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Water Shortages Translate To Agricultural Investment Opportunities

31 Jul
Water Shortages MEans Agricultural Investment Opportunities

Trouble For Farmers Is An Opportunity For You

Reading today about the drought in California hit home for me the long-term benefits of owning agricultural land somewhere in the world that had access to plenty of water. The drought is being blamed for increased prices of everything from milk and vegetables to In-N-Out burgers. Water levels in Lake Mead, which provides water to California, Nevada, and Arizona, are the lowest they’ve been since the dam was built.

Having grown up in Arizona, I understand a bit about water wars. California and Arizona fought for a long time before an agreement about access to water from the Colorado River was reached. Arizona is mostly desert, yet Phoenix grew to be one of the biggest cities in the country…thanks to an abundance of ground water.

When the west was being won, some guy’s job at Fort McDowell was to go out each day to cut marsh grass to feed the horses. Yes, marsh grass was growing in the desert, thanks to the high level of ground water in the valleys. Today, most of that ground water in the Phoenix area has been depleted. In California a guy with a drilling company is busy digging water wells for farmers.

While the drought in California will eventually end (I’d say…though I know some doom-and-gloomers predict otherwise), the demand for water will only continue to grow in that part of the United States. With depleted ground water and lake and river water diverted to service the larger populations, farmers are in for continued tough times.

Investors, on the other hand, have an opportunity. Agricultural land in places where water isn’t in short supply is one of the best possible investments you could make right now, not only for the potential long-term profit, but also for your own security.

Productive Land Overseas Could Mean Real Profit

I’ve been touting productive land both for investment and personal use for years. And, over the past several years, I’ve been buying productive land in various forms in different countries for my own portfolio.

I’ll be in Belize next week organizing a plan for what to do with my 9 acres there. It’s not a huge piece but big enough for a farmhouse and crops and fields enough to provide for my family in a doom-and-gloom scenario. If we had to retreat to this pretty little spring-side spot in Belize and lay low with some cows, chickens, and kitchen gardens, we’d be happy to do so.

Smaller parcels are still available in the small project where I’ve invested. The average size of the lots here is about 3 acres, which isn’t a lot of land if you’re trying to feed your family, but it’s something and it’s manageable. You can read more about Maya Springs in Belize here.

Not everyone has an interest in being a farmer, even a hobby farmer. Regardless, your portfolio should include agriculture plays. You have more opportunities for doing this in a turn-key way all the time. More and more groups are putting together agricultural projects that allow you to buy a very small parcel (a piece of a much bigger plantation) complete with farm management. You own the land you invest in (you receive title, even though it’s a piece of a much bigger parcel) and get a cash return from the production of your particular property, but you don’t have to get your hands dirty or become an expert in the crop being produced. This is a great option for the small investor.

One such project I’ve recommended in the past, that I have invested in myself, and that I’m more bullish on now than ever is a mango plantation in Panama. This plantation was only just launched this year, but the land for phase one is cleared and trees are going into the ground imminently. The developer bought land with its own water source, a river with no farmer upstream to interfere with the flow. They have the rights to pull out as much water as required for their plantation. Really, they’ll have cause to pull water from the river only during the dry season, but it’s there whenever they need it.

Mangos are the most eaten fruit in the world after tomatoes. The demand is big and growing, especially in North America and Europe. For this and many other reasons, including the relatively small amount of capital required to buy in, I see this one of the best current agri-plays available anywhere for an individual investor.

You can find more information about this mango plantation opportunity here.

Lief Simon

Mailbag

“Lief, my husband and I are Jewish and are feeling uncomfortable with the rise in anti-Semitic activities that seem to be happening across Europe and other places. I know that it may be too early to gauge the mood in Europe (we have been interested in settling in France), since the conflict in Gaza is so recent, but is anti-Semitism generally a problem in Europe? Is it more of a problem in large cities? Are some countries in Europe more tolerant? We live in the United States currently.”

M.F.

I’ve been told that the French can be anti-Semitic. Not being Jewish, I haven’t encountered it.

Despite what I’ve heard, based on what I’ve observed, I would say that, unless you’re Hassidic, for example, in which case your attire would indicate that you’re Jewish, I don’t think you’d have much trouble in France.