The reduction in the number of farms in the world will lead to increased risks for investors

American scientists from the University of Colorado analyzed the development of farms from the point of view of the economy and predicted the development of this industry until the end of the century. The scientists report that by this time the number of farms in the world will be reduced by half, while the area of ​​farms will double.

At the moment, there are about 600 million farms in the world, scientists report. At the same time, in their development there is a tendency to reduce the number of farms with an increase in their area - larger farms buy smaller ones, holdings merge into even larger associations, small farms that cannot withstand competition are closed. Large farms are more efficient, but with a decrease in the number of farms, the risks of investors grow, scientists say.

We are talking about the diversity of the investment portfolio, the report says. Now investors can invest in many farms, but in the future the number of options will be greatly reduced. At the same time, although large farms are efficient, they are more exposed to serious risks. If climate factors or catastrophes affect such a farm, the impact on the economic sphere will be shocking, and investment losses will be huge. 

The situation looks completely different when an investor can invest in several smaller farms, the scientists explained: then, if one farm does not get the harvest in the volume that the investor expected, this can be compensated by other farms located in other regions or engaged in breeding other crops.