Investment opportunity Investors in grain producing capacity can participate in the industry in a variety of ways. Professional investment advisors can identify the appropriate approach for each investor, given their objectives, capabilities and appetite for risk. The primary means of participating are described below: Table 1 Investment opportunity Investment Property management Types of return available Description type options to investors Passive owners – employ a farm manager to manage the property Profit generated by the on their behalf. The property as the – manager would make all owner of the property strategic and operational the investor would decisions in-line with the keep the net income investment objectives of from the property. the owner. Returns are highly dependent on the yield Lease the land would – and market price for be leased out to other the crops grown on the growers who would pay Outright Purchase of property. to have access to the purchase agricultural land land and take all the risk Lease rental this – of producing a crop. would be a monetary payment for use of the Active become – land. There is actively involved in normally no management, in participation in the particular the key value of crops grown decisions of what crops on a leased property. to plant, the application of key inputs, production Capital gain this is – hedging strategies, only realised on sale of investment in capital the asset. equipment and use of on-farm labour. Passive all operating Share in profits – decisions would be left generated by the to the joint venture property this is would Partnering with – partners with review of be the nominal profit existing growers key decisions and generated by the Joint venture who already own results in line with the property less an (JV) land or for the joint venture agreement. agreed management purchase of fee for the operators of Lease land is leased – additional land the property. to third party growers who would pay to have Lease rental this – access to the land. would be a monetary
Investment opportunity Investors in grain producing capacity can participate in the industry in a variety of ways. Professional investment advisors can identify the appropriate approach for each investor, given their objectives, capabilities and appetite for risk. The primary means of participating are described below: Table 1 Investment opportunity Investment type Description Property management options Types of return available to investors Outright purchase Purchase of agricultural land Passive – owners employ a farm manager to manage the property on their behalf. The manager would make all strategic and operational decisions in-line with the investment objectives of the owner. Lease – the land would be leased out to other growers who would pay to have access to the land and take all the risk of producing a crop. Active – become actively involved in management, in particular the key decisions of what crops to plant, the application of key inputs, production hedging strategies, investment in capital equipment and use of on-farm labour. Profit generated by the property – as the owner of the property the investor would keep the net income from the property. Returns are highly dependent on the yield and market price for the crops grown on the property. Lease rental – this would be a monetary payment for use of the land. There is normally no participation in the value of crops grown on a leased property. Capital gain – this is only realised on sale of the asset. Joint venture (JV) Partnering with existing growers who already own land or for the purchase of additional land Passive – all operating decisions would be left to the joint venture partners with review of key decisions and results in line with the joint venture agreement. Lease – land is leased to third party growers who would pay to have access to the land. Share in profits generated by the property – this is would be the nominal profit generated by the property less an agreed management fee for the operators of the property. Lease rental – this would be a monetary