculture commodities) he hasn't yet put his money where his mouth is and bought any farmland.

  4. Dr J K Nigam | October 3, 2012

    Very interesting info. furnished by Jim Rogers. Defiantly food price will go up and its going. This sudden rise of food commodity is only due to food demands. The huge demand of bio-fuel, alcohol, harama and cloth industry also increasing day by day.
    Now it's our duty to invest in agri related activity to meet out future demand and better earning.

    J k Nigam
    Qualitas Crop Sciences Pvt Ltd

  5. jeff paris | November 25, 2012

    Totally agree with This article…i personnally started to invest in Ukraine in 2010 ans after only 2years we have a return of 29% as direct farmers…we seek investors, if interested check Our web site

  6. ASAFO ADJEI RICHARD | March 9, 2013

    agricultural is the backbone of economic development and accept the view that it gives the highest returns to investors and this is undisputable.

  7. ASAFO ADJEI RICHARD | March 9, 2013

    agricultural aid

  8. sergej | August 6, 2013

    Good day

    Agriculture,biofuels,foodstuffs

    BUSI LOOKING FOR PARTNER, INVESTORS, CREDITORS TO CREATE AGROFIRM

    The project was developed under the Agro specific region Chernigov region, Ukraine, and is regarded as a regional investment projects in the area. This will create over 100 jobs.

    This project has the support of district administration (letter attached).

    Opinion on the draft Poultry Research Institute attached.

    Under this project will be established agricultural company (Ltd.)

    In the agricultural firm will be transferred to buildings, agricultural land on lease for a period 49 years for agricultural firms.

    1.1Point.

    1.2 Quail farm.
    2. Production bio-fuels.

    2. Point.

    1. Ostrich farm.
    2. Farms pheasant.
    3. Farms guinea fowl.
    4. Rabbits ferma.
    5. Farm for growing sheep.
    Details on E-mail: serg.curnosov @ yandex.ua

    Summary of the project
    1. Essence of the project
    • Foundation of agricultural firm of closed type.
    2. Scope of activity, place of the project realization
    • Growth of: quails, pheasants, guinea fowls, ostriches (eggs, meat)
    • Sheeps (meat, skin)
    • Rabbit (meat, skin)
    • Cereals (formula-feed plant)
    • Plant for bio-fuels production
    • Ukraine, Chernihiv region
    3. Description of the product.
    • Food, hatching eggs, bio-fuel.
    4. Total cost of the project
    • 10 000 000 $
    5. Sum of investments. 5 000 000 $
    • The costs of quail farm (100 000- egg breed; 300 000-meat breed)—1 000 000 $ (acquisition and installation of equipment, breeding stock, maintenance facilities, salaries of employees.)
    • The costs of the production of bio-fuel (capacity 34 tons per day)—3 500 000$ (purchase and installation of equipment, repair facilities, salaries of employees)
    • The costs of the production of animal feed (capacity of 10 tons per day)—1500 000 $ $ (purchase and installation of equipment, salaries of employees)
    • The costs of rabbit farm (2100 rabbit dams) –700 000 $ (purchase and installation of equipment, repair facilities, salaries of employees)
    • The costs of an ostrich farm (25 families)-600 000 $ (purchase and installation of equipment, repair facilities, salaries of employees)
    • The costs of the farm of pheasants and guinea fowls (1 000-pheasants, 2 000 guinea fowls)–300 000(purchase and installation of equipment, breeding herd, repair facilities, salaries of employees)
    • The cost of sheep breeding (1 000 heads) — 400 000 $ (purchase and installation of equipment, breeding herd, repair facilities, salaries of employees)
    6. Repayment of the loan during the fifth year in equal parts.
    7. Estimated payback period
    • 5 years
    8. Term of investment
    • 5 years
    9. Annual turnover
    • 25 000 000$
    10. Sales of the product, advertising
    • Ukraine, foreign countries
    11. Business plan
    • Yes
    12. Stage of the project development (pre-starting, starting, expanding)
    • Starting
    13. Buildings, structures, land, human resources.
    14. The contribution of the investor.
    • Provision of the capital equals to 5 000 000 $
    15. Contact
    person : Curnosov Sergey Anatolyevich .t.+38 050 443 15 56
    16. E-mail: serg.curnosov@yandex.ua

  9. James Sitton | February 9, 2014

    I live in Plainview Texas and would like to move up north and buy some of the farm land by
    Dumas Texas. There is good water there and they raise 230 bushel corn 3 bale to the acre
    cotton 8 to 10 thousand lb. milo. I have plenty of exp. and help and a son to take over when
    I retire. Some of the wells are 1000 gallons one is 2200 gallons per. minute. Would like to
    make payments ever year would not be a problem. But what we are looking for is 16 million
    that would put us in business and would make someone 5% return on there money so maybe
    you know someone that would like a deal like this. We would like to turn this in to del-monty
    farm later own. My phone number is 806 759 2235 call or email anytime

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