Wednesday, May 9, 2012
Yes, you can become a millionaire farmer
By Paul B. Farrell, MarketWatch
May 3, 2012
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?
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 “AllAmerica 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
Michael Murphy is another great example: For decades Murphy has been advising investors on “megashifts” 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
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:
Prudential Jennison Natural Resources (MFD:PRGNX)
T. Rowe Price New Era (MFD:PRNEX)
Van Eck Global Hard Assets (MFD:GHAAX)
Ivy Global Natural Resources (MFD:IGNAX)
RS Global Natural Resources (MFD:RSNRX)
Fidelity Select Materials (MFD:FSDPX)
Fidelity Select Natural Resources (MFD:FNARX)
Franklin Natural Resources (MFD:FRNRX)
John Hancock II Natural Resources (MFD:JINRX)
ING Global Resources (MFD: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 yearto-date basis and the longer 3-year annual average basis, but in negative territory on a medium term
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