Farmland / Timber Funds

Zanderman

Malthusian wrote: »

Forgive the pedantry but if they became uncertainties they weren't ever certainties in the first place. A better illustration of political risk is difficult to imagine.

I should have known better to call them certainties, sorry! Those 'certainties' I mentioned are indeed, as you say, uncertainties really. I was merely suggesting they become even more uncertain on Brexit.

The tendency to consider them certainties is actually one of the great problems of our time - with most agricultural practice increasingly relying on these 'certainties' for many decades now. And brexit neatly illustrates how the 'certainties' can fail. Farmers relying on them (the vast vast majority of farmers) may well go bust if an equivalent new system isn't put into place. Or we all start paying the real cost of food and other agricultural production (which we, in effect, subsidise substantially through our taxes and have done for decades).

Many land managers and organisations have become so convinced that the subsidies are a given that most long-term planning for farmland revolves around them. Inevitable perhaps, but also an illustration of short-term thinking. Even the environmental charities build their long-term land management around them and they are then naive enough to claim their plans are 'sustainable', despite relying on a subsidy system that is a political invention.

Sustainable flood defence is a good example - with projects small and large all over the place to encourage land owners to manage land in a way that absorbs more water and reduces surface water run-off. But these are all built around subsidies. So they aren't sustainable. Laudable efforts, yes, sensible efforts, yes, but sustainable financially, no. And so they may well fail if subsidies change.

That example doesn't help the OP much but I hope the point is made, that land management is heavily influenced by political issues and funds, and it isn't as simple as growing a crop/forest/herd of cows and selling it. It's very complex indeed with a lot of fragile interdependencies.

Computer_Beginner

Zanderman wrote: »

I

Many land managers and organisations have become so convinced that the subsidies are a given that most long-term planning for farmland revolves around them. Inevitable perhaps, but also an illustration of short-term thinking. Even the environmental charities build their long-term land management around them and they are then naive enough to claim their plans are 'sustainable', despite relying on a subsidy system that is a political invention.

Sustainable flood defence is a good example - with projects small and large all over the place to encourage land owners to manage land in a way that absorbs more water and reduces surface water run-off. But these are all built around subsidies. So they aren't sustainable. Laudable efforts, yes, sensible efforts, yes, but sustainable financially, no. And so they may well fail if subsidies change.
.

I've also noticed an increased trend towards conifers being phased out and 'native' hardwood trees being introduced instead. This seems to be mainly an enviromental 'initiative' or 'scheme'. But I've long had the question that if the conifers were planted by the FC because they were the most profitable, then how will the new hardwood tree replacement schemes be profitable? Or is this just the government spending money by a 'backdoor' route?

Computer_Beginner

Zanderman wrote: »

I
That example doesn't help the OP much but I hope the point is made, that land management is heavily influenced by political issues and funds, and it isn't as simple as growing a crop/forest/herd of cows and selling it. It's very complex indeed with a lot of fragile interdependencies.

So how would you advise a novice to gain exposure to agricultural land / forestry?
REIT?
Actively managed pension fund, from well known names (eg Aviva, Scottish Widows etc). Do they have much land exposure?

Or would you advise just stay away completely?

firestone

Computer_Beginner wrote: »

So how would you advise a novice to gain exposure to agricultural land / forestry?
REIT?
Actively managed pension fund, from well known names (eg Aviva, Scottish Widows etc). Do they have much land exposure?

Or would you advise just stay away completely?

Think most would advise you to start with other Global or multi asset funds first but if you must go into that field (no pun intended) i would stick with the ishares timber fund.Seems like i am in the minority but i have been it for a while and the results have been good but at times volatile.
To be fair i had a small inheritance and looked for a couple of niche funds for a bit of fun and that was one of them but would not have picked it if i did not have other funds funds/IT's first

Zanderman

Computer_Beginner wrote: »

Or would you advise just stay away completely

I think I already said that in my first reply to you.

Zanderman

Computer_Beginner wrote: »

I've also noticed an increased trend towards conifers being phased out and 'native' hardwood trees being introduced instead. This seems to be mainly an enviromental 'initiative' or 'scheme'. But I've long had the question that if the conifers were planted by the FC because they were the most profitable, then how will the new hardwood tree replacement schemes be profitable? Or is this just the government spending money by a 'backdoor' route?

If you don't understand what is going on and have to ask questions like this - don't invest!

Malthusian

Computer_Beginner wrote: »

So how would you advise a novice to gain exposure to agricultural land / forestry?

The same way I would advise a novice on how to attempt the Fried Liver Attack or run a 20-mile coastal trail race. I wouldn't. It is not inherently a bad idea but it is unsuitable for novices.

A global multi-asset fund will include exposure to forestry companies in due proportion to the significance of forestry companies in the economy. Why do you think you need more than this? Genuine question.

"Diversification" is not an answer. If you hold a globally diversified portfolio you are already exposed to forestry so it is not diversification. What you are trying to do is increase the exposure you already have. Why?

Right now, I cannot imagine McDonalds going bust. Because I can see with my own eyes it's always busy.
But 20 years ago, all the pubs in my town were absolutely packed every weekend. People queing at the bar to get served beer at £1 a pint. (Why they didn't stick the prices up on a Saturday night I'm not sure. People would still have paid.)

You're too focused on superficial irrelevancies like how many people are in a restaurant. A restaurant can be absolutely thriving and packed with people every single day of the week and they could keep coming back for another 100 years. And it could still go bust tomorrow because it can't pay its debts.

Computer_Beginner

Malthusian wrote: »

A global multi-asset fund will include exposure to forestry companies in due proportion to the significance of forestry companies in the economy. Why do you think you need more than this? Genuine question.

"Diversification" is not an answer. If you hold a globally diversified portfolio you are already exposed to forestry so it is not diversification. What you are trying to do is increase the exposure you already have. Why?
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A future hedge against inflation, that is not denominated in a fiat currency (like bonds are).
An asset that is a store of value and has the potential to produce a tangible good (eg timber, beef etc)

Computer_Beginner

Malthusian wrote: »

You're too focused on superficial irrelevancies like how many people are in a restaurant. A restaurant can be absolutely thriving and packed with people every single day of the week and they could keep coming back for another 100 years. And it could still go bust tomorrow because it can't pay its debts.

True.
Like Carillion, plenty of work coming in - but loaded up with debt.