Eternity Law International — News — Investing in agriculture

Investing in agriculture

Published:
January 28, 2020

The issue of investing in agriculture requires detailed consideration. There are many options for this kind of investment projects on the markets. More experienced investors are looking for profitable and promising options for investing money.

Investing in agriculture is considered a stable investment option. A sufficient number of organizations and private entrepreneurs come to this decision.

Some time ago, not every investor dared to invest in this field of activity. When considering investment decisions in agriculture, you cannot expect a quick return on your investment. According to economists, it can be concluded that the agricultural sector is a long-term project.

This explains the rather long period for the return on investment and profit. The income that can be obtained from this industry belongs to long-term investment.

But one should not reject the factor that investments in the agro-industrial complex bring a sufficiently high income. Investors receive much more impressive returns than from investments in real estate or manufacturing.

Several reasons are noted due to which contributions to the agricultural sector remain low and are not of interest to investors:

High level of risk – Investing in agriculture

The activity of the agro-industrial complex is influenced by many external factors. The level of these risks cannot be influenced by the investor or manufacturer.

This type of factor includes seasonal or weather conditions, land characteristics, and other unsuitable circumstances during planting.

Conducting work in the field of animal husbandry requires a detailed approach to the choice of feed, medicine and care. This sector is at risk of sudden animal disease and loss.

Long Term of Earning Income – Investing in Agriculture

Making a profit requires more than just growing crops. To do this, you need to collect, process and provide for its implementation. Working with agriculture requires the sale of the final product. The sales phase of the final product scares those who decide to invest in agriculture.

Investing in agriculture provides a solution to several important problems:

  1. Provision of jobs for the population
  2. Solving problems related to the economy
  3. Skillful management and exploitation of natural resources are related to the ecological state of the environment

The most common sources of investment in the agro-industrial complex are:

  • Investments from public funds
  • Private investor contributions
  • Investing by foreign partners

Investments in the agro-industrial complex – Investing in agriculture

  • Tax reliefIn the production of agricultural products, an enterprise can contribute about 12% to the state treasury. Also, producers of agricultural products are subject to exemptions from transport and property tax.
  • Investors who finance agriculture are supported by government supportThe state authorities are trying to actively support investment, which directly affects the development of the country as a whole. Investors are provided with additional conditions for the loan.
  • Popularization in the markets of domestic producers and the fight against imported productsThe duties on the export of products differ significantly from those established for the import of foreign-made products. The duty on the import of non-domestic products is set at over 50%. Thus, the state levels the market and tries to popularize the products made on the territory of the state.
  • High real estate prices and stability of investments that are invested in land bring profit, the result of the activity is resold. The land can be used for collateral.
  • Trade in products at the state level.

During the control and establishment of the price scale for products, specialized funds are created. The state provides trade relations for product manufacturers.

Agriculture Investment Process – Investing in Agriculture

  • Investing finance in agriculture requires the acquisition of special assets. With profitable investments in assets, investors have a better position in the market.
  • It is possible to obtain insurance against inflation and provide the business with profit during the purchase of agricultural assets, In this case, funds are saved and included in the work.
  • During strategic planning and writing a business plan, a very important part is the description of the project’s investment risk. In order to competently manage the business and level the difficulties that emerge during the implementation phase, it is necessary to take into account the risks. Project alternatives provide the business with additional options for problem solving.
  • The agro-industrial and agricultural sectors are characterized by pronounced seasonality and unstable land prices. The peculiarities of this area have led to a lack of specialists with good qualifications and work experience.
    It is necessary to insure the risks of agriculture and ensure maximum safety for the agricultural business.
  • The agricultural sphere of activity allows you to cover several types of activities within the agrarian complex. Leading different directions gives you a chance to get more options for earning money.
    Investments in the agro-industrial complex have significant prospects and are inevitable when pursuing a strategy of work in several areas of this area. It is best not to start investing in various activities, to gradually acquire equipment and land.

Features of doing business in the field of agro-industrial complex – Investing in agriculture

Investing in agriculture has features that are associated with unstable natural conditions. It is necessary to take into account these features and be prepared to solve problem situations. There is a risk of a bad year, disease and death of animals.

When calculating profitability, don’t expect quick profits. The agricultural sector tends to take time to return the money.

Agricultural products have a short shelf life. During a good harvest, when the products are in demand, prices will be reduced. This is essential for good sales.

A contract with an insurance company is an important step in the basics of doing business in agriculture.

Careful search for a good investment project makes it possible to make the right investment. One of the main criteria for success is the definition of the investment object. To form goals and an investment object, you need to analyze a large amount of information or involve project managers.

Project managers are able to analyze the relevance of the project being implemented, the risks, identify the amount required for investment, as well as the time it takes to return the investment.

For investment advice, contact the specialists of Eternity Law International.

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