Investing in Land is Overrated - An Essay

[Johnson Boris]

This essay discusses the viability of investing in land in order to produce food. There is a misconception that land is a good investment. It is not. 

 

I wrote this essay 150 days ago, before I went inactive. I noticed that there was a misunderstanding regarding the viability of land and I wanted to write my thoughts down and see if I was actually right. Some of the numbers are a little outdated, but the market changes support my argument even more, with the food supply during peacetime increasing daily by 50% more than when I wrote this essay. It also diminishes during war-time even less than when I wrote this. I decided not to bother changing the numbers due to the core value of the essay being the idea that the situation is bad for food production in the long run, not 100 days from now (although it is also gonna be bad 100 days from now). There are structural factors that make land not a good investment.

 

I recommend reading the FAQs. 

 

Investing in Land is Overrated and Here is Why

 

Buying land to produce food is a thing of the past, investing in food production is not so good anymore and it is becoming even clearer every day. Producing food not only requires a huge initial investment that could be used elsewhere, but the price of the resource can also change dramatically, making it a volatile investment. Most importantly though, when you factor in everything, the ROI is abysmal.

 

Producing Food v Not Producing Food

 

I thought I would start by comparing the best 2 builds for 2.5k infra at current market prices and taking into account the small radiation of 10% with mmr 0250. I chose 2.5k infra since it is an infra level that works very well both with and without farms (which means you can switch easily in wartime), is popular and is a good general representation of a difference in revenue between farms and manus. 

 

 

On the left, the usual 2k land, 10 mines, 10 manus, 100 commerce build with 2 manus projects and CRC... On the right, the best build for 4k land with 20 farms, 5 manus and 100% commerce with the projects of mass irrigation, CRC and the munitions project. The numbers shown are the daily net monetary revenue per city per day, the bottom one takes into account mil. upkeep, which is irrelevant atm.

 

There is a difference of 93k in net monetary income. The cost of buying land from 2k to 4k with all the reduction bonuses you can imagine is 26.5 million. With a quick calculation we can say that the time it takes to start achieving a return of investment (ROI) is: 26.5 million costs / 93k difference in net monetary revenue=284 days (of peace). 

 

Essentially, at first glance, we can more or less assess that it takes a shorter amount of time to begin getting a return from this investment than buying  city 21 onwards, but that it has a generally longer return of investment than projects in the mid-high tier like the ITC. It gets worse though.

 

Food is volatile

 

To talk about the future price of food I will assume demand for food will remain almost the same in the long run regardless of the price. People are not gonna start starving their citizens bc food prices are higher and UP and AUP are still very worth it even if food prices increased “a little”. Virtually everyone already gets UP and AUP and the very few that don’t, would not change their mind if food prices went down since the reason they don’t buy them is usually ineptitude. Also, people would obviously not buy more infra or soldiers because food prices went down, it is simply not a significant enough factor.

 

What if food prices just fall?

 

 

As we can see, there is an increase of 19.5 million food per day during peace (we can only expect this figure to increase over time as more people buy more land since it is quite trendy atm). 

 

With 1.5 billion food in the market, we can actually calculate how long it would take for the food supply to double. 1.5 billion total food / 19.5 million increase in food per day= 76 days.

 

With a food supply double its current size, we should expect prices to go down dramatically (more supply, same demand=lower price). Let's see the exact same food build from before but with 90 ppu for food(which would be a decrease in price of about 35%) and compare it to the normal build. 

 

 

On the left, the no-food build. On the right, the food build with lower ppu. The food build actually makes less than the normal build. Now, it would be disingenuous of me to just leave it there since we should also expect the normal build’s revenue to go down a little since manu and raw’s prices would also fall a little with a long peace. Nevertheless, I think it is clear that food prices suffer the most under an elongated peace, just check the previous graph of the total food over time to see how much it grows during peacetime. 

 

So, even if producing food would still be better than a normal build, we can only expect it to have a very small advantage over the normal build if there is a lot of peace ahead, meaning that the time it would take to achieve ROI would take even longer. If the scenario was even worse and producing food would simply not be worth it with 4k land, with only 5k land users producing it, you have just been left with a useless bunch of land and projects for a while. 

