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The average price of staple foods will more than double in the next 20 years, leading to an unprecedented reversal in human development, Oxfam has warned.
The world's poorest people, who spend up to 80% of their income of food, will be hit hardest according to the charity. It said the world is entering an era of permanent food crisis, which is likely to be accompanied by political unrest and will require radical reform of the international food system.
Research to be published on Wednesday forecasts international prices of staples such as maize could rise by as much as 180% by 2030, with half of that rise due to the impacts of climate change.
After decades of steady decline in the number of hungry people around the world, the numbers are rapidly increasing as demand outpaces food production. The average growth rate in agricultural yields has almost halved since 1990 and is set to decline to a fraction of 1% in the next decade.
A devastating combination of factors – climate change, depleting natural resources, a global scramble for land and water, the rush to turn food into biofuels, a growing global population, and changing diets – have created the conditions for an increase in deep poverty.
"We are sleepwalking towards an age of avoidable crisis," Oxfam's chief executive, Barbara Stocking, said. "One in seven people on the planet go hungry every day despite the fact that the world is capable of feeding everyone. The food system must be overhauled."
Oxfam called on the prime minister, David Cameron, and other G20 leaders to agree new rules to govern food markets. It wants greater regulation of commodities markets to contain volatility in prices.
It said global food reserves must be urgently increased and western governments must end biofuels policies that divert food to fuel for cars.
It also attacked excessive corporate concentration in the food sector, particularly in grain trading and in seed and agrochemicals.
The Oxfam report followed warnings from the UN last week that food prices are likely to hit new highs in the next few weeks, triggering unrest in developing countries. The average global price of cereals jumped by 71% to a new record in the year to April last month.
Drought in the major crop-growing areas of Europe and intense rain and tornadoes in the US have led to fears of shortfalls in this year's crops.
The World Bank warned last month that rising food prices have pushed 44 million people into poverty since last June.
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Source: The Guardian
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Tuesday 31 May 2011
Thursday 26 May 2011
Wheat prices soar as IGC forecasts harvest deficit
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The world will not, after all, balance its books in wheat next season, despite weaker prospects for consumption by biofuels plants highlighted by the mothballing of Europe's biggest bioethanol plant.
The International Grains Council cut its forecast for world wheat consumption in 2011-12 by 3m tonnes, to 669m tonnes, reflecting in part lower expectations for use by biofuels users such as the UK's Ensus site, which is being mothballed because of high grain prices.
"Use [of wheat] for ethanol is growing less quickly than expected, including in the European Union, while greater use of alternative feeds, including barley, is expected to cut the feeding of wheat in Russia," the influential group said.
However, it lowered its estimate for production even more, by 5m tonnes, to 667m tonnes, reflecting "overly dry conditions in the southern US, much of Europe, and parts of the former Soviet Union".
"The outlook for wheat crops has been affected by unfavourable weather in a number of countries."
'Panic buying'
The warning places the intergovernmental group among the growing band of forecasters to ditch expectations of a rise, or even stasis, in global wheat stocks in 2011-12, although inventories are set to remain at an ample level.
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The grain's stocks-to-use ratio, a metric of the availability of a crop, and therefore of its price potential, will come in at 27.7% on IGC estimates, well above the 21.3% level in 2007-08 which helped fuel the last spike in prices.
And it came as, thanks to weather scares, wheat futures posted a second day of strong gains, notably in Minneapolis, which trades spring wheat, which US and Canadian farmers are struggling to plant amidst overly damp conditions.
Minneapolis wheat for July soared to $10.78 a bushel at one point, the highest for a spot contract since July 2008.
"Some panic buying is finally surfacing because of the continued delays in the Northern Plains," Darrell Holaday at US broker Country Futures said.
In Europe, grain institute Arvalis raised its estimate of drought damage to France's soft wheat crop, the region's biggest, to "more than 10%" from "far more than 5%".
Total grains
The IGC edged is forecast for consumption of corn by US bioethanol plants in 2011-12 lower too meaning that, while the estimate for production of overall grains was cut by 5m tonnes, inventories were seen higher than before, at 338m tonnes.
Stocks are expected to end this season at 348m tonnes.
Total grain stocks held by major exporters – a metric which exclude those held by countries such as China which are rarely traded, and so have less of an impact on prices – were pegged at 111m tonnes, an eight-year low but 3m tonnes above the previous forecast.
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Source: Agrimoney.com
The world will not, after all, balance its books in wheat next season, despite weaker prospects for consumption by biofuels plants highlighted by the mothballing of Europe's biggest bioethanol plant.
The International Grains Council cut its forecast for world wheat consumption in 2011-12 by 3m tonnes, to 669m tonnes, reflecting in part lower expectations for use by biofuels users such as the UK's Ensus site, which is being mothballed because of high grain prices.
