Tag Archives: alternative
Attractive Opportunities in Agriculture: Steve Yuzpe
THURSDAY, JUNE 27, 2013 Henry Bonner Attractive Opportunities in Agriculture: Steve Yuzpe Steve Yuzpe joined Sprott Resource Corp. in 2009 as Chief Financial Officer. Sprott Resource Corp., a publically-listed private equity firm, manages a portfolio of investments in the natural resources sector, including a large allocation to agriculture. “Food production is a very interesting area to be in right now, because the case for higher food prices around the world is very compelling. The need for food security, the effects of rising populations, water scarcity and climate change, and the need for inflation-protected assets all make the set-up for agriculture very compelling right now. There are opportunities in the sector that should offer strong risk-adjusted returns.” Despite its attractiveness, the ability to enter the agricultural sector is quite restricted to individual and retail investors, says Steve. On a relative basis, very few investment opportunities are publicly available. Those that can enter the space through private investments – such as large investment funds – have a definite advantage by having access to a significantly larger investment universe. “In addition to the typical long-term supply and demand trends, there are three agro-economic factors that underlie the bull case for agriculture. Firstly, the sector should provide an inflation-protected asset for investors concerned with currency devaluation occurring now. Inflation drives up the costs of all the raw materials involved in food production, processing, storage, transportation, etc. For example, food and energy are over 80% correlated. So if you believe that the prices of these commodities in general and energy specifically could rise, agriculture could provide you with an additional means of protecting against this risk.” “Another major factor is global climate change. Whether or not the change is man-made or a long-term natural cycle is irrelevant. Over the past two decades, average temperatures are rising and weather conditions have become increasingly volatile, which creates a lot of uncertainty around the productivity of existing farmland. This uncertainty can have a huge impact on crop prices, as evidenced by the devastating droughts in the U.S., Russia, and India in 2012. There seems to have been a dramatic weather event in major crop producing areas in each of the last five years.” Steve believes governments will continue to implement policies to secure inexpensive food for domestic populations in response to the political upheaval that high food prices can cause. “In 2010, the Russian government imposed export restrictions on wheat. Argentina did the same thing in late 2012 and early 2013, to secure the supply for their constituency.” Meanwhile, food supply is also threatened by the reduction of existing available farmland through pollution, urbanization, soil degradation, and water scarcity, says Steve. Putting new resources into production could be challenging and costly. “There is available arable land that isn’t producing in Brazil, Russia and Kazakhstan. Most of the land is either of marginal utility, or is located in remote regions, adding transportation to the cost of bringing production to market. In addition, it takes years to convert the land into arable farmland, with heavy input costs for pesticides, fertilizers, etc. So these types of projects aren’t about to bring down the price of food. In fact, they would only be economical in a global environment of food shortages, when it’s better to have high-priced food than no food.” “In agriculture, you have to take a long-term view. We believe that the global macro-economic picture is on our side in this area. Global populations will continue to grow; the amount of cultivatable farmland per person is being squeezed down. We believe that this create opportunities for our investment portfolio over the long term.” Steve Yuzpe has 15 years of experience with financial administration management in public and private corporations. Sprott Resource Corp .is a Canadian-based company, the primary purpose of which is to invest and operate natural resource projects. Through acquisitions, joint ventures and other investments,Sprott Resource Corp.seeks to provide its shareholders with exposure to the natural resource sector for the purposes of capital appreciation and real wealth preservation. Continue reading
Biomass Of Northern Hemisphere Forests Mapped
ANI inShare Washington, June 27 (ANI): Thanks to satellites, the biomass of the northern hemisphere’s forests has been mapped with greater precision to help improve our understanding of the carbon cycle and our prediction of Earth’s future climate. Accurately measuring forest biomass and how it varies are key elements for taking stock of forests and vegetation. Since forests assist in removing carbon dioxide from the atmosphere, mapping forest biomass is also important for understanding the global carbon cycle. In particular, northern forests – including forest soil – store a third more carbon stocks per hectare as tropical forests, making them one of the most significant carbon stores in the world. The boreal forest ecosystem – exclusive to the northern hemisphere – spans Russia, northern Europe, Canada and Alaska, with interrelated habitats of forests, lakes, wetlands, rivers and tundra. With processing software drawing in stacks of radar images from ESA’s Envisat satellite, scientists have created a map of the whole northern hemisphere’s forest biomass in higher resolution than ever before – each pixel represents 1 km on the ground. “Single Envisat radar images taken at a wavelength of approximately 5 cm cannot provide the sensitivity needed to map the composition of forests with high density,” Maurizio Santoro from Gamma Remote Sensing said. “Combining a large number of radar datasets, however, yields a greater sensitivity and gives a more accurate information on what’s below the forest canopy,” Santoro said. About 70 000 Envisat radar images from October 2009 to February 2011 were fed into this new, ‘hyper-temporal’ approach to create the pan-boreal map for 2010. This is the first radar-derived output on biomass for the whole northern zone using a single approach – and it is just one of the products from the Biomasar-II project. (ANI) Continue reading
Yunnan Launches Carbon Offset Program
Forested mountains in Menghai County, Xishuangbanna Earlier this week China held its first ever National Low Carbon Day (全国低碳日). Several of the mainland’s megacities instituted cap and trade programs aimed at limiting pollution levels. Yunnan, although not required to participate by Beijing, launched a carbon sequestration program of its own. In a provincial first, the Yunnan Development and Reform Commission has brokered a deal wherein Yunnan Forestry Investment Company (YFI) sold carbon credits worth 17,800 tons of carbon dioxide (CO2) to Guangdong-based Friends of Iron and Steel (FIS). In exchange for the credits, FIS has agreed to pay 1.07 million yuan (US$174,000). With the money it has earned from the sale of its credits YFI is now under contract to plant and maintain forest or bamboo groves that will sequester carbon equal to the amount of credits sold. In order to accomplish this, YFI has been granted a 30-year lease by the provincial government to manage unused land in Xishuangbanna totaling 3,500 hectares — or roughly one-eighth the size of Dianchi Lake. It is hoped the new forest managed by YFI will serve the dual purpose of becoming a carbon sink while also reclaiming land that is too steep or too eroded to support agriculture. Once fully under cultivation, trees and bamboo grown in areas such as these are expected to capture 550,000 tons of CO2 over the course of three decades. These numbers were calculated using metrics set out in a 2005 version of the Kyoto Protocol. Media reports have not discussed to what extent Yunnan industries are limited regarding CO2 output. However, according to Yunnan Info, per capita CO2 emission levels are down 16 percent province-wide since 2010. Whether or not this new system of carbon trading will succeed is difficult to predict. The unit price of 60 yuan per ton of CO2 in Yunnan is 20 percent lower than its equivalent in Europe’s carbon trading program. That system saw its carbon offset program crash earlier this year, largely due to CO2 credit prices deemed too insignificant to alter industry behavior. Continue reading