 

What if food prices simply remain somewhat stable?

 

Well, my answer is, what would take for that to happen?

 

 

As we can see, food supply drops by 20 million per day when there is 100% radiation (during a global war). Which is actually very similar to how much the food supply grows per day during peacetime (19.5 million per day), which makes things super simple. 

 

These numbers mean that, essentially, for every day of peace there must be a day of war to counter-balance it so that food supply doesn't go up, lowering food prices. Now, due to a general continuous growth in city count and newbies in the game, the supply must increase a little over time in order for the price to remain the same, so I will do a ratio of 8:10 for warday:peaceday for the actual “calculation” at the end of this section.

 

First of all, I think we reached a problem. There are not the same number of days of war as there are days of peace, there simply can't be, war is too expensive. But let’s say there were about the same number of days of war as there were days of peace for the sake of the benefit of the doubt. This would leave the ppu for food at largely the same and wouldn't change the time it would take to begin getting a return of investment, giving you a pretty decent (for the mid-high tier) 285 days for a return of investment. Wrong, you can not produce during the days of war, so you would need to factor in war days to also get the actual time it would take you to begin getting a return of investment. This means that the ROI for buying land with stable food prices would be 513 days (using the ratio mentioned at the end of last paragraph). This ROI is already starting to look bad, but I think it's even worse.

 

Extra investment and opportunity cost

 

Even though I have already started to prove that land is overrated, we would also have to factor in the costs of projects. Tbh, this ain't a big deal since advanced engineering corps is already worth it just for the infra costs reduction. As for Mass Irrigation and Arable Land Agency, they just add a few more days of ROI depending on the city count.

 

More importantly though, the opportunity cost of building other projects, cities or infra can start adding up (opportunity cost refers to the benefits not accrued due to not choosing another opportunity). The specific opportunity cost is simply not something you can calculate for the span of 513 days since God knows what the price of things, the FA situation or anything in general will be by then. 

 

But there are 2 main points I would like to raise.

 

What about your 100% radiation build? 

 

When in high radiation, food can not be produced. This makes farmers switch to more manus or raws oriented builds. Now, to farm you need to use 2 project slots (for mass irrigation and arable land agency) that are useless during 100% radiation periods and could otherwise be filled with manus oriented projects, commerce projects, CRC, Green tech, RI or the police project.

 

Obviously, the extra land can come in handy at certain occasions, but we can expect it to, very often, be rather irrelevant since 1. The decrease in disease rate between having 2k land and 4k land is rather small. 2. You very often want a flat 0 as your disease rate in high infra builds, so a small increase in disease rate will very often not even be felt. Besides, the projects mentioned in the previous paragraph would also increase your revenue during 100% radiation periods. 

 

In fact, let’s compare the normal first build of no-food (with 2k land) to the exact same build with one less project, which will be a manufacturing project, the munitions one, and 4k land (I decided it should be a manufacturing project since you don’t need a second manus project when farming food with 2.5k infra). I’ll do this to show, in a vacuum, the difference in revenue. Keep in mind that a person producing food has 2 fewer project slots available than someone not producing food, I’m being nice here.

 

 

The 4k land build (on the bottom) actually makes 40k less revenue than the exact same build with 2k land and one more project (on the top). In addition, the revenue difference would increase during war-time with war-time prices (I have used peacetime prices) because the first build produces more manus. 

 

Now, I am not gonna attempt to add this revenue differential to the ROI equation for stable food prices since it is just an example and every player will find themself in a different situation. However, I thought raising this point was relevant since project slots do matter in the mid-high tier and having one or 2 extra project slots WILL increase your revenue. As for the whales with too many project slots, you are a whole other animal, more on that in the conclusion. 

 

What about profit?

 

ROI (return of investment) this, ROI that, ROI doesn’t actually matter Boris, what actually matters is profit! You want to make profit off your investment. No one particularly fancies having a bunch of land, the literal only use of land is increasing your revenue. 

