Diversification through Equity in Agribusiness

Tropical countries such as Colombia and Panama are amongst the most biologically diverse in the world. With over 55,000 regional plant species, these two countries also feature a variety of ecosystems and natural forests that cover great amounts of the national territory. Taking advantage of the rich soil, local agriculture has great potential for sustainable and diversified plantations featuring fruit commodities, valuable tree crops, and livestock. In the case of Colombia, most of the country’s agricultural production takes place along the vast Atlantic plains, which is an ideal environment for such large ventures. As agricultural products become a coveted and highly valued commodity worldwide, these farmlands will continue to rise in value not only for their yields, but also for the rich soils that they occupy.

Diversification through Equity in Agribusiness

Participating in agribusiness provides a unique opportunity for investors to benefit from a tangible asset that appreciates in real value, while also benefitting from the yields of increased global food demand. It is expected that the demand for food crops will continue to increase over the coming decades, particularly in the tropics, for two mains reasons: the first is the projection of demographic growth worldwide, which will require an ever-larger food supply; the second is a movement towards biofuel energy sources to meet the world’s increasing energy demand. For example, in Brazil, ethanol produced from sugarcane has revitalized an entire agricultural sector and driven up profits for farmers, who now have a more stable demand for their product. Another benefit of tropical farming is the security afforded by yearlong growth and the possibility of cultivating various products that are highly valued. In addition to fruit and livestock farming, hardwood harvesting remains in high demand throughout these regions due to the demand for construction and furniture production. Likewise, farmlands in Panama and Colombia are ideal for non-edible crops that have energy production potential, such as palm and jatropha, both of which produce oil and biodiesel fuels.

The diversity of agricultural land uses as well as the underlying economic dynamics explained above can be coupled with hybrid land utilization and agroforestry to maximize investment yields. With agroforestry and mixed farming, farm operators manage to boost agricultural production and add property value to their land. Specifically, agroforestry consists of utilizing a unique set of trees within a farmland operation in order to increase and sustain biodiversity, which in turn mitigates the effects of soil degradation. Simultaneously, agroforestry provides shade for livestock and maintains favorable humidity levels within the property, thus helping prevent severe drought.

To benefit from agricultural investment and incorporate it into your portfolio, there are financial instruments that offer the possibility of high return by pooling resources into a commonly held company, fund, or trust that actively administers agricultural lands. The potential investment instruments include Real Estate Investment Trusts (REIT), Equity, and Limited Liability Corporations (LLC), amongst others. In the case of Farmfolio, our CEO Dax Cooke wants international investors to capitalize on agriculture as a unique natural resource by way of a new and innovative asset class. Farmfolio’s Farmshare offerings contribute socially and economically to the Latin American communities where they are settled by empowering them to grow and upscale their entrepreneurial vision, while yielding high returns for our clients and investors.

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