Investment in agribusiness can have many rewarding aspects. In Australia the agribusiness is a billion dollar export industry, which impacts on economic factors such as: regional employment, economic growth and trade relations.
For individuals paying the highest marginal tax rate it is particularly valuable as it is recognised as a tax effective investment. The investor is also able to diversify their investment portfolio. What attracts investors the most though is that the share market, property market and current levels of interest rate have a minimal impact on agribusiness performance.
In Australia the biggest contributing factor to the industry’s growth is the increased security and guarantee provided by the Australian Taxation Office (ATO). In 1998 they introduced the ATO Product Ruling system, which provides tax conviction on the availability of tax deductions for investing in agribusiness projects.
As mentioned previously other key benefits to agribusiness investment include:
- Portfolio diversification
- Excellent expected investment returns over the long term
- Tax effectiveness as outlined by the relevant ATO product ruling with the investor usually receiving an upfront tax deduction for some or all of the initial and ongoing cost of their investment.
Portfolio diversification is enhanced as the risks concerned with these projects are very different from typical investment risks. As agribusiness investments are considered to be ‘true alternatives’, the risks involved and return characteristics are unrelated to those of the traditional asset classes, such as bonds, shares and property. Due to the long rotation period the returns from a timber project are driven by a different set of risk factors such as fire. However any reputable forestry investment company will have steps in place to cover this unlikely eventuality.
As an added benefit the agricultural sector provides large scale employment to people living in the poorest countries. In many countries throughout the world, agriculture continues to be the largest sector responsible for employing and feeding a huge percentage of the population, particularly in forest rich countries such as Brazil and Bolivia.
For more information on investing in Forestry please click here
April 14th, 2010 at 11:29 AM
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April 15th, 2010 at 2:41 PM
Panamanian Coffee Production
Coffee is one of the world’s biggest export commodities, the top agricultural export for a dozen countries and one of the world’s ten largest legal agricultural exports by value. (Source: FAO Statistics Division.) According to John Talbot of the University of the West Indies, “Coffee is the second most valuable commodity exported by developing countries, a distant second to crude oil,” but well ahead of third place sugar and other agricultural, forestry and mining outputs.
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