There is clear opportunity in the agriculture industry, but high demand is also resulting in premium pricing for these investments. Looking past our borders and investing in agriculture abroad may be the answer to finding more affordable agriculture investment opportunities while diversifying your portfolio. Here's what investors need to know about international agricultural investments.
What is international agriculture investing?
International agriculture investing is any investment, whether it be physical land, stocks, REITs, or commodities, and the associated businesses that you invest in outside of your home country. There are both non-passive and passive investment avenues that oftentimes do not require you to live in or even have a residency in the other country, depending on where you choose to invest. This means that you can stay right where you're at and purchase a lime tree farm in Panama, a cocoa farm in Mexico, or a coffee farm in Guatemala just as easily as buying cornfields in Iowa.
What are the benefits of international agriculture investing?
International agriculture investing comes with all of the upside that domestic agriculture can offer, like consistent demand regardless of economic situations and diminishing resources in the form of arable land (unless you're considering regenerative agriculture). But depending on where and how you choose to invest, it may offer even more potential stability and returns.
Many countries around the world offer an avenue to citizenship or residency by purchasing land in their country for those who are looking for a plan B. And in many places, the cost for land is significantly lower. Much of the food on our grocery store shelves come from places like Chile or Mexico, an example of how international crops have become an essential part of the food system across the globe. This means you can earn top dollar for goods that are farmed for less than it would cost here in the States.
What are the drawbacks of international agriculture investing?
Not all countries are interested in foreign investment dollars, which can mean direct agriculture investing is completely out of the question in places like Thailand. Other places may require that a national purchase the property with you, or you may need special permissions from various government agencies. While that may seem daunting, you can usually find professionals who specialize in assisting foreigners through this process. You will also need to determine how or when you'll take income off your agricultural investment for taxation purposes. Just because it's overseas doesn't mean Uncle Sam gives you free rein. If you're unsure about investing overseas, you can check out our top picks for the best agricultural stocks of 2021 right here at home.
Is international agriculture investing worth it?
International agricultural investing can offer a lot of potential benefits, like maximizing your investment dollars for lucrative returns, but does need additional due diligence. Make sure to consult with an experienced realtor or attorney who understands the process for investing in your country of interest as a foreigner. It will also be a good idea to check with your accountant ahead of time to make sure everything is processed legally and to the best of your advantage. As long as the homework is taken care of, the world is your oyster.