Salam Alaykum Waramotulahi Wabarakatuhu,
I want to know if the kind of agricultural investment explained below is shariah complaint to invest in or not. Its a own a farm scheme being promoted by a private agritech company (EZ Farms) in Nigeria.
The details of the offer and investment is given below:
- ROI: 18 – 60% (variable return) Crop-based (Maize ranges from 18% to 60%) per cycle
- Price: N285,000 per Acre (6 plots)
- Location: Within EZ Farm Estate, Iwo, Osun State
- Land Title: Excision, land sales agreement, survey red copy (later)
- Outright Ownership: You own the farmland for life
- Contract: 60 or 70% of net profit to Investor, EZ Farms take remaining 30 or 40%
- Duration per cycle: 4 – 30 months (crop-based)
- Employment: To provide jobs for 200 Youths
a) EZ farms develop and manage the farm for the investor, selecting the best combination of crops (Maize, Pineapple, Cashew, Rice) that will maximize profit.
b) At harvest, a 60:40 or 70:30 sharing of profit is done.
c) At every production cycle, investor can cash out only his or her share of profit and re-plant another cycle with the capital OR investor can withdraw both capital and his share of profit.
- Insurance Policy:
The farm is insured thus:
Scenario A: If the crops are lost before Harvest, the insurance policy will pay back the costs of replanting the crops and growing the crops to maturity less the policy co-pay. The co-pay is the amount subtracted from the amount claimed to get the amount payable to the farm. Co-pay can be up to 10%.
Scenario B: If the crops are lost or damaged during harvest, the insurance policy will pay back the market value of crops lost or damaged during harvest.
The insurance policy insures the farm against the risks of physical loss or damage to crops caused directly by the following perils: Fire, Lightning, Aircraft damage, Windstorm Damage, Flood, Outbreak of Pest and Diseases. The standard coverage provided by this policy will pay for the production costs of crops that have been lost or damaged during the period from planting up to the maturity of the crop.