"Use [of wheat] for ethanol is growing less quickly than expected, including in the European Union, while greater use of alternative feeds, including barley, is expected to cut the feeding of wheat in Russia," the influential group said.
However, it lowered its estimate for production even more, by 5m tonnes, to 667m tonnes, reflecting "overly dry conditions in the southern US, much of Europe, and parts of the former Soviet Union".
"The outlook for wheat crops has been affected by unfavourable weather in a number of countries."
'Panic buying'
The warning places the intergovernmental group among the growing band of forecasters to ditch expectations of a rise, or even stasis, in global wheat stocks in 2011-12, although inventories are set to remain at an ample level.
Download your FREE Agricultural Investment and Farmland Investment Guide here
The grain's stocks-to-use ratio, a metric of the availability of a crop, and therefore of its price potential, will come in at 27.7% on IGC estimates, well above the 21.3% level in 2007-08 which helped fuel the last spike in prices.
And it came as, thanks to weather scares, wheat futures posted a second day of strong gains, notably in Minneapolis, which trades spring wheat, which US and Canadian farmers are struggling to plant amidst overly damp conditions.
Minneapolis wheat for July soared to $10.78 a bushel at one point, the highest for a spot contract since July 2008.
"Some panic buying is finally surfacing because of the continued delays in the Northern Plains," Darrell Holaday at US broker Country Futures said.
In Europe, grain institute Arvalis raised its estimate of drought damage to France's soft wheat crop, the region's biggest, to "more than 10%" from "far more than 5%".
Total grains
The IGC edged is forecast for consumption of corn by US bioethanol plants in 2011-12 lower too meaning that, while the estimate for production of overall grains was cut by 5m tonnes, inventories were seen higher than before, at 338m tonnes.
Stocks are expected to end this season at 348m tonnes.
Total grain stocks held by major exporters – a metric which exclude those held by countries such as China which are rarely traded, and so have less of an impact on prices – were pegged at 111m tonnes, an eight-year low but 3m tonnes above the previous forecast.
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Source: Agrimoney.com
UK wheat supplies cut to 'tightest in modern era'
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UK officials have bowed to the bumper pace of exports and forecast that the country's wheat supplies will end next month at their tightest "in the modern era" – although some believe even this revision may not be the last.
The Home Grown Cereals Authority cut by 91,000 tonnes, to 1.51m tonnes, its estimate for wheat stocks in the European Union's third largest grower of the grain at the close of the 2010-11 crop year.
"This creates the lowest stocks-to-usage ratio since 1997-98," the HGCA said, with the data implying inventories finishing 2010-11 at the equivalent of 10.9% of domestic consumption, or less than six weeks of use.
Michael Archer, the HGCA's senior cereals and oilseeds analyst, told Agrimoney.com that given the different structure of the UK wheat market now and that 13 years ago – which had yet to see changes such as the reform of the EU's common agricultural policy and the widespread use of futures – the figure could be seen as the "lowest we have had in the modern era".
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Ensus effect
The stocks revision reflected lower expectations for imports, which were downgraded by 33,000 tonnes to 1.05m tonnes, and a higher figure for exports, hiked by 335,900 tonnes to 2.44m tonnes - a rise of one-third year on year.
UK wheat has found fresh demand, including its first shipments to Turkey, as buyers denied supplies by Russian and Ukrainian export curbs sought replacement sources, and as France bought in feed grain to replace its own wheat which, even of lower quality, has been finding export orders for food use.
This more than offset the impact of a 108,000-tonne cut to food and industrial consumption of wheat, reflecting the mothballing of the Ensus wheat bioethanol plant in northern England, which is due to shut down over the next few days because of the margin squeeze caused by high grain costs.
However, even the revised stocks estimate may not be low enough, some observers believe, given that exports have reached 2.34m tonnes with three months of the crop year left to go.
"I can see them tailing off, but not that quickly," one trader told Agrimoney.com.
"I can see stocks ending tighter yet."
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Stacking up the data
Mr Archer said that the export estimate indeed reflected an assessment that shipments would tail off sharply.
"If they are stronger, it makes the figures difficult to add up," he said.
"It implies higher imports, which we do not expect, or weaker domestic use, which we do not expect, or even lower stocks, which it is difficult to see realistically occurring."
London's old crop July wheat contract stood 1.0% higher at £194.00 a tonne in late deals on an upbeat day for world grains, with Chicago wheat gaining more than 2%, and Minneapolis spring wheat jumping 3%.
London's beter-traded November contract stood 1.1% higher at £193.50 a tonne.
