Is There Really Such A Thing As High ROI In The World Of Agriculture?

Agriculture has famously been an area of business that requires high initial outlays, but these have always been expenses that industry leaders have been willing to risk due to high potential returns. Yet, as the farming industry and its value continues to plummet in the wake of extreme weather, pandemic challenges, and beyond, serious questions are being asked as to whether ROIs in agriculture are still possible. 

Of course, the basic answer to this question is yes. However, for individuals just starting out here, high machinery and land costs, as well as the ongoing rise of veganism, do still pose potential problems. As such, the question changes to how ROI is still possible in agriculture, and that’s exactly what we’re going to consider in this article. 

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Know your best options

There are various options for an agricultural business, and some of them are logically more viable than others regarding returns. In fact, according to Yahoo finance, agricultural options that include the farming of vegan food, microgreens, and apiculture have the highest market value right now, especially when you consider the upfront investments that each of these requires. Equally, an increasing trend towards more affordable, fractional farmland ownership is worth considering for individuals looking to reap the rewards of their land far sooner than they might through traditional routes.

ROI in agriculture could also increase by switching to more cost-effective energy resources such as propane and diesel. In general, farmers use propane to maintain the temperature in barns and greenhouses, power trucks and tractors, operate farm equipment, and run the irrigation system. Since rural areas can be more prone to frequent electricity outages, propane and diesel could be reliable alternatives to power farm machines and improve Return on Investment. Each of these examples highlights that agricultural ROI is very much still in existence, it simply requires a sound business plan and an understanding of where the market interest lies right now.

Start with a lump sum

Even if you’re going down the route of affordable agricultural options like vegan farming, large sums are still necessary upfront for things such as seed and the machinery from companies like Scherer to plant/harvest it. Often, these funds will come from bank loans or other credit options, but ongoing payments and increasing interest can set already tricky potential ROIs further back.

So, anyone investing in agriculture right now also needs to make sure that they’re able to pay pretty large sums of money upfront without necessarily relying on credit routes. Whether this is achieved using private savings or investment from private parties, it’s then possible to begin this enterprise debt-free, and with far more upfront understanding of the money that you need to recover, and roughly how long it’ll take before ROIs are possible.

Differentiate on the market

As traditional and often expensive farming routes increasingly fail to reap results, ROIs are also becoming reliant on the ability of new market contenders to differentiate their services using, for instance, new ways of farming such as vertical farming and precision farming or, as mentioned, vegan farming. In each instance, the results produced provide an immediate in-point within the market which makes these efforts more viable, and thus brings returns within easier reach than they would be in a traditional animal or grain agricultural pursuit. 

Agriculture has always provided high returns on investment, and that’s no different even as the pandemic and other challenges herald business transformations across the industry.