Tag Archives: agri-investors

ROBIN BROMBY   The Australian October 21, 2013 Will we control enough food production to feed ourselves in 15 years In 15 years, Australia will have 28 million people. Will we control enough food production to feed ourselves?. Picture: Sam Mooy  Source: TheAustralian AGRICULTURE may be the investment story of the coming decade but, unlike the resources sector, you don’t have a choice of nearly 1000 stocks (good, mediocre and awful). In fact, choice of vehicles is disappointingly small.   Jim Rogers was the man who, with George Soros, founded the Quantum Fund. He has been a believer in gold, mineral commodities — anything that is likely to be in short supply and will keep its value in a world where central banks are creating trillions of dollars of new money. He tells US Barron’s magazine that agriculture is going to be one of the best investments over the coming decades. Food prices are going to have to rise dramatically to attract people and capital into farming. “The average farmer is 58 in the US and Australia, 66 in Japan,” he says. “Old farmers are dying or retiring, and young people aren’t going into agriculture. Young Americans go into PR, not agriculture.” He then lists the options for Americans to get into the farm sector, among them banks in agricultural areas, shares in farm equipment, fertiliser or seed companies, and agriculture funds. Unfortunately, we don’t have regional banks, although there are a few companies exposed to the fertiliser business, including Incitec Pivot (IPL), although it seems more enthusiastic about the explosives side of the business. Or there’s Australia New Agribusiness & Chemical Group (ANB), controlled by Chinese interests and expanding its fertiliser manufacturing by going upstream into phosphate mining. Of course, we have a selection of phosphate and potash explorers. But the prices for both commodities are becoming more depressed, and too many investor fingers have been burned since the great phosphate bubble of 2008. Several years ago, your correspondent was expounding to an investor about the need for more investment instruments connected with farming and food as the world population kept growing and the area of arable land kept shrinking. That investor insisted on setting up a meeting with two very canny mining stock entrepreneurs for yours truly to expound on the theme. These gentlemen were polite, carefully avoiding yawning, but were clearly dubious about this whole agricultural thing. It’s still a hard story to sell. So it was encouraging that, in his latest client note, Peter Strachan of StockAnalysis takes up the Jim Rogers line. As Strachan sees it, foreigners now recognise the agricultural opportunities in Australia. In February, PrimeAg Australia (PAG) sold the bulk of its farm properties to a New York-based investment fund that has been building its agriculture exposure. A month later, incidentally, the US fund announced it was financing a farmland research centre at the University of Illinois. More recently, Americans in the form of Archer Daniel Midlands made a bid for GrainCorp (GNC), an acquisition that will require Joe Hockey’s nod. And Canadian interests are one of three bidders for Warrnambool Cheese & Butter (WCB). Local investors will retain access only if the first bidder, Bega Cheese (BGA), is the successful suitor. As Strachan notes, 1 per cent of Australia’s land mass, prime beef-growing country, has just passed to Indonesian interests and buyers from Asia are leading the hunt for grain-growing land. “Long-term money from around the globe sees the value that local owners do not,” Strachan notes. In 15 years, Australia will have 28 million people. Will we control enough food production to feed ourselves, especially if there’s a severe drought? In the meantime, local investors wanting to gain exposure to the global food supply story face very thin pickings. Continue reading →