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Source: Agrimoney.com
UK officials have bowed to the bumper pace of exports and forecast that the country's wheat supplies will end next month at their tightest "in the modern era" – although some believe even this revision may not be the last.
The Home Grown Cereals Authority cut by 91,000 tonnes, to 1.51m tonnes, its estimate for wheat stocks in the European Union's third largest grower of the grain at the close of the 2010-11 crop year.
"This creates the lowest stocks-to-usage ratio since 1997-98," the HGCA said, with the data implying inventories finishing 2010-11 at the equivalent of 10.9% of domestic consumption, or less than six weeks of use.
Michael Archer, the HGCA's senior cereals and oilseeds analyst, told Agrimoney.com that given the different structure of the UK wheat market now and that 13 years ago – which had yet to see changes such as the reform of the EU's common agricultural policy and the widespread use of futures – the figure could be seen as the "lowest we have had in the modern era".
Download your FREE Agricultural Investment and Farmland Investment Guide here
Ensus effect
The stocks revision reflected lower expectations for imports, which were downgraded by 33,000 tonnes to 1.05m tonnes, and a higher figure for exports, hiked by 335,900 tonnes to 2.44m tonnes - a rise of one-third year on year.
UK wheat has found fresh demand, including its first shipments to Turkey, as buyers denied supplies by Russian and Ukrainian export curbs sought replacement sources, and as France bought in feed grain to replace its own wheat which, even of lower quality, has been finding export orders for food use.
This more than offset the impact of a 108,000-tonne cut to food and industrial consumption of wheat, reflecting the mothballing of the Ensus wheat bioethanol plant in northern England, which is due to shut down over the next few days because of the margin squeeze caused by high grain costs.
However, even the revised stocks estimate may not be low enough, some observers believe, given that exports have reached 2.34m tonnes with three months of the crop year left to go.
"I can see them tailing off, but not that quickly," one trader told Agrimoney.com.
"I can see stocks ending tighter yet."
Download your FREE Agricultural Investment and Farmland Investment Guide here
Stacking up the data
Mr Archer said that the export estimate indeed reflected an assessment that shipments would tail off sharply.
"If they are stronger, it makes the figures difficult to add up," he said.
"It implies higher imports, which we do not expect, or weaker domestic use, which we do not expect, or even lower stocks, which it is difficult to see realistically occurring."
London's old crop July wheat contract stood 1.0% higher at £194.00 a tonne in late deals on an upbeat day for world grains, with Chicago wheat gaining more than 2%, and Minneapolis spring wheat jumping 3%.
London's beter-traded November contract stood 1.1% higher at £193.50 a tonne.
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Source: Agrimoney.com
Australian Grain Handler Earnings up 66%
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GrainCorp shares jumped nearly 8% after the Australian crop handler unveiled a 66% jump in earnings, raised its profits outlook and flagged upbeat prospects heading even into 2013.
The Sydney-based group reported profits of Aus$88m for the October-to-March half, up from Aus$53m a year before, boosted by the record harvest in its eastern Australian fiefdom.
The company's grain receivals doubled to 14.4m tonnes.
"It's a big year for a volume-based business like ours. Our grains businesses are having an unprecedented year," Alison Watkins, the GrainCorp chief executive said.
The grain marketing division reported earnings before interest, tax, depreciation and amortisation (ebitda) more than doubled, to Aus$35m, with the ports unit seeing ebitda jump 160% to Aus$55m.
Exports jump
And GrainCorp forecast good times ahead, raising its outlook for earnings for the full year to the end of September to Aus$145m-165m, from Aus$115m-135m.
Analysts have factored in full-year earnings of Aus$132m.
"Second-half earnings from grain handling will be supported by the significant carry forward of grain in our country elevators. This means earnings from storage will be higher than the previous half year," Ms Watkins said.
The group also edged higher to 7m-8m tonnes, from 6.5m-7.5m tonnes, its forecast for export volumes, which doubled to 3.2m tonnes in the first half.
Another strong harvest?
Prospects looked better for 2011-12 financial year too, given that GrainCorp expects to begin it with carryover stocks of an "above average" 6m tonnes of grain, compared with the 2.6m tonnes with which it started the current financial year.
The group forecast "busy storage, and logistics and export programmes" for 2011-12, boosted also by the prospect of "positive crop volume" from Australia's next harvest too.
GrainCorp quoted Australian Crop Forecasters data forecasting an eastern Australian barley and canola crop of 19.0m tonnes, compared with some 22m tonnes from the last harvest, but nonetheless a historically strong result.
The forecast assumes sowings rising 8% to 9.5m hectares, but yields dropping 20% to 2.0 tonnes per hectare from last time, when plentiful rains boosted crops.
