Agriculture is not a new investment option. There are many options for agriculture investors. Commodities trading began in the agriculture futures market, which offered contracts that allowed farmers offset crop yield losses.

The agriculture sector is now global and attractive to many investors, especially those who are concerned about food security. Investors who are interested in agribusiness have many options.

It is important to take into consideration all of these aspects when you are looking to enter the market. For those who are interested in investing in agriculture, here's a quick overview.

Ways to invest and how to invest

There are many stakeholders involved in agriculture, including crop growers, fertilizer producers, and suppliers of farming equipment. Market watchers need to know the names and roles of these stakeholders before investing in agriculture.

• The stages of the agricultural process -- Crop growers, distributors and suppliers are just a few of the many groups that play a role in the overall agricultural process. Investors can identify opportunities and problems in the market by understanding how they interact. There are large companies that have vertically integrated their processes, controlling their supply, production, and distribution networks.

• Indirect Agribusinesses -- To deliver agricultural products, there are many agribusinesses that operate outside the production process. These businesses earn a lot of their revenue indirectly through agriculture. These companies are directly involved in the growth of the sector through equipment, surveying and technology upgrades.

• Diverse commodities - Commodities like potash, phosphate, and livestock can be taken into account separately when making investment decisions. Investors can track the performance of these commodities to gauge market health. Companies will feel the impact of drastic changes in demand, price or supply.

There are many ways to invest in agriculture

Once you have decided in which part of the agricultural value chains you want to invest, you will need to decide how you will do it. There are many options available, including stocks, futures and exchange-traded fund (ETF) vehicles.

The most reliable method is the futures market. It allows investors to take part in price movements in agricultural commodities. Investopedia warns that futures contracts can be intimidating for newbies and recommends that anyone interested in this route study past price movements and get to know more about the market.

There are many options when it comes to investing on agricultural stocks. Investors have the option to consider smaller, niche-focused service providers as well as large, global corporations. You might also consider companies that focus on commodities such as potash or phosphate.

Click here to see our overviews of ASX and TSXV listed potash stocks. If you are interested in phosphate we also have a list that trades on different exchanges.

ETFs are another option. ETFs for agriculture are composed of either a selection of agricultural stocks or a group of commodity-specific futures contracts. These ETFs are an excellent option because they offer diversification and lower investment risk.

There are many ways to invest in agriculture's future growth

Agriculture is often considered to be a sector that can withstand recessions. However, people need to eat even in difficult economic times. The global population is expected to grow to 10 billion people by 2057. This, combined with increasing urbanization and shrinking amounts of arable land per capita, makes it a great time to invest in agriculture. Food production will need to increase to meet world food demand.

In areas where there is a high risk of food shortages and economic hardship, investing in agriculture can have a significant impact. The Food and Agriculture Organization of the United Nations (FAO) believes that agriculture investment is one of the best strategies for economic growth and poverty reduction.

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Securities Disclosure - I, Melissa Pistilli have no direct investment in any company mentioned.

By: Melissa Pistilli
Title: Ways to Invest in Agriculture
Sourced From: investingnews.com/daily/resource-investing/agriculture-investing/ways-to-invest-in-agriculture/
Published Date: Wed, 03 Nov 2021 20:50:21 +0000

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