The numerous companies from around the world that buy and manage farmland for investors spelled out a variety of strategies for success at the Global AgInvesting 2009 conference in New York. Some specialize in one country or continent; others spread risk over multiple regions of the world. Some specialize in a limited selection of commodities; others raise eight or nine crops and livestock. Some concentrate on annual crops; others prefer permanent groves, plantations or vineyards. Some sell into traditional markets; others vertically integrate by buying or building processing plants.
Stated profit goals for investors ranged from about 8% to 25%. However, a few themes were universal:
- Gain economy of scale. Buying inputs and even selling product may benefit from being a big fish in a small pond.
- Be the low-cost producer—after considering all costs, including getting product to market. Being able to pay cash helps! When prices fall and others go out of business you'll still be standing.
- Be the best producer. "If you can operate, land will come,” said Joe Carvin, CEO of Altima Partners, who plans to buy in Russia, Ukraine and Kazakhastan. Citing an April 2009 Barrons article quoting commodity enthusiast Jim Rogers, he said, "There is a shortage of good farmers right now.”
- Benefit the environment. Regardless where you are farming, it's the right thing to do, and may be the politically popular thing to do. It may even earn you money for carbon credits.
- Care for your water. It is increasingly a limiting input.
- Benefit the community. "Local buy-in is critical,” said Susan Payne, CEO of Emergent Asset Management, the largest farmland owner in Sub-Saharan Africa, which employs 400 workers in nine countries. Benefits to local communities include medicine and health-improvement efforts, housing with electricity, and schools.