Investing in farming can seem like a good strategic move as many investors regard agriculture and farming to be recession-proof.  People have got to eat, right?

With UN estimates of a billion extra mouths to feed over the next 15 years, and steadily rising living standards driving demand, the answer may well be ‘oh yes’.

Australia is a major agricultural exporter but few investors have much exposure to the sector. This is partly because there are not many blue chip companies to choose from. In fact, less than 1% of the value of the benchmark S&P/ASX 200 equity index is represented by agricultural companies.

It may also be in part because agricultural prices tend to be volatile from year to year – largely as weather related volatility affects supply.

But investors prepared to ignore short term fluctuations and seeking higher returns by looking outside the larger capitalisation stocks will find agriculture has substantial growth potential.

The world population is increasing at a rate of over 70 million people per year, much of it in Asia, which is also experiencing steadily rising standards of living.

With increasing affluence in Asia, consumer demand is shifting from simple calorie intake like grains to higher quality foods like dairy, meats and vegetables. (Grain demand shifts to feeding the required cattle, poultry and pigs.) So these countries look to Australian companies to help meet demand, thus an investment opportunity.

How do you get access to agriculture investments?

Literally buying a farm isn’t a feasible strategy for the average investor due to the obviously large capital commitment and the time and costs of operating a farm are substantial.  Fortunately, investors have many other means to gain exposure to the sector beyond sinking money into a farm.

Unsurprisingly, you can buy shares in listed Australian companies who supply grains, meat, dairy, seafood, honey and horticultural seeds into Asian and other overseas markets.

3 examples of these types of companies are:

Australian Agricultural Company Ltd (ASX: AAC) – The Australian Agricultural Company Ltd (AACo) sells both beef and live cattle.

Graincorp Ltd (ASX: GNC) – Graincorp is an integrated agribusiness with storage, logistics, marketing, and processing facilities. Its business revolves around three core grains; wheat, barley and canola.

Capilano Honey Ltd (ASX: CZZ) – Capilano supplies honey to more than 30 countries across the globe.

Don’t forget to check with your financial adviser or stock broker before making any investment decisions.