GrainCorp said that the crop volumes it was left with as of the beginning of its 2012-13 financial year were "likely" to prove "above long-term average" levels.
Malt decline
The data did reveal a 3.4% decline to Aus$ 57m in ebitda at the malt business, blamed on an "unfavourable" exchange rate, following the appreciation in the dollar to its highest for nearly 30 years against the US dollar.
"Consolidation in the global brewing industry is giving brewers additional bargaining power with suppliers," Ms Watkins added.
The first half results were also swollen by a $40.4m gain from marking derivatives to market prices, a windfall the group expects to realise in the second half of its financial year.
Nonetheless, GrainCorp shares closed up Aus$0.62 at Aus$8.38.
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Source: Agrimoney.com
GrainCorp shares jumped nearly 8% after the Australian crop handler unveiled a 66% jump in earnings, raised its profits outlook and flagged upbeat prospects heading even into 2013.
The Sydney-based group reported profits of Aus$88m for the October-to-March half, up from Aus$53m a year before, boosted by the record harvest in its eastern Australian fiefdom.
The company's grain receivals doubled to 14.4m tonnes.
"It's a big year for a volume-based business like ours. Our grains businesses are having an unprecedented year," Alison Watkins, the GrainCorp chief executive said.
The grain marketing division reported earnings before interest, tax, depreciation and amortisation (ebitda) more than doubled, to Aus$35m, with the ports unit seeing ebitda jump 160% to Aus$55m.
Exports jump
And GrainCorp forecast good times ahead, raising its outlook for earnings for the full year to the end of September to Aus$145m-165m, from Aus$115m-135m.
Analysts have factored in full-year earnings of Aus$132m.
"Second-half earnings from grain handling will be supported by the significant carry forward of grain in our country elevators. This means earnings from storage will be higher than the previous half year," Ms Watkins said.
The group also edged higher to 7m-8m tonnes, from 6.5m-7.5m tonnes, its forecast for export volumes, which doubled to 3.2m tonnes in the first half.
Another strong harvest?
Prospects looked better for 2011-12 financial year too, given that GrainCorp expects to begin it with carryover stocks of an "above average" 6m tonnes of grain, compared with the 2.6m tonnes with which it started the current financial year.
The group forecast "busy storage, and logistics and export programmes" for 2011-12, boosted also by the prospect of "positive crop volume" from Australia's next harvest too.
GrainCorp quoted Australian Crop Forecasters data forecasting an eastern Australian barley and canola crop of 19.0m tonnes, compared with some 22m tonnes from the last harvest, but nonetheless a historically strong result.
The forecast assumes sowings rising 8% to 9.5m hectares, but yields dropping 20% to 2.0 tonnes per hectare from last time, when plentiful rains boosted crops.
GrainCorp said that the crop volumes it was left with as of the beginning of its 2012-13 financial year were "likely" to prove "above long-term average" levels.
Malt decline
The data did reveal a 3.4% decline to Aus$ 57m in ebitda at the malt business, blamed on an "unfavourable" exchange rate, following the appreciation in the dollar to its highest for nearly 30 years against the US dollar.
"Consolidation in the global brewing industry is giving brewers additional bargaining power with suppliers," Ms Watkins added.
The first half results were also swollen by a $40.4m gain from marking derivatives to market prices, a windfall the group expects to realise in the second half of its financial year.
Nonetheless, GrainCorp shares closed up Aus$0.62 at Aus$8.38.
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Source: Agrimoney.com
Farmland best bet in gloomy outlook, says Yale's Shiller
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With the exception of farmland, investors should keep their expectations for investment returns low for at least the next 10 years, according to Robert Shiller, an economics professor at Yale University.
Speaking during an opening session of the Investment Management Consultants Association's conference, Mr. Shiller said he expects stocks to gain a mere 2% to 3% annually over the next decade.
In his presentation, Mr. Shiller, well-known for his S&P/Case-Shiller Home Price indexes, illustrated how farmland participated in the real estate bubble from 2000 to 2005, but did not fall as much over the past few years.
“My only bullish call is farmland,” he said.
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The reason farmland has held much of the gains that it built up during the real estate bubble, he said, is that, unlike housing, there is a limited supply.
“A single, logical error that people make when buying a home is that they think buying a home is the same as buying land,” he said. “But in the total price of a house, only 20% is the land.”
Mr. Shiller also covered some of the driving forces behind the financial crisis, which he described as the worst since the 1930s.
“Even at this point, with the recession technically over, we are in the worst financial shape we've been in since the Great Depression,” he said.
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Mr. Shiller mentioned the usual suspects in explaining the 2007-09 crisis, including relaxed lending practices, a disproportionate percentage of subprime loans, weak regulatory oversight and a government policy that encouraged more mortgage lending.
