A checklist on how to mitigate farmland investment risks

Written by Stephanie Price, Journalist

Simply put, you can’t, but there are ways to minimize the risk investors associate with investing in agriculture. Fred Helper, President of the Agricultural Companies at Wexford Capital, gives us a checklist on how to mitigate farmland investment risks.

1. Buy high quality land

• Soils
• Drainage
• Water
• Quantity
• Quality
• Allocation
• Size
• Improvements
• Availability of good quality financially stable tenants
• Diversification – Location and type of crop

2. Hedging

• Crops
• Fertilizer
• Weather

3. Crop insurance

• Types of coverage
  • Yield protection
  • Revenue protection
  • Group risk plan
  • Group risk income protection
  • Annual production history
• Correlations: pre-season to growing season
  • Look at the correlation of crop disasters and successful seasons

4. Hire a good management team

• Expert consultants
  • With region specific knowledge and proven industry experience
• Farm managers
  • Have solid agronomic knowledge
  • Essential for people on the ground to have a deep working understanding of agriculture