Before the discovery of crude oil in 1956 and the oil boom in the 1970s, Nigeria was known to be an agrarian economy that was remarkably booming as agriculture was her major source of foreign exchange earnings.
In view of recent developments such as the decline in the value of crude oil, incessant inflation, and the receding economy, as well as the adverse effects of the Covid pandemic on the economy, investors are beginning to make alternative and wiser investment choices.
Government organizations, private companies and individuals are making efforts to return to investing in farmland. This is especially in view of Nigeria’s current acre per capita index. If Nigeria’s land were to be shared amongst the entire nation’s population today, each individual will have access to a meager 1.1 acres only.
What’s more? Nigeria will become the world’s most populated nation by 2050 and this translates to much more difficulty in securing land then as acre per capita reduces significantly to 0.6 per Nigerian. In the neighboring African nation, Namibia, it gets even trickier as the current acre per capita index stands at 0.31. Without a doubt, now is the best time to acquire farmland.
In recent years, billionaires like Bill Gates have significantly invested in farmland, currently owning 270,000 acres of farmland, making him the largest private owner of farmland in America. It makes one wonder why an established name in tech is interested in the farmland. In fact, it would interest you to know that the Gates family own the soil where the potatoes in McDonald’s French fries grow as well as the onions that make up Americans dinner every night.
There are a number of reasons for these investments. These are the same reasons why the average investor today knows that farmland in Nigeria has been identified as a goldmine. Here are five reasons you should invest in farmland:
1. People always need to eat
With over 200 million mouths to feed, farming and the need for agricultural products are in even more demand. By 2050, Nigeria’s population will have hit over 400 million to become with the world’s most populated nation. This implies the need for more food production as people are always in demand of it.
Even with the scourge of the Covid-19 pandemic in 2020, the demand for food remained at a constant high. Investment in farmland, therefore, capitalises on the rise in people’s demand for food.
2. Cheaper and smartest form of real estate
The value of an acre of land is several times its initial worth after a while. How much more is the value of farmland? Investing in farmland is actually a cheaper and smarter real estate option as the same price of N50,000,000 that gets you a plot of land at Lekki can get you 200 acres of land in Ogbomoso, which is 1,200 plots.
Even better, farmlands have a better prospect of transitioning to another real estate asset class. Many cities of today were really just the farmlands of yesterday. If you’re looking to invest in real estate with significant appreciation, farmland is the smart choice to make.
3. Unique asset class
A farmland investment beats other asset classes in the places that really matter. Take equity building, for instance, by using funds from net income that is not needed for family living or income taxes, farmers and investors can build equity to generate future income, as a source of retirement income, or to keep in trust for posterity.
This can be achieved via either purchase, of assets or the reduction of debt. With either of these, equity that generates future income is guaranteed. Farmland is also an extremely low-volatile asset compared to many popular assets such as stocks, cryptocurrency, or commodities.
4. Limited risk
There is no investment without risk, but investing in farmland offers you lesser risk. Considering that people are always going to demand food, farming would invariably stay in business & farmland would always be in high demand. One major thing to consider when investing is the stability of the market.
In spite of highs and lows and financial headwinds that may trouble the stock market, agribusiness and the need for food retain their status. An investment in farmland comes with limited risks as it is backed up by stable assets which are unlikely to depreciate.
5. The need to diversify an investment portfolio
Investors are advised to diversify their investment portfolio. The reason behind this is that if one investment plan fails, one can always fall back on another. With the current instability of the stock market, prudent investors seek stable assets such as farmland to improve their holdings, guarantee them an hedge against inflation and also increase their wealth.
As a bonus point, farmland, investment is also any young individual’s surefire way to build wealth and secure the future. As a parent looking to build trans-generational wealth and give your child (ren) a great financial head start at life, a farmland investment is also the perfect choice for you.
Let us guide you through making the right farmland investment and securing profitable returns on it. Send us an email today at email@example.com to get started.