If the records for the last five years are checked, it is concluded that the investment in agricultural land is on a rise. Individuals, enterprises and different countries are all actively participating in the purchase of agricultural land. The increased investment rate in the agricultural land is due to many reasons. Scarcity of land is responsible for an upsurge in the demand of land. Thus, the gap between demand and supply of land is rapidly widening. In such a scenario, investment in agricultural land promises outstanding returns.
People looking for long-term profitable investment must invest in an agricultural piece of land. At present there are multiple investment options available which are accompanied with an enhancement of agricultural production. The measures adopted to increase the agricultural produce are tailored as per the varying local conditions, i.e. production type, financial aid, capital sources, infrastructure, etc.
Talking about India, it is predicted that the country is bound to see a huge mismatch in the demand and supply of land in the near future. The rising population will add to the woes of India as the demand for both an urban infrastructure and high-quality food will also soar high with higher income. Thus, a simultaneous land and food scarcity challenge is likely to turn up soon. This will result in an uneven increase in the prices of land and also pave way for higher- than-normal annual returns from farming. Where on one hand the corporates are more interested in looking overseas there on the other hand the individuals plan to reap higher benefits within India. Contract farming is in vogue and so are the professional farm managers, these two elements when together fetch gains from both the capital appreciation and the annual returns from the produce. A twin-delight, investing into agricultural land proves to be an excellent asset as it usually has higher returns than the one offered by commercial or residential properties. The icing on the cake is that the capital appreciation coupled with income from farming produce is exempted from Income Tax. Investing in a farmland can churn out as much as three-four times of the return generated from any other type of real estate investment. Apart from the monetary benefits, you can simply laze in the sun lying peacefully in a hammock in your farm-house over the weekend!
The agricultural laws differ in all states and thus owning a piece of agricultural land in a particular state is subject to existing laws. In states like Gujarat and Maharashtra the ownership of agricultural land is restricted to only agriculturists, whereas states like Madhya Pradesh and Rajasthan do not have any such laws. It is always good to consult a professional lawyer for purchasing agricultural land in any state. Land acquisition in India can be a cumbersome process if the required caution is not taken. Few things that should be done are meeting the land owner, hiring a lawyer, appointing a farm management company or an individual person to take care of the farm, etc.
A noteworthy factor is that developed land gives quicker returns as compared to the undeveloped land. It is very important to sow the right crop for better returns from the agricultural produce. Row crops like wheat, corn, barley, soy, etc. yield quick but unpredictable returns as compared to the permanent crops (apple orchard, mango orchard, etc.) that yield consistent returns after a long time. However, permanent crops bring profitable returns in the long run.
The location of the agricultural land also decides the return type, i.e. whether the returns are generated from agricultural returns or through land escalation. Lands located near ample of water resources gives significant returns from the agricultural produce whereas lands located near road or developing infrastructure experience a price escalation and brings profitable returns.
It is evident that Investing in an agricultural land is a true asset in the long run as it brings fair and profitable returns when compared to any other type of investment.