Investing in Agriculture is NOT a Lottery!
Agriculture is often perceived as very high risk, something to be avoid at all cost. On the other side, many recognise the potential in agriculture and appreciate the fundamentals that are likely to drive the soft commodities market over the next few decades. In the end food stocks are running dry, while demand (we have to feed 9bn people by 2050) is set to sky-rocket due to an increase in global population and the spending power thereof.
Yet do we perhaps misinterpret risk? Well according to the ex-commodities trader in the video, we often confuse causation, meaning we associate/blame the wrong event for the wrong outcome, such as drought with a failed crop. Risk is therefore often misunderstood, causing a faulty paradigm. This makes us think we know about a problem/risk, while in reality we often don’t. Another interesting factor seems to be semantics. When expressing live stock numbers for dollars amounts, it too seems to receive greater attention.
To solve these misconceptions, we really need to start understanding risk better. We can do this by improving on our data, knowledge and dialogue, to get a pretty accurate picture on wat is going on. We don’t necessarily need fancy apps, as even simple modelling can bring about major results. Currently, our response to certain risk, make things a while lot worse as we miss the point. Let’s unpack the risk, it can be taken out of the system and you can and need to make your won luck.