Publications
Partners
Shutterstock [http://www.shutterstock.com/]
Johannesburg - Agricultural land has emerged as a good capital preservation tool for investors, according to a product manager at Futuregrowth Asset Management.
"Agricultural land is a good inflation hedge especially for investors who are concerned about inflationary government policies such as low interest rate environments," Smital Rambhai said.
Rambhai said rental yields on agricultural land in South Africa and the rest of Africa are higher than in developed economies due to cheaper land prices.
South African farmland outperformed all asset classes between 1999 and 2008, shortly after the outbreak of global financial crisis, Rambhai said, citing Human Sciences Reasearch Council (HSRC).
“Farmland has also had a very low level of volatility,” he said.
But he said the risk in this type of investment is the high level of instability and the direct commodity danger.
"There is also a higher cost involved due to the special skills required," he said.
He made these comments just as South African black farmers reportedly said they would talk to competition authorities in an effort to stop a R2.5bn takeover of agricultural services firm Afgri.
They told a South African business daily that selling the firm to US investors is anticompetitive and would "further isolate blacks from the food value chain".
"Agricultural land is a good inflation hedge especially for investors who are concerned about inflationary government policies such as low interest rate environments," Smital Rambhai said.
Rambhai said rental yields on agricultural land in South Africa and the rest of Africa are higher than in developed economies due to cheaper land prices.
South African farmland outperformed all asset classes between 1999 and 2008, shortly after the outbreak of global financial crisis, Rambhai said, citing Human Sciences Reasearch Council (HSRC).
“Farmland has also had a very low level of volatility,” he said.
But he said the risk in this type of investment is the high level of instability and the direct commodity danger.
"There is also a higher cost involved due to the special skills required," he said.
He made these comments just as South African black farmers reportedly said they would talk to competition authorities in an effort to stop a R2.5bn takeover of agricultural services firm Afgri.
They told a South African business daily that selling the firm to US investors is anticompetitive and would "further isolate blacks from the food value chain".