 

To compare the profit for this project against others for a 600 day long period would be rather absurd and maybe even counterproductive since every player is themselves and their circumstances. 

 

What I can do, however, is provide a little analysis on how such a huge ROI is a problem. The graph below will essentially represent 3 theoretical options of investment, and the theoretical profit they give over a theoretical amount of time.

 

 

In essence, what I try to signal with this graph is that it will require extra time as well as the ROI period for land to catch-up in profit with an option with a shorter ROI but less increase in revenue than land. So, you would find that you would have to start adding days to the already long ROI of 513 days we calculated earlier to reach the profit you would have actually made with investments with shorter ROI. Keep in mind that the calculated ROI did not take into account the total drawbacks of a 100% radiation build. 

 

Flexibility

 

I wanted to make a small comment on the fact that investing on land isn’t as flexible as investing on manus. If the market changes, manus people will be more capable of switching their economic strategy without turning their backs on a previous massive investment.

 

Conclusion

 

For the mid-high tier: 

 

In a best case scenario (the stable prices case), the ROI is just terrible, because, really, we are looking at a potential ROI of over 2 years. I would argue over 3 or 4. Not only that, but you will also have to wait for a long long time to really see the profit from buying land to be higher than the potential profit you would have gotten from spending your money on other projects or cities. In a worst case scenario, you will be left with a bunch of useless land and projects because only people that already have 5000 land or more find producing food worth it.

 

I would just simply quit recommending people at this tier to start producing food. Unlike land, cities at least give a military advantage, so they are good for warriors. Cities also don’t have such an abysmal ROI if you are a war dodger, so they are good for war dodgers. 

 

For the whales:

 

For the purpose of this essay, I will call whales those that have so many project slots there are not enough projects to fill them and have huge city counts. For those whales, the ROI they may be able to get from land may be the shortest ROI available(even if it is over 2 years). This whole essay does not really apply to them. The game is over for them, they won. Now they can spend their money on their friends.

 

Conclusion +

 

There are a plethora of game developments that could change this situation for the better or for the worse given how long the ROI is, that is inevitable and part of the reason why even cities are more useful and reliable investments. 

 

If you think there is a particular build path that makes farms worth it because they allow you to, for example, jump to 3k with just CRC and 2 manus projects+farms, you may be right. There is a chance that it makes sense for your aa, your sphere, but I doubt that is the case due to the number of drawbacks and the other options available. Other options should be assessed.

 

also, as a final reminder, I think I was charitable to the farming alternative in this essay. I could have added a bigger gap between farming and non-farming in many places and decided not to so as to just focus on the main points. 2500 infra is outclassed by 2250 and 2400 infra in my opinion. The growth of food per day is bound to grow dramatically and, in fact, it already has. Check for yourself the current growth of total food per day. It is a 50% increase since I wrote this essay! Don't expect to ever see your money back if you ever invest in food production.

 

I hope that with this essay members in the mid-high tier won't be advised to follow the now misguided advice to produce food so that they may grow faster to catch-up with the pre-existing whales.

Bonus graph:

 

FAQs

 

Q. Why not just sell your food when prices are high during war?

 

A. You can buy food during peacetime and then sell it during wartime without having land to produce food. Just resource-flip like everyone else. In fact, as a food producer, you are most probably gonna be selling your food when it is least valuable, during peacetime, since that is when you produce it. This means that you will very often sell your food below the ppu used here if prices remained stable (which was 125 ppu).

 

Q. What if there are a lot of war days with 100% radiation and food prices go up due to a shortage of it?

 

A. If there are a lot of war days, you will not be able to produce food… rendering your investment useless… Besides, thank you for giving me the opportunity to point out that, with a radiation of 50%, a manus and raws build will very often already be better for a person with 4k land, while people with 5k land may still produce food, adding to the food supply (just see the total food graph during the Johnsons v HM). This, again, would render your investment in land useless for a bit while food prices wouldn’t actually go up that much. 

