The opportunities for investing into agriculture are endless, according to Jim Rogers, the famed US investor, businessman and author. Rogers has been speaking publicly about the opportunity in agri investment for many years. He does not invest into agricultural land directly, but has exposure to agribusinesses and commodities. Here he tells Agri Investor about the importance of not missing these opportunities.
What led you to focus on agri in recent years?
I first invested in agriculture years ago but renewed my interest in the recent years because the sector was in a very depressed state for a long time and in many places still is. This means that prices are low and that farmers are not making a lot of money, but that is beginning to change. Whenever I see something depressed for so long, I look to see if things are going to get better and that’s what led to my interest in agri; the fact that things have been so bad and can only get better.
In the past 10 years the world has consumed more than it has produced and inventories have been near historic lows in many cases. It seems we are having a bumper crop in the US this year but that is not necessarily true of the whole world.
The situation is getting worse in many ways because we are starting to run out of farmers – the average age of farmers in the US is 58 for example, and the highest rates of suicide are among farming professionals. That’s because farming has been such a bad business. And young people are not going into agriculture, favouring other occupations instead; more people in the US study PR than agriculture. So either the profitability of agriculture improves a lot, or we won’t have any food and that won’t happen, it never has. We have had famines in the past and someone always comes to the rescue to produce more food.
Where do you see the most opportunity in agriculture?
If you like farming, that’s a great opportunity as you get value appreciation and income, year after year. But I don’t think I would be a very good farmer so I am not rushing to buy a farm. So I might look at tractor companies or seed companies instead. Or you could look at opening restaurants or shops in agricultural areas to service the farmers that will eventually have more money.
Some countries are more focused on agri processing than others or you could move to Iowa and buy a lakehouse, but I don’t want to move to Iowa so I’m not going to do that. You could buy an agri media company and make a fortune that way. It really depends on your interest, knowledge and passion.
You now live in Singapore, what are your thoughts on the agri industry in Asia?
Agriculture has been a very bad business in Asia. The Chinese realise the problem and are working out ways to get incentives to rural areas. Beijing has said that cities have profited greatly in the last 30 years – partly at the expense of rural areas.
Myanmar used to be a great agri nation but socialism can ruin anything. It will improve once again and provide an exciting opportunity compared to more developed, and more expensive markets like Australia. I have investments in Australia and water is a real problem there.
Outside of Asia, Angola used to export food and then had a long civil war. It is a huge country with not many people where land is cheap and permissions are good, so I am sure there are now spectacular opportunities for investment there.
Do you have any advice for first time investors?
An unfortunate fact that I’ve noticed over many years is that most people don’t want to invest in something that’s depressed but that’s when they should be. But instead they ignore it and aren’t interested.
Then when things start going up, they get interested and want to rush in; I have seen this a dozen of times. I have not learnt how to overcome that other than continue to find out facts and make a fundamental case for a sector like agri. Of course there are some smart people that do buy low and then others will join in. And then at the top when everyone wants to invest, that’s when you should sell.
It’s important to look at the long term. Yes, commodity prices are down this year which will force landowners to reduce their rents. And those that are only making investments based on short term goals will suffer from lower rental income. But it’s nothing more than a blip in a long term trend if you ask me.
Are there any big opportunities that must not be missed?
No opportunities in agri have been and gone yet. Students are not studying agriculture but instead preferring to go the City of London or Wall Street. But soon they will see stock brokers driving taxis and farmers driving Lamborghinis and when they do, more of them will go into agriculture. That is not happening now, but when it does perhaps there will be an opportunity for a Lamborghini dealership in rural areas!
The huge movement of young people into the cities is a huge problem but the worse it gets, the better the investment opportunity.
I’m not the only one who sees what is happening. Eventually agri will be much more exciting, otherwise there will be no food at any price creating famine and war. And then those producing food will be in a good situation.