Cash Crops: Buying Farmland for Income in South America

by Dave

Investors nervous about the stock market and in search of better returns than a money-market fund might consider plowing cash into farmland, say some financial planners.

Wheat farm in Uruguay

The Article talks about the prospects for US farmland, but South American farmland is worth a look by US HNW investors. An acquisition of farmland parcels of, say 1000 hectares, in the grain belt of South America is available at a fraction of prices in the U.S. Midwest. Grain farming here, unlike in the U.S., receives zero government subsidies, yet is quite profitable. The farming market is completely dollarized, both purchases and receivables, alleviating currency risk. Besides, generating 5% or so in annual income, the potential annual land appreciation is a few percentage points higher than U.S. comparables. There are farm management companies that structure and manage operations for a fixed fee - plus a share of the profits. Ideal even for investors, with a non-farming background, who are interested in yields and profits. Local bank financing is also available.

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