 

Q. What about 4.5k land or higher?

 

A. Same arguments apply, the ROI is just even longer. 

 

Q. What about the new UP? (a new UP at ~c21 is expected to be added at some point)

 

A. idk how much food that project will require and neither do you nor sheepy. Besides, I don’t think many people would be surprised if it took a year for such a UP to be released. Don’t risk everything in the hopes of a new update at some point.

 

PD: Now that the project came out I would like to add that this sets a precedent for any future UPs. 

 

Q. How am I supposed to more or less catch-up to the whales? At least farming gives me some hope for the long-run. 

 

A. Just raid, you will make a fortune raiding if you git gud at it. To give you a number, 200 million a week is a reasonable number for a good raider. Friends also help.

 

Q. What should I do instead?

 

A. Follow a good project path and just have normal builds without food. 

 

Q. But my revenue per city increased by 300k. How is that possible? 

 

A. You probably didn't have all the good projects you could have had or your build was just bad. Compare the food production option to other project options like ITC, CRC or manus projects. You should not compare the food production option to another option that doesn't utilise as many project slots or a build not as polished.

 

Q. What about the new Fallout Shelter?

 

A. Paradoxically, this new project harms new, active, food producers. For a person with 4K land, there is almost no way farming food with only 10% output will be worth it. BUT for those massive whales that already have 5k land and more, the prices don't have to be as high for it to be worth it. Making it more likely for your investment to be rendered useless. + Inactive or half-inactive whales with farms will still produce some food for a while out of ineptitude during 100% radiation periods because they will be too lazy or too inactive to change their build. This will mean that total food will diminish slower during wartime now, lowering food prices by increasing supply.

Edited November 26, 2022 by Johnson Boris

[Chad]

Reading through this you highly dislike the current system what changes would you make to make land viable. 

[Johnson Boris]

On 11/5/2022 at 10:53 PM, chad said:

Reading through this you highly dislike the current system what changes would you make to make land viable. 

I wouldn't make any changes to the system of land in particular. The current system essentially ensures that there will be a surplus of food in the long run and I think that is good because it gives econ and fa less headaches.

 

Everything in this game has the potential of being better, but land is not a priority at all. I personally don't wish for the whales that alreaddy invested in land to see their investment become more profitable. I hope that by posting this less newbies are pushed into wasting their money on such a terrible investment and that the development team reassesses their current view on land as an investment so that better updates are made in the future.

Edited November 26, 2022 by Johnson Boris

[P2K]

On 11/5/2022 at 5:26 PM, Johnson Boris said:

little”. Virtually everyone already gets UP and AUP and the very few that don’t, would not change

 

[P2K]

So what would you the expert recommend I do? I am at C17 right now I was going to keep building as many cities as I could. But now I am wondering if I should just get ready to stop building cities and stockpile as much money as I can.

 

 What would Be the perfect city count to stop building and just collect money for a while? Or do you think in the long run it is worth it to sacrifice the ROI for the sake of growing your nation?

 

Edited December 26, 2022 by P2K

[Sweeeeet Ronny D]

5 hours ago, P2K said:

So what would you the expert recommend I do? I am at C17 right now I was going to keep building as many cities as I could. But now I am wondering if I should just get ready to stop building cities and stockpile as much money as I can.

 

As someone with 45 cities, you should just stop buying cities now.  its much more important to have giant stockpiles of cash than investing it in your growth.  Why you ask? because growing a nation is for suckers.

[P2K]

On 12/8/2022 at 11:30 AM, Sweeeeet Ronny D said:

As someone with 45 cities, you should just stop buying cities now.  its much more important to have giant stockpiles of cash than investing it in your growth.  Why you ask? because growing a nation is for suckers.

I know that in reality I would never have enough money saved because there is no such thing as to much money. But if you were to take your best estimate how much money would be enough before you decided you would have enough put away that you could start using any extra money on top of that to start building again?

 

 Also I have a question about trying to corner a market. How much would it take to be able to corner one of the markets? Doesn’t have to be any specific market. I just want to try to make some consistent passive income.

 

 How would you attempt to corner said market?