Tag Archives: green
Provider View: Demand Is Growing Fast
Numerous firms fall into the agriculture investment universe – and most offer opportunities By Jonathan Blake | Published Jul 01, 2013 Demand for agricultural resources, products and technologies is set to rise significantly, driven by a fast-developing global population. Against this backdrop, the investment case for agricultural equities continues to be driven by sustainable global demand on one side and the instability and inadequacy of supply on the other. As such, the business of feeding the world merits consideration for any well-diversified, long-term investment portfolio. The United Nations expects the world’s population to grow to more than 9bn by 2050. This means than in less than 40 years we will have 2bn more mouths to feed, with three-quarters living in the developing world. Food preferences are changing too. As individuals become wealthier, their eating habits tend to alter, with meat and protein consumption often rising sharply. This is what is happening in the large emerging markets of India and China, where demand for chicken and pork is growing. Since grain and other types of feed are major cost inputs in the production of meat, it is expected that changing dietary habits will lead to continued upward pressure on grain prices. More than that, well-supported commodity prices have also improved farming economics and provided a strong incentive for farmers to maximise output. This will continue to have positive implications for companies involved in a number of related industries such as agrochemicals, agricultural machinery and grain-handling and processing services. At the same time, there is rising interest in alternative energy sources such as biofuels, where agricultural products are the main inputs. In this area, demand will be well supported by a combination of high oil prices and regulatory incentives, as national governments continue to introduce subsidies and output targets. An environment of rising commodity prices tends to be a supportive one, but other related industries can also do well at different points in the economic cycle. For example, in an environment where soft commodity prices moderate, ‘downstream’ assets, such as processors, manufacturers and food retailers, offer interesting opportunities. These industries tend to be more defensive, as firms generally have the ability to maintain prices, even if input costs fall. Moreover, while there are plenty of opportunities in the developed western markets, many attractive ideas can be found in developing economies around the world. In Latin America, for example, there is significant potential for the region to develop as a major food exporter. Overall, a large number of quoted companies fall into the ‘agriculture’ investment universe, whether directly involved in agribusiness or in a related activity. Jonathan Blake is head of agriculture at Baring Asset Management Continue reading
OECD Sees West Africa Agriculture Investment Boost on Population
By Isis Almeida – Jun 27, 2013 Agricultural investment in West Africa , the world’s largest cocoa-producing region, will grow “very significantly” by 2050 as the population expands and people move from rural areas to cities, according to the Organization for Economic Cooperation and Development. West African urbanization is increasing at the fastest rate in the world, Karim Dahou, an executive manager at the OECD’s directorate for financial and enterprise affairs, said today in an interview at a conference in London. Population in West Africa has doubled every 20 years since 1960 and in cities the number of people has tripled, he said. “In West Africa, the natural resources are conducive to huge agricultural output, there’s water, there are a lot of hydro-resources,” Dahou said at the Agriculture Investment Summit. “Our agricultural outlook by 2050 is very optimistic in terms of the growth of the sector globally, and including in Africa.” Investment in West African agriculture will expand as the world tries to meet growing local and global demand, he said. The amount of capital invested per farmer in Africa is “very low,” one sixth of that in Asia and one fourth of that in Latin America , according to Dahou. That’s the reason why yields for many crops in the region are stagnant, he said. Ghana and Nigeria are leading investments in agriculture in the region, he said. Nigeria, which spends $10 billion a year importing wheat, sugar, rice and fish, plans to boost domestic food production by 20 million metric tons by 2015, according to Akinwunmi Adesina, the country’s agriculture minister. Cash crops such as cocoa and coffee in West Africa won’t be under threat as the region tackles food security and may even facilitate access to food as they bring in revenue, Dahou said. There’s enough land available to expand and improve yields for both food and cash crops, he said. “The issue is not really space, it’s intensification,” Dahou said. “That’s what African agriculture, especially West African agriculture, needs.” To contact the reporter on this story: Isis Almeida in London at ialmeida3@bloomberg.net To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net Continue reading
Slower Global Agricultural Production Growth
FAO expects slower global agricultural production growth due to Limited expansion of agricultural land. 27 JUN 2013 WDM Group PR Network PR.com)– A new report published by the FAO revealed that global agricultural production is expected to grow 1.5 percent a year on average over the coming decade, compared with annual growth of 2.1 percent between 2003 and 2012. Limited expansion of agricultural land, rising production costs, growing resource constraints and increasing environmental pressures are the main factors behind the trend. The report added that the FAO believes that prices will remain above historical averages over the medium term for both crop and livestock products due to a combination of slower production growth and stronger demand, including for biofuels. The findings of the FAO report support Agcapita’s belief that fundamentals are in favor of farmland investment. Agcapita believes farmland is a safe investment, that supply is shrinking and that unprecedented demand for “food, feed and fuel” will continue to move crop prices higher over the long-term. Agcapita’s series of farmland funds continue to show great appeal to conservative investors concerned with inflation and the volatility of their existing public equity investments. Farmland has similar inflation hedging qualities to gold but with an ongoing cash yield that gold lacks. Farmland returns exhibit low volatility and this combined with the high absolute returns from farmland equate to a favorable Sharpe ratio. Agcapita’s funds directly hold diversified portfolios of farmland in western Canada, and in particular in the highly price competitive province of Saskatchewan. Investors are provided with the comfort of a direct investment in farmland combined with a model of front-end loaded cash rents. Agcapita Farmland Fund IV has launched in April 2013 with a $20 million offering. Agcapita is the only farmland investment fund eligible for registered plans (RRSP, TFSA, RESP etc). Fund IV is open to investors in BC, Alberta, Saskatchewan, Manitoba, Ontario, Newfoundland and accredited investors in Quebec. If you are interested in finding out more about the Fund IV offering please feel free to email us on enquiries@farmlandinvestmentpartnership.com This news release may contain certain information that is forward looking and, by its nature, such forward-looking information is subject to important risks and uncertainties. The words “anticipate,” “expect,” “may,” “should” “estimate,” “project,” “outlook,” “forecast” or other similar words are used to identify such forward looking information. Those forward-looking statements herein made by Agcapita, if any, reflect Agcapita’s beliefs and assumptions based on information available at the time the statements were made (including, without limitation, that (i) the demand for agricultural commodities will continue to grow at a pace that is unlikely to be matched by growth in agricultural productivity, and (ii) investment demand for tangible assets such as agricultural commodities and farmland will continue to increase for the foreseeable future). Actual results or events may differ from those anticipated or predicted in these forward-looking statements, and the differences may be material. Factors which could cause actual results or events to differ materially from current expectations include, among other things: risks associated with the ownership and operation of farmland, including fluctuations in interest rates, rental rates and vacancy rates; general economic conditions; local real estate markets; supply and demand for farmland; competition for available farmland; weather; crop diseases; the price of grain and other agricultural commodities; changes in legislation and the regulatory environment; and international trade and global political conditions. Readers are cautioned not to place undue reliance on any forward-looking information contained in this news release (if any), which is given as of the date it is expressed herein. Agcapita’s undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise. Contact Information: Agcapita Partners Karim Kadry +1-587-887-1541 Contact via Email www.agcapita.com Read the full story here: http://www.pr.com/press-release/496931 Press Release Distributed by PR.com Continue reading
