Risks & Insurance
GENERAL INVESTMENT RISKS
Every investment product today involves different risks, and offers separate returns for the level of risk. Generally speaking, investors are exposed to two types of risks, as defined by the finance profession.
Systematic risks: This is the risk inherent to the entire market or market segment, and it affects the overall market – not just a particular business or industry, such as volatility and market risk, interest rate changes, inflation, recession and wars.
Unsystematic risks: This is the risk that affects a minimal number of investment assets. It is also called specific risk, diversifiable risk, and residual risk. This type of risk refers to the uncertainty inherent in a company or industry investment. Examples include a change in management, regulatory changes, and product-specific risks.
At Invest4Land, we have developed an investment model and product that helps reduce both systematic and unsystematic risks.
Turkish farmlands benefit from the TARSIM agricultural insurance pool initiative, which aims to promote and spread Agricultural Insurance to all farms in Turkey to protect the farmers against the natural disasters and other risks.
HOW WE REDUCE RISKS
Invest4Land has carefully formulated an investment model to protect investors and farmland projects from risks, by taking the following precautions:
1- Our Choice of Agricultural Real Estate
Generally, both real estate and agriculture investments are long-duration investments and hence, don’t suffer the volatility of the stock market. Both asset classes benefit from unstoppable demographic trends. Housing and food are two necessities whose demand increases with a growing population. Research shows that even in times of economic downturn, instability, and even war, demand for essential food crops is unaffected, if not heightened by people focusing on nutritional necessities. Global urbanization decreases arable land, increasing farmland values. Finally, as populations increase in wealth, they tend to eat more protein, which is another factor favoring the long-term outlook of agricultural investments.
2- International Currency Risk
All our investment products and returns are priced in United States Dollars. The reason for this is that all the return calculations investors receive from us are also in United States Dollars. Food products have the advantage of international market demand, so if demand drops in one country, it can be sold in another. Our choice of crops (Golden Chandler Walnut) is also strategic in this manner, it has had a 10-year growing demand, and can be both sold locally and benefit from low transport costs, or exported to international buyers in USD when higher returns are possible.
3- Perishable Food Risks
Walnuts are a dry fruit product that has significantly lower perishability rate and longer shelf life than fresh fruits. Fresh fruits and vegetables are incredibly perishable, and have a relatively short shelf-life; they also rarely contain outer shells or protective layers, which could result in damage and loss in transport and storage. Walnuts have a naturally protective shell that minimizes transport and storage damage and crop loss, the longer shelf life also allows for more export options and transport times. Walnuts shelf-life can also be extended by refrigerating or freezing, without any significant loss of nutritional value.
4- Climate and Natural Disaster Risk
Natural disasters from droughts, earthquakes, floods, and diseases, are a well-known risk factor in all agricultural investments. The insurances needed for our investments drive one of our strategic choices for the location of our investments; we can derive from both private and government insurances on farmlands and crops. Turkish farmlands benefit from the TARSIM agricultural insurance pool initiative, which aims to promote and spread Agricultural Insurance to all farms in Turkey, and to conduct the necessary applications fast and accurately, to protect the farmers against the natural disasters and other risks. The scheme was developed in cooperation with the relevant government entities, private insurance providers, and farming associations and entities, under an independent management committee. All necessary insurance lines fully cover all Invest4Land farmlands, from crops, cattle, sheep and goat, poultry, and beehives.