Agricultural prices have been rallying for several years now, but Jim Rogers thinks there’s still room to grow.
The commodities investor said on Tuesday that he is still bullish on agriculture, calling it a great place for investors to be for the next two decades.
Prices of agricultural commodities are still relatively cheap compared to those of metals and energy, and the world is scrambling for arable farmlands to feed a growing population, Mr. Rogers told a packed audience at the Global AgInvesting conference, at the Waldorf-Astoria Hotel in New York.
However, how to ride on the agricultural bull run remains a tricky issue.
The most profitable way is to invest in commodity futures, but it is not a game for everyone given the extreme volatility and high capital requirements — “unless you know what you’re doing,” Mr. Rogers said in an interview with the Wall Street Journal on the sidelines of the conference.
Short of becoming a farmer, investors can benefit from buying a commodity index product, investing in currencies of agricultural nations and even getting a piece of farmland, Mr. Rogers said. As for individual commodities, investors might want to pick those that are off the most from the highs, he said.
Farmland has become a popular asset class among investors. By owning a piece of agricultural land, investors expect to see cash flows based on the proceeds. But it requires a big upfront investment and is not exactly liquid. To fill that void, many farmland investment companies are being set up to attract those who want a piece of the land but don’t want the hassle of hiring farmers, planting or irrigating. Dismissing the bubble talk surrounding farmland investment, Mr. Rogers said the investment idea is probably “in its third inning.” He is on the board of such a company, Genagro Ltd., which farms in Brazil.
Mr. Rogers knows firsthand that attracting investors to agriculture is not an easy task. A commodity vehicle launched in 2009 by Mr. Rogers and Macquarie, an Australian bank, to bet on China’s growing demand for agricultural products closed down after failing to attract enough investor interest, he said.
Mr. Rogers is one of the most highly-regarded commodities investors, and made a fortune when he co-founded the Quantum Fund with George Soros in 1973.
Original Article : The Wall Street Journal
Story By Carolyn Cui