Saturday, July 14, 2012

Jim Rogers Begins Farm Acquisitions in Australia

Jim Rogers has been saying for at least a couple of years that the future wealthy will be farmers, or at least those that invest in farms in certain strategic places around the world.

Rogers, as usual, is putting his money where his mouth is, recently launching a new rural land fund with approximately $350 million available to acquired farming land.

According to Rogers, because Australia is located so close to the Asian markets, that is the place where farming will grow the quickest and fastest, and so is targeting the northern NSW in the country.

He sees this as the season of time to get into the sector before the price of farmland skyrockets. Rogers says food shortages will get worse, and the price of farmland will jump as a result. General inflation is another factor in the agricultural mix.

How the fund will work, which is a closed, unlisted fund called the Laguna Bay Pastoral Company, is to first attract investors from the Australian domestic market before opening it up to those outside the country.

The fund is different in that it will partner with high quality farmers in the region who are among the top 10 percent in farming earnings in the region.

Those farmers will continue to run the acquired properties and also give suggestions as to other properties that would be worth taking a look at for acquisition purposes.

Overall, the fund is about getting the best farms and farmers. Rogers sees a rise in price of soft commodities in Australia because of the reliance of Asia on the products.

Rogers says it's nowhere near to late to get into the farming sector, as there is a lot of time left before inflation makes it cost prohibitive to invest in the sector.

It's a good example of those interested in investing in farmland in any quality area of the world.

You want to buy up great farms run by great managers. Do that and you've solved most of the efficiencies and profit challenges.

For those wanting a piece of the action without acquiring farms and their managers, most farm-related public companies and/or ETFs should do well, as will a number of futures.

One recent example is the fertilizer industry. When the cost of corn soared in response to the drought in the Midwest of America, the price of fertilizer shot up as well, with fertilizer companies jumping from 10 to 15 percent within a few short months.

That's because farmers whose crops are thriving are going to have much more capital to spend on inputs and farm equipment; or any other vital part of the farming process.

Multiply that with rising inflation and you see the potential in a wide variety of agricultural related segments.

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