In addition to technological development Investing today has become easier and more popular. Investments or investments are now being received not only by large companies but also by MSMEs and even farmers. This means that access to capital for MSMEs and farmers is now not limited to banks.
However, investing in agriculture in this way is not considered risky. Read the full conversation below:
About investment in agriculture
Investing in agriculture is about providing resources to achieve future profits in agriculture. Resources here can be capital, time, energy, knowledge, or everything.
This means that in investing in agriculture You don't have to be a farmer or breeder. But you can also finance your business in the form of money or other resources. so that farmers and breeders can operate
How to invest in agriculture
1. Direct investment
direct investment It can be interpreted as the activity of seizing capital or business resources for a long period of time for profit. This direct investment generally involves physical assets that must be directly managed by the investor.
Examples of direct agricultural investments include purchasing and managing your own rice fields, gardens, or livestock. Or buying your own rice field for someone else to manage. This direct agricultural investment has been widely used in rural areas in Indonesia.
The advantage of investing in this sector is that the assets you own will increase significantly. Especially if you are buying land for farming or gardening. You will also receive profits in the form of selling agricultural products and sharing profits from selling agricultural products.
The challenge and risk is that this type of investment requires a large amount of capital and requires good asset management skills. which means If you decide to buy land and build a rubber plantation. You must know the process of caring for, harvesting, and selling rubber.
2.Investment portfolio
With this type of investment, you do not need to be directly involved in the production process of agricultural products. You simply provide funding or a loan to an agricultural company or farmer. This can now be done online through various applications. Here are several ways you can invest in agriculture online:
- Buy stocks or bonds of agricultural and plantation companies. This way, you can have some capital and lend it to large farming and plantation companies like Salim Ivomas Pratama's. Slim Group or Ultra Milk Producing Company PTT Ultra Jaya Dairy Industry and Trading Co., Ltd.
If you invest in this way Your investment target (issuer) is a large company and typically a palm oil company. The advantage is that the investment risk is relatively low because the company is already stable in terms of business and finances. The disadvantage is You can only help large companies develop. It's not the small farmers or farmers who really need more capital.
- Providing online cash loans to farmers and farmers through the P2P Lending application.– There are currently many P2P Lending applications that provide financing for smallholder farmers, farmers, and fishermen. The capital required for this investment also varies from IDR 100,000 to IDR 1,000,000.
With this investment You can help small farmers and growers get additional funding. The only drawback is that their businesses tend to be less established. It depends on the season and in terms of human resources. This is more risky compared to large companies.
Benefits of investing in agriculture
1. Get extra income
Whether investing directly or indirectly in agriculture, you have extra income (Passive income– For example, having your own chili garden at home. Not only can you freely use chili peppers at home when you need them. But you can also earn additional income by selling peppers to the market every time you harvest them.
2. Asset distribution
Asset diversification is important. Because of the spread of risk You can reduce losses that may arise from falling asset prices, for example, if your main job is as a private employee. But you also have agricultural land that others share with you who earn income from sales. If you are fired from the company, at least you will still have income from your share of the profits.
3. Assets can be sold when necessary.
The third advantage of investing in agriculture is that Your investment assets can be sold or mortgaged when you need new funds. This applies to both direct investments. (Owning your own agricultural land) and indirect investment. (Purchasing stocks and bonds but not P2P lending)
Challenges and risks of investing in agriculture
1. Uncertain income
This applies to both direct and indirect investments. Direct investment may arise from fluctuations in agricultural product prices and seasonality. While indirect investing involves stock and bond prices on the secondary market.
2. Human resource risks
When you invest directly in the agricultural sector or provide loans through P2P Lending, you face risks to the quality of your human resources. This risk relates to the ability of human resources to manage the agricultural and livestock land you own or invest in. and ability to do business It is not uncommon for small-scale farmers and fishermen to have sufficient skills to cultivate land and livestock. But they have less ability to do business.
Examples of investment activities in the agricultural sector
There are many examples of investment activities in agriculture. One of the most common things to do is buy agricultural land for someone else to manage. Land owners will benefit from the increase in land prices (capital increase) and profit from profit sharing, the ratio of which was previously agreed upon with the cultivator.
An example of an indirect agricultural investment is buying shares in an agricultural company on the Indonesian Stock Exchange (BEI). In this case, the investor will be entitled to receive dividends. (company's profit share) and investment profits (Profit from increase in stock price)
Investment in agriculture is vital to the development of this country. If you are interested in investing in this sector. Make sure you choose an investment method that suits your risk profile. Because each method of agricultural investment has different levels of risk.
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