But the real question people should be asking, he said, is why we ended up in that position in the first place.
“You can't just blame the regulators, because people weren't calling for regulators to do something about it during the housing boom,” he said.
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In terms of his generally gloomy investment outlook, Mr. Shiller calculated the real unemployment rate — including the unemployed and underemployed, as well as those people that have been forced into early retirement — at 15.9% — about one-sixth of the adult population in the United States.
The downward trend of the latest consumer confidence data also should be recognized, he added.
“It worries me because if people don't have confidence, they don't spend money,” he said.
Mr. Shiller also pointed out that the homebuilding industry, and probably the banking industry, actually started feeling the pressure at least two years before the start of the financial crisis in 2007.
According to his research, consumer traffic at real estate properties started to fall dramatically in 2005, and that was followed by a dramatic decline in housing permits.
“It was almost like somebody blew a whistle that only dogs and homebuyers could hear,” he said.
Download your FREE Farmland Investment Guide here
Source: Investment News
With the exception of farmland, investors should keep their expectations for investment returns low for at least the next 10 years, according to Robert Shiller, an economics professor at Yale University.
Speaking during an opening session of the Investment Management Consultants Association's conference, Mr. Shiller said he expects stocks to gain a mere 2% to 3% annually over the next decade.
In his presentation, Mr. Shiller, well-known for his S&P/Case-Shiller Home Price indexes, illustrated how farmland participated in the real estate bubble from 2000 to 2005, but did not fall as much over the past few years.
“My only bullish call is farmland,” he said.
Download your FREE Farmland Investment Guide here
The reason farmland has held much of the gains that it built up during the real estate bubble, he said, is that, unlike housing, there is a limited supply.
“A single, logical error that people make when buying a home is that they think buying a home is the same as buying land,” he said. “But in the total price of a house, only 20% is the land.”
Mr. Shiller also covered some of the driving forces behind the financial crisis, which he described as the worst since the 1930s.
“Even at this point, with the recession technically over, we are in the worst financial shape we've been in since the Great Depression,” he said.
Download your FREE Farmland Investment Guide here
Mr. Shiller mentioned the usual suspects in explaining the 2007-09 crisis, including relaxed lending practices, a disproportionate percentage of subprime loans, weak regulatory oversight and a government policy that encouraged more mortgage lending.
But the real question people should be asking, he said, is why we ended up in that position in the first place.
“You can't just blame the regulators, because people weren't calling for regulators to do something about it during the housing boom,” he said.
Download your FREE Farmland Investment Guide here
In terms of his generally gloomy investment outlook, Mr. Shiller calculated the real unemployment rate — including the unemployed and underemployed, as well as those people that have been forced into early retirement — at 15.9% — about one-sixth of the adult population in the United States.
The downward trend of the latest consumer confidence data also should be recognized, he added.
“It worries me because if people don't have confidence, they don't spend money,” he said.
Mr. Shiller also pointed out that the homebuilding industry, and probably the banking industry, actually started feeling the pressure at least two years before the start of the financial crisis in 2007.
According to his research, consumer traffic at real estate properties started to fall dramatically in 2005, and that was followed by a dramatic decline in housing permits.
“It was almost like somebody blew a whistle that only dogs and homebuyers could hear,” he said.
Download your FREE Farmland Investment Guide here
Source: Investment News
New Jersey State Investment Council Invests 25% in Alternative Investments
New Jersey State Investment Council, Trenton, on Thursday endorsed an asset allocation plan that would increase its exposure to alternative investments to just more than a quarter of the $72.9 billion system’s assets.
The council endorsed the state Division of Investment’s recommendation that the aggregate alternative target be raised to 25.5% for the year starting July 1, up from a 19.2% target. The actual allocation as of March 31 was 17.1%.
The four broad alternative asset categories are hedge funds, private equity, real estate and real assets, which includes commodities.
Among changes in the new asset allocation plan, U.S. large-cap equities will be cut to 21.5% from 24.5%; international developed markets equities would drop to 15% from 16.7%; cash and U.S. Treasuries, 4.5% from 7%; and TIPS, 3.5% from 4.9%.
The allocation plan represents a “prudent and tactical shift” in allocation, said Robert Grady, council chairman. He said the proposed increase in alternatives is part of the system’s strategy to achieve greater portfolio diversity.
The goal of the new asset allocation plan is better risk-adjusted returns, said Timothy Walsh, chief investment officer of the pension system.
Read more: http://www.pionline.com/article/20110519/DAILYREG/110519895#ixzz1NSyHiamc
The council endorsed the state Division of Investment’s recommendation that the aggregate alternative target be raised to 25.5% for the year starting July 1, up from a 19.2% target. The actual allocation as of March 31 was 17.1%.
