Agriculture usually plays a vital role in the economy of every nation that exists. Not only for the reason that it tends to feed the entire population of a country but also in the respect that agriculture correlates and interacts with all the related industries of that country. A country is usually considered to be a social and politically stable nation if it possesses a very stable agricultural basis.

A stable agricultural industry ensures a country of food security. Food security is considered to be one of the primary requirements of any nation. No nation can effectively grow with a stable agricultural base while harboring a nation of “hungry people”, as these hungry people can do nothing what-so-ever towards helping develop their country. Food security prevents starvation which has traditionally been considered one of the largest problems being experienced by the small developing nations. Most countries depend upon agricultural products and related industries for their major source of income. Even the newly developing countries will find that they depend upon and can benefit greatly from their agricultural industry.

Aside from the crops and animals that are produced by the farmers who make up a country agricultural sector the agricultural field represents the main source of employment within most countries. The larger farms usually find it necessary to hire additional hands in which to successfully cultivate the lands and to take care of the related farm animals. Most of these large farms have processing plants located in nearby facilities for finalizing their agricultural products and developing the by-products. It goes without saying that these sub-industries employ considerable man-power within their operations. Most of the modern farms and agriculture-related industries make good use of today’s modern equipment as well as the principles of science and technology.

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The “Chinese economic miracle” seems to have captured the whole world’s attention, especially when it comes to production, manufacturing, sourcing, FDI inflow to China etc’. But do we know about the biggest sector in the Chinese labour market – the agricultural sector?

The PRC inherited a ruined country, exhausted from both man made disasters such as warlords, civil wars, occupation, and natural disasters, droughts, famine, and floods.

During the Mao era, the Chinese government carried out a wide ranging land reform in the rural areas. Farmers with little or no land were given land of their own, significantly arousing their enthusiasm for production. Overall in Mao’s period, China’s agriculture developed slowly, with some golden times such as 1953-57 when the yearly gross output increased by 4.5% on average.

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Agricultural investment has outperformed traditional asset classes such as stocks, bonds and cash for some time, a fact backed by the sound fundamentals backing agricultural investments.

The world population is growing, with most experts predicting a growth of 40% by 2050, and a correlated growth in demand for food of at least 50%. This, combined with the diminishing supply of agricultural land is pushing up the value of agricultural land at an annual average of more than 18% over the last three years.

Here’s an interesting fundamental fact driving agricultural investments: The current commitments to biofuel use from the USA, EU, Japan, China, Canada, and India, would use up around 440 million acres, that’s all of the agricultural land in North America and 11% of the worlds farmland. This demand will continue to pressure output, and put agricultural land at a premium.

So, what could be considered the best agricultural investment? Well the options for investor are two-fold, firstly you could invest in one of the many agricultural funds available on the market, these agricultural funds offer the investor the opportunity to participate at lower levels and enjoy the lower risk element of spreading their investment over a vast portfolio of crops and locations.

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