Diversifying a Portfolio with International Agriculture

Many investors have never considered agriculture outside the U.S. as an alternative asset class.  Some may think there are no opportunities outside the U.S. they can’t find here while others don’t have experience with agriculture and therefore, don’t consider it a viable alternative, especially in foreign markets.  We’ve gathered expert insight from an international entrepreneur in an effort to shed some light on the strong opportunities and upside potential in Latin American agriculture.  Michael DeSa is the founder of AG DTours, a US-based advisory company offering customized investment research trips and consulting services to private and institutional investors seeking an agricultural-based investment in Latin America. 

Peaches in Argentina

Peaches in Argentina

Latin American agriculture, in particular, offers exciting investment opportunities for those wanting to gain exposure to an industry built on strong fundamentals, sustainable natural resource supplies, and robust upside potential.   

Today’s uncertain economic times have many investors searching for alternative investment options.  Michael believes agriculture is a more stable, tangible alternative than low yielding bonds or overvalued and extremely volatile equity markets.  Agriculture is one of the most underutilized asset classes, despite its role as an industry accounting for nearly 10% of global GDP.  Farmland has historically proven itself as a tangible storage of wealth.  In fact, the appreciation of farmland worldwide over the last 30 years is approximately 3.5% annually.  With the global population expanding rapidly – the U.N. estimates a world population of almost 10 billion by 2050 –enabling the development of a robust food system will be crucial to ensuring a prosperous global future.

Agriculture in Latin America is attractive for a variety of reasons.  It’s one of the few regions of the world that still has underdeveloped and underutilized farmland.  The region is home to nearly 30% of the globe’s arable land and 1/3 of its fresh water supply, speaking to its ability to sustain agriculture over time.  Within the tremendous size and scope of Latin America, Michael believes the most value and upside potential is concentrated in the southern cone (Argentina, Chile, Uruguay, Brazil and Paraguay).  While opportunities abound throughout the continent, the south/central region has the most potential for future upside.  In this region, you’ll find a stronger physical and legal infrastructure, a longer track record of strong foreign investor sentiment, and examples of a more stable geopolitical climate.

The vast array of affordable and diverse investment opportunities in Latin American agriculture are largely unparalleled.  As U.S. markets continue to struggle and become increasingly uncertain, many investors will depart traditional asset classes in search of better investment alternatives.  Agriculture in Latin America is backed by undeniably strong fundamentals, a high degree of investor freedom to act and create new businesses with local workers, and welcomes the incorporation of experience and technology from developed markets to create high value opportunities with strong growth potential.  Investors should seek to partner with reliable and professional advisors in order to achieve the upside potential of this market. Fortune favors the bold, first movers who can become comfortable enough with the risks to operate successfully in this high opportunity environment.

Find out how to invest in income-producing agriculture products.