The four broad alternative asset categories are hedge funds, private equity, real estate and real assets, which includes commodities.
Among changes in the new asset allocation plan, U.S. large-cap equities will be cut to 21.5% from 24.5%; international developed markets equities would drop to 15% from 16.7%; cash and U.S. Treasuries, 4.5% from 7%; and TIPS, 3.5% from 4.9%.
The allocation plan represents a “prudent and tactical shift” in allocation, said Robert Grady, council chairman. He said the proposed increase in alternatives is part of the system’s strategy to achieve greater portfolio diversity.
The goal of the new asset allocation plan is better risk-adjusted returns, said Timothy Walsh, chief investment officer of the pension system.
Read more: http://www.pionline.com/article/20110519/DAILYREG/110519895#ixzz1NSyHiamc
Alaska Permanent OKs putting $1.75 billion into alternative timber investments and forestry investments
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Alaska Permanent Fund Corp., Juneau, approved allocating $1.75 billion to its alternative investment programs and authorized manager searches for timber and diversified inflation fund managers, confirmed Laura Achee, spokeswoman for the $40.4 billion fund.
Callan Associates, the fund’s general consultant, will assist with the searches for a timber manager and a diversified inflation manager, both new investments for the fund. How much will be invested in each portfolio hasn’t been determined, Ms. Achee said in a telephone interview.
Download your FREE guide to Timber Investments and Forestry investments here
“The board believes that alternative investments are important to complement traditional asset classes, adding diversification and improving the fund’s risk-adjusted rate of return,” Bill Moran, APFC board chairman, said in a news release. “For example, timber investments, an asset class that other state funds have been in for some time, show promise to add stability and long-term returns for the permanent fund.”
The board, at its regular meeting May 19-20, also approved allocating $750 million to corporate credit opportunities; $600 million in new private equity investments, which will be made through existing managers Pathway Capital Management and HarbourVest Partners; and $400 million to infrastructure investments, which could include a search for new infrastructure managers.
The fund noted that the private equity investments will be added to a previous $3.1 billion commitment the fund expects to have in place by June 30.
Download your FREE guide to Timber Investments and Forestry investments here
Ms. Achee said the three new commitments will be funded from the fund’s $25 billion corporate exposure asset class.
The board also authorized the fund to invest in credit opportunity funds via funds of funds, in addition to direct investments.
The fund’s target asset allocation is 36% equities, 23% bonds, 12% real estate, 6% private equity, 6% absolute return, 3% infrastructure, 2% cash and 12% other categories.
Download your FREE guide to Timber Investments and Forestry investments here
Read more: http://www.pionline.com/article/20110524/DAILY/110529960#ixzz1NSe1fq65
Alaska Permanent Fund Corp., Juneau, approved allocating $1.75 billion to its alternative investment programs and authorized manager searches for timber and diversified inflation fund managers, confirmed Laura Achee, spokeswoman for the $40.4 billion fund.
Callan Associates, the fund’s general consultant, will assist with the searches for a timber manager and a diversified inflation manager, both new investments for the fund. How much will be invested in each portfolio hasn’t been determined, Ms. Achee said in a telephone interview.
Download your FREE guide to Timber Investments and Forestry investments here
“The board believes that alternative investments are important to complement traditional asset classes, adding diversification and improving the fund’s risk-adjusted rate of return,” Bill Moran, APFC board chairman, said in a news release. “For example, timber investments, an asset class that other state funds have been in for some time, show promise to add stability and long-term returns for the permanent fund.”
The board, at its regular meeting May 19-20, also approved allocating $750 million to corporate credit opportunities; $600 million in new private equity investments, which will be made through existing managers Pathway Capital Management and HarbourVest Partners; and $400 million to infrastructure investments, which could include a search for new infrastructure managers.
The fund noted that the private equity investments will be added to a previous $3.1 billion commitment the fund expects to have in place by June 30.
Download your FREE guide to Timber Investments and Forestry investments here
Ms. Achee said the three new commitments will be funded from the fund’s $25 billion corporate exposure asset class.
The board also authorized the fund to invest in credit opportunity funds via funds of funds, in addition to direct investments.
The fund’s target asset allocation is 36% equities, 23% bonds, 12% real estate, 6% private equity, 6% absolute return, 3% infrastructure, 2% cash and 12% other categories.
