I don’t know if I’d call myself a country boy, but I am South Carolinian, born and bred.
While my part of the state isn’t exactly backwoods, my grandparents lived on a farm. So, growing up, I spent many hours picking corn and eating freshly picked fried green tomatoes.
This hardly makes me an expert in farming. But, fortunately, that’s not my line of work.
Here, at Intelligent Income Daily, my job is to find investment opportunities that generate both share price profits and dividend payouts. My team and I strive to bring you the safest income ideas to help you consistently and reliably boost your bottom line – regardless of market conditions.
Today, I’ll share what one of my contacts – who is an expert in produce production – has to say about the state of U.S. farmland…
And of the food shortage just around the corner.
I’ll also tell you about an investment category that could help provide the resources the world desperately needs… and how funding these stocks can make you money.
What the World Needs Now Is Farmland to Grow Food
According to the World Food Programme last month, about 50 million people in 40+ countries were experiencing near-famine conditions. And nearly 350 million were near starvation, up 25% from the start of the year.
It’s bound to get worse still, including in countries like the U.S., where we take our daily meals for granted. Experts are increasingly warning about upcoming shortages…
On top of the shortages we’re already experiencing.
Part of that is due to the war in Ukraine. The country used to be a leading exporter of fertilizer to 70 crop-producing countries and a major crop producer itself.
Meanwhile, places like India, China, parts of the U.S., and Europe are experiencing extreme heat waves. That’s having a negative impact on agriculture production, too.
Add to that Russia shuttering the Nord Stream 1 natural gas pipeline. Without that fuel, Markets Insider reports that some farmers in Europe plan to wind down production in the face of high energy prices this winter.
The world was already seeing a decline in workable farmland far before this point… And now, this adds to the global food supply crisis.
Clearly, it’s an urgent cause as well as an investment opportunity. So, I’ll share how we as investors can help fund those combatting the food crisis – and make income along the way.
A Two-of-a-Kind Farmland Opportunity
To get a clearer picture of the situation on the home front, I sat down with Paul Pittman, CEO of Farmland Partners (FPI) – which I’ll detail in a moment.
He told me he sees the problem clearly: “When you look at it on a per capita basis, [farmland is] declining quite rapidly because the population’s growing and available land is gradually decreasing.”
That’s “the real sort of power of the asset class: The gradual increases in global food demand that are occurring in the face of land scarcity. There’s a declining amount of productive farmland available.”
Worth a total of $2.9 trillion, farmland is one of the largest commercial real estate sectors. Yet, it’s still mostly owned by individual farmers, not billionaires and corporations.
Of course, it’s not easy to make a profit that way. There are government regulations to adhere to, equipment and facilities to maintain, and weather to worry about.
That’s where Paul’s company comes in.
Farmland Partners is only one of two farmland real estate investment trusts (REITs) that trade on major U.S. exchanges.
And it’s helping drive the solution in very real, very sustainable ways. It’s cultivated a diversified portfolio of 350 individual farms across 19 states run by 120 tenants producing 26 different crops. And it manages approximately 185,000 acres.
REITs are landlords, so FPI doesn’t do any actual farming. Instead, it takes on the land cost, freeing up capital for actual farmers to do what they need to do.
It’s a great win-win arrangement, so neither farmland REIT suffers from a shortage of lessees – even though they provide little to no maintenance capital expenditures (capex) for the farmers.
This only adds to my main reason for appreciating farmland REITs. They’re a low-risk way to participate in the global food demand story.
Farmland Partners, in particular, is an expert on what land will best support the most profitable crops. And it offers a 1.64% annual dividend yield.
While not the biggest dividend out there… With nearly 895 million acres of farmable land in the U.S., the company has plenty of room to grow.
So when you’re not a farmer yourself – no matter how many fried green tomatoes you’ve eaten – it’s an excellent way to participate while getting exposure to a high-demand sector along the way.
Happy SWAN (sleep well at night) investing,
Brad Thomas
Editor, Intelligent Income Daily