How To Earn 17% Per Year From This Exploding Global Trend (Hint: Go Organic)
The world population continues to grow, helping to fuel a growing demand for food. Additionally, more and more people are paying closer attention to what they’re eating and to where and how it was grown.
We all know that processed foods are bad for us. However, even some fresh foods aren’t exactly good for us. Preservatives are used on fresh fruits to extend their shelf lives and chemical fertilizers and pest controls are used in the production of many food products that we traditionally think of as healthy.
Growing awareness of these realities is motivating many to prefer organic products, especially organic fruits and vegetables.
According to the Organic Trade Association, consumer demand for organic products has increased by a double-digit percentage every year since the 1990s, expanding from US$3.6 billion in sales in 1997 to more than US$39 billion in 2014. And the demand continues to grow; 51% of families are buying more organic products than a year ago. A recent Consumer Reports survey shows that 84% of people buy organic food sometimes and 45% purchase organic at least once a month.
This trend is motivating more stores to enter the organic market, with even Costco and Sam’s Club incorporating organic food sections.
Interestingly, just 1% of productive land in the United States carries organic certification. This means that most of the organic produce sold in the United States is imported. As it takes at least three years to convert land from “modern” farming methods to organic for certification, the United States is expected to be forced to continue importing the majority of its organic produce for some time, especially considering the pace at which demand is growing.
And a fast-growing demand for organic isn’t limited to the United States. This is a global trend.
An investment in agriculture can provide a decent yield. An investment in organic agriculture has the potential to provide an excellent return, thanks to the premium prices organic produce can command. Historically, the challenge has been to find opportunities for the individual investor. Starting about three years ago, I began working with colleague James Archer in a focused way to identify any agricultural opportunities, especially any organic agricultural opportunities that make sense for us small investors.
The first such opportunity James and I found was a mango plantation in Panama that I’ve been telling you about since February 2014. This is a certified organic plantation that has been developed on land that had not previously been used for any agricultural production… meaning it had no history of chemical fertilizers or pesticides. The developers were able to gain organic certification from the start.
Having the organic certification already in hand helped to attract the attention of wholesale produce buyers from the United States, who, for the reasons I’ve explained, are aggressively seeking new sources of organic product in an effort to keep up with the exploding demand from grocery store clients from Whole Foods to now Costco and Sam’s Club and others.
Today, nearly two years later, interest from U.S. wholesale buyers is bigger than ever and has pushed the developers to plan an extension of the mango plantation that they have been busy implementing. They launched this second mango plantation late last year and, at my urging, kept the price for investment the same as for the first plantation—US$36,500 per hectare. They committed to holding the price at this level through January. However, at the end of this month, the price will go up to US$38,000 per hectare.
You have a couple of weeks to act before the cost increases.
With projected annualized returns in the 17% range, organic farming offers an excellent return at today’s prices. As demand for organic products continues to outstrip supply, prices for organic products are expected to increase faster than for food in general. That could mean even better returns than are currently being projected; however, even stable product prices make this opportunity worth considering.
P.S. To answer a question I’m asked often, yes, I’ve invested myself. I purchased two hectares of mangos last year and am considering buying more.