Download your FREE guide to Timber Investments and Forestry investments here
Read more: http://www.pionline.com/article/20110524/DAILY/110529960#ixzz1NSe1fq65
Romania’s wheat harvest may rise 23 percent this year
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Romania’s wheat harvest may rise 23 percent this year, helped by favorable weather and higher investment in fertilizers, Agriculture Minister Valeriu Tabara said. The eastern European country may harvest as much as 7 million metric tons of the grain, up from 5.7 million tons last year, he said in an interview in Bucharest. The government wants to increase exports of all cereals so farmers can capitalize on higher international prices, Tabara said reports Bloomberg.
Source: Balkans News
Romania’s wheat harvest may rise 23 percent this year, helped by favorable weather and higher investment in fertilizers, Agriculture Minister Valeriu Tabara said. The eastern European country may harvest as much as 7 million metric tons of the grain, up from 5.7 million tons last year, he said in an interview in Bucharest. The government wants to increase exports of all cereals so farmers can capitalize on higher international prices, Tabara said reports Bloomberg.
Source: Balkans News
Renewable Energy: U.S. Aviation Biofuels Industry a Go
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In 2010, the Sustainable Aviation Fuels Northwest (SAFN) was formed to determine how the Pacific Northwest could create a viable and robust biofuels industry with the goal of creating fuels for the aviation industry. Yesterday, a 10 month study conducted by Climate Solutions has determined that the Pacific Northwest has the diverse feedstock, fuel-delivery infrastructure and political will needed to achieve their goals. However, the report stressed that creating an aviation biofuels industry will depend upon securing early government policy support to prioritize the aviation industry in U.S. biofuels development.
Partners in the program include Boeing, Alaska Airlines, Portland International Airport, Seattle-Tacoma International Airport, Spokane International Airport and Washington State University.
“It is critical to the future of aviation that we develop a sustainable supply of aviation biofuels,” said Boeing Commercial Airplanes President and CEO Jim Albaugh during a press announcement. “Airlines are particularly vulnerable to oil price volatility, and the aviation community must address this issue to maintain economic growth and further mitigate the environmental impacts of our industry.”
Dr. John Gardner, vice president for advancement and external affairs at Washington State University noted that there were three goals of the report. The study aimed to verify what the sources of biomass would be; what the supply chain would be and the steps needed to make it happen; and what policies might be barriers.
To create a market for aviation biofuels, the study outlines an integrated approach recommending the use of diverse feedstock and technology pathways, including oilseeds, forest residues, solid waste and algae. In addition, the study outlines the long-term importance of securing aviation biofuels as a top government priority and using the aviation industry to drive growth in domestic production.
Bill Ayer, Alaska Air Group Chairman, noted that consumers care about the issue of high fuel costs and sustainable future fuels and the airlines are taking the issue seriously.
“Alaska Airlines has made significant strides in reducing its environmental impact by enhancing the efficiency of its operations, including using satellite-based flying technology and investing in the most fuel-efficient airplanes in their class – but efficiency is only part of the answer,” said Ayer. “In order for the aviation sector to continue its impressive record of fuel efficiency and emissions reduction while continuing to grow, it is important that a sustainable supply of aviation biofuels is developed.”
The Pacific Northwest is a great place to drive the initiative to aviation biofuels – Bill Bryan, Port of Seattle commission president, said that their airport is the most sustainable in America and challenged airports across the country to outdo them.
“Airports have been leaders for years in finding ways to reduce their environmental footprint, from clean fuel sources for taxis and shuttles to electrification of ground equipment and pre-conditioned air, but in order to take the next big step we have to address emissions from aircraft. We can’t get there without biofuels. It not only will help the sustainability of the Northwest but also the aviation industry,” concluded Bryan.
In 2010, the Sustainable Aviation Fuels Northwest (SAFN) was formed to determine how the Pacific Northwest could create a viable and robust biofuels industry with the goal of creating fuels for the aviation industry. Yesterday, a 10 month study conducted by Climate Solutions has determined that the Pacific Northwest has the diverse feedstock, fuel-delivery infrastructure and political will needed to achieve their goals. However, the report stressed that creating an aviation biofuels industry will depend upon securing early government policy support to prioritize the aviation industry in U.S. biofuels development.
Partners in the program include Boeing, Alaska Airlines, Portland International Airport, Seattle-Tacoma International Airport, Spokane International Airport and Washington State University.
“It is critical to the future of aviation that we develop a sustainable supply of aviation biofuels,” said Boeing Commercial Airplanes President and CEO Jim Albaugh during a press announcement. “Airlines are particularly vulnerable to oil price volatility, and the aviation community must address this issue to maintain economic growth and further mitigate the environmental impacts of our industry.”
Dr. John Gardner, vice president for advancement and external affairs at Washington State University noted that there were three goals of the report. The study aimed to verify what the sources of biomass would be; what the supply chain would be and the steps needed to make it happen; and what policies might be barriers.
