MarketWatch
Home
Paul B. Farrell
Yes, you can become a millionaire farmer
Published: May 3, 2012 at 12:01 a.m. ET
By Paul B. Farrell
Commentary: Jim Rogers: Best job of 21st century
SAN LUIS OBISPO, Calif. (MarketWatch) — “‘If you want to become rich,” Jim Rogers, investment whiz, best-selling author and one of Wall Street’s towering personalities, has this advice: Become a farmer.”
That was in Time magazine last summer. So did you make the leap? Listen to Rogers? Leave Wall Street? Leave that stuffy ol’ bank? Get on the road to becoming a millionaire farmer?
Reuters
Still thinking? OK, let’s examine four possible ways you could get into farming this year:
You could buy some natural resources and commodities mutual funds
You can get into a hedge fund, trust, partnership or private equity firm investing in farmland
You might actually bite the proverbial bullet, buy a working farm and live off the land or
You can have your cake and eat it too, like Michael Murphy who publishes the highly-successful New World Investor biotech newsletter and also operates a unique permaculture farm.
There’s an even bigger reason for abandoning the financial world for farming. “We don’t need more bankers. What we need are more farmers,” says Rogers. “The invisible hand will do its magic.”
In short, farming’s not just another great way to get rich. There’s a higher calling in it, a mix of money, enjoying life, fulfilling your destiny, and a dose of altruism: “The world has a serious food problem,” says Rogers in Steve Gandel’s exciting Time article. And “the only real way to solve it is to draw more people back to agriculture.”
Hopefully this will inspire more bankers to say bye-bye Wall Street, hello “best job of the 21st century.”
Opportunity knocks: world need more farmers, can’t feed 10 billion in 2050
Just how badly does the world need more farmers? Jeremy Grantham’s firm manages $100 billion, warns of an “inevitable mismatch between finite resources and exponential population growth,” plus a “bubble-like explosion of prices for raw materials,” plus commodity shortages that will become a huge “threat to the long-term viability of our species when we reach a population level of 10 billion,” making “it impossible to feed the 10 billion people.” See 5 money moves on commodities bear is making now.
Impossible? Yes, the planet’s “carrying capacity” cannot feed the 10 billion people UN demographers predict on the planet as we add three billion more by 2050. So that’s a constraint on the world’s future. Grantham concluded, “as the population continues to grow, we will be stressed by recurrent shortages of hydrocarbons, metals, water, and, especially, fertilizer. Our global agriculture, though, will clearly bear the greatest stresses.”
In short, agriculture is the world’s biggest commodity problem, biggest challenge and the biggest opportunity, bigger than Wall Street banking on the path to a successful and satisfying life. Below are some ideas and leads on the four paths to success.
Invest in farmland, local, national and worldwide
Here’s another way to leveraging your talents and passion for agriculture, investing in farmland. Bigger players include Canada’s Agcapita, Brazil’s Agrifirma plus American investors like Ceres and Chess Partners. Earlier we wrote about 416 agricultural real estate deals across the world.
Why are these operators crucial to farming? Water and wind erosion are wiping away crop soils 10 to 40 times the rate of soil formation. Forestlands are disappearing at rates over 500 times the replacement rate, a trend accelerated by today’s new age of 100,000-acre mega-fires.
So farmland operations like CeresPartners and ChessCapitalPartners are making valuable contributions by financing and owning smaller farms.
And also on the plus side, remember, throughout history successful farmers often created local banks. They become farmers first, then got rich, then become bankers too.
Invest in a farm, get your hands dirty, operate your own farm
Can you combine farming and Wall Street? You bet. Back when I was on Wall Street at Morgan Stanley one of the top three men commuted from his large working farm in Princeton. Another key man was Barton Biggs, chief global strategist for 30 years. Smart Money said he was “without question the premier prognosticator on the international scene.” Institutional Investor magazine put him on its “All-America Research Team” 10 times.
Biggs now runs the Traxis Partners hedge fund. In his best-seller, “Wealth, War and Wisdom,” Biggs advises investors to prepare for “the possibility of a breakdown of the civilized infrastructure.” How? Be a farmer. Seriously: “Your safe haven must be self-sufficient and capable of growing some kind of food ... It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes. … Think Swiss Family Robinson.”
Michael Murphy is another great example: For decades Murphy has been advising investors on “mega-shifts” in technology, in his New World Investor newsletter and his recent “Survive the Great Inflation.” We detailed his unique operating farm in “12 Tips for Profiting on Commodity Demand.”
Murphy “walks the way he talks,” combining his world of finance with the unique process on his operating farm, a commitment that led to “permaculture” farming certification.
Finance insiders can get ‘rich’ farmers on a ‘permaculture’ path
“Though the problems of the world are increasingly more complex, the solutions remain embarrassingly simple,” says Bill Mollison, co-founder of the global “permaculture” movement. What’s really impressive is the peaceful Zen sense about this spiritually rich permaculture way of life.
That’s right, it’s really not just living in two separate worlds for guys like Murphy. This is a commitment, a way of living. Here’s how the permaculture course describes this way of life:
“Permaculture is an ecological design system for sustainability in all aspects of our lives. Permaculture teaches us how build natural homes, grow our own food, restore diminished landscapes and ecosystems, catch rainwater, build communities, take care of waste and much more.”
“The philosophy within permaculture is one of working with rather than against nature, and of protracted and thoughtful observation rather than premature and thoughtless action. Permaculture design techniques encourage land use which integrates principles of ecology and applies lessons from nature. It teaches us to create settings and construct ecosystems which have the diversity, stability, and the resilience of natural ecosystems. In the spirit of sustainability, it also teaches us to allow natural and designed ecosystems to demonstrate their own evolutions.”
In short, permaculture farming is a way of living, in a different world from agribusiness giants Monsanto and Cargill. Farming is a lifestyle that fits biotech expert Michael Murphy who merges both, much like the great Zen masters and the guys I knew from Morgan Stanley. But most of all, this way of farming is a worldwide movement. And if you want to explore it further, check out all the courses offered by the Permaculture Institute.
15 agricultural innovations to help you be a millionaire farmer
A couple weeks ago, just before the annual Earth Day celebration, the Worldwatch Institute published an impressive list of “15 sustainable agricultural practices that are protecting the environment while also improving people’s livelihoods.” That’s important because these innovations protect the future of our world.
The world of “agriculture provides food for all of us and income for more than one billion people around the world,” says Worldwatch’s Danielle Nierenberg: “Relatively simple innovations to reduce the amount of food we waste, or to help the urban poor become more self-sufficient, can help agriculture feed the world without destroying the planet.”
What an opportunity: Global population is rapidly accelerating, from just six billion 12 years ago to seven billion last year, adding three billion more in the next generation. Rogers got it right: “We don’t need more bankers. What we need are more farmers.”
Alternatively, natural-resources funds or commodity trading
The simplest way to get your feet wet (while you’re thinking about a bigger move into farming and agriculture) would be to get a feel of the market. Invest in some natural-resources funds. We asked analyst Michelle Swartzentruber to compile a top-10 list from the Morningstar database:
Kim
Prudential Jennison Natural Resources PRGNX
T. Rowe Price New Era PRNEX
Van Eck Global Hard Assets GHAAX
Ivy Global Natural Resources IGNAX
RS Global Natural Resources RSNRX
Fidelity Select Materials FSDPX
Fidelity Select Natural Resources FNARX
Franklin Natural Resources FRNRX
John Hancock II Natural Resources JINRX
ING Global Resources IGRSX
You might also take Jim Rogers other suggestion from his 2007 best-seller “Hot Commodities,” where he called commodities the “world’s best market.”
More on this later, but if you look closely at our list of the top-10 best natural resources funds you can see how volatile the underlying commodities have been in recent years: Positive on the short-term year-to-date basis and the longer 3-year annual average basis, but in negative territory on a medium term one-year basis.
Bottom line, if you really want to become a millionaire farmer, my guess is that neither passive funds nor active commodity trading will satisfy a passion for farming. So if you really want to invest in agriculture … if you believe farming is your calling … if you see an opportunity to get rich … and if you have a strong desire to make a contribution to the world’s need to feed billions in the next generation … then at some point you might just walk out the door, into the world of agriculture and become a farmer.
See original version of this story
Read Next
Why I stopped using stop loss orders
A big problem with stop losses is that you give up control of your sell order. During volatile markets, that can cost you money. But there is an alternative, writes Michael Sincere.
More On MarketWatch
The 10 best things government has done for us
Holding TIPS will make you poorer
About the Author
Paul B. Farrell
Paul Farrell writes the column on behavioral economics. He's the author of nine books on personal finance, economics and psychology, including "The Millionaire Code," "The Winning Portfolio," "The Lazy Person's Guide to Investing." Farrell was an investment banker with Morgan Stanley; executive vice president of the Financial News Network; executive vice president of Mercury Entertainment Corp; and associate editor of the Los Angeles Herald Examiner.
Copyright © MarketWatch, Inc. All rights r