To create a market for aviation biofuels, the study outlines an integrated approach recommending the use of diverse feedstock and technology pathways, including oilseeds, forest residues, solid waste and algae. In addition, the study outlines the long-term importance of securing aviation biofuels as a top government priority and using the aviation industry to drive growth in domestic production.
Bill Ayer, Alaska Air Group Chairman, noted that consumers care about the issue of high fuel costs and sustainable future fuels and the airlines are taking the issue seriously.
“Alaska Airlines has made significant strides in reducing its environmental impact by enhancing the efficiency of its operations, including using satellite-based flying technology and investing in the most fuel-efficient airplanes in their class – but efficiency is only part of the answer,” said Ayer. “In order for the aviation sector to continue its impressive record of fuel efficiency and emissions reduction while continuing to grow, it is important that a sustainable supply of aviation biofuels is developed.”
The Pacific Northwest is a great place to drive the initiative to aviation biofuels – Bill Bryan, Port of Seattle commission president, said that their airport is the most sustainable in America and challenged airports across the country to outdo them.
“Airports have been leaders for years in finding ways to reduce their environmental footprint, from clean fuel sources for taxis and shuttles to electrification of ground equipment and pre-conditioned air, but in order to take the next big step we have to address emissions from aircraft. We can’t get there without biofuels. It not only will help the sustainability of the Northwest but also the aviation industry,” concluded Bryan.
OECD Present at Leading World Agriculture Investment Conference
Over 80 institutional investors and fund managers are set to hear exclusive OECD updates on the determinants of agro-investment and initiatives for promoting investment in agriculture.
Emergent Asset management, Macquarie, Duxton Asset Management, InvestAg Savills and many more are also onboard to contribute to the broader discussion around strategies and risks for participating in agriculture.
This exclusive meeting provides a once-only chance in June (29-30) to network with key investors and Ag managers, and to effortlessly catch-up on where allocations are being made and how best to develop the ideal Ag portfolio.
The World Agriculture Investment Conference Asia is the third event in our global series: please contact George Kiley to learn more about our Europe (as covered by BBC, Thomson Reuters and Wall Street Journal) and USA events.
Read more: http://www.digitaljournal.com/pr/318802#ixzz1NSW08Pya
Emergent Asset management, Macquarie, Duxton Asset Management, InvestAg Savills and many more are also onboard to contribute to the broader discussion around strategies and risks for participating in agriculture.
This exclusive meeting provides a once-only chance in June (29-30) to network with key investors and Ag managers, and to effortlessly catch-up on where allocations are being made and how best to develop the ideal Ag portfolio.
The World Agriculture Investment Conference Asia is the third event in our global series: please contact George Kiley to learn more about our Europe (as covered by BBC, Thomson Reuters and Wall Street Journal) and USA events.
Read more: http://www.digitaljournal.com/pr/318802#ixzz1NSW08Pya
G8 Warned of Pending Food Crisis
Download your FREE Agricultural Investment and Farmland Investment Guide here
G8 leaders are being called on to make stronger ties with Africa a top priority at their meeting in Deauville, France, especially regarding food security and poverty reduction. The International Food Policy Research Institute [IFPRI] warned of another food crisis unless action is taken.
“For the last decade or so, the partnership between Africa and the development agencies or the development partners, has been strengthened significantly. But I think there’s still room to improve. In particular, the G8 countries should really, really think seriously to meet the commitments they have made before,” said Shenggen Fan, IFPRI director general.
Download your FREE Agricultural Investment and Farmland Investment Guide here
It could happen again
At the L’Aquila summit in Italy in 2009, G8 leaders pledged to take action to deal with the food crisis, which saw prices rise and supplies fall. The conditions triggered riots in a number of countries in 2007 and 2008.
Fan said, “When the G8 met in Italy, they committed $22 billion to support smallholder agriculture in developing countries, particularly Africa. Today, that commitment is still there [but] they have not met much of the commitment yet.”
Download your FREE Agricultural Investment and Farmland Investment Guide here
He warned the world is poised to have another food crisis, unless the pledge is paid in full.
“I think it’s already coming. In the last 10 months, the wheat price has increased by a hundred percent. Maize price has also increased by 100%. In addition, prices for meat, dairy products have also increased,” he said.
Feeling the effects
When food prices increase many poor, not only just the consumers, but also even producers, suffer,” he said, and added, “If it happens again, we will probably lose the progress we have made in the last decade or so.”
Download your FREE Agricultural Investment and Farmland Investment Guide here
He warned women and children are the most vulnerable to volatile prices and markets. Hunger and malnutrition, he said, can permanently damage a child’s brain development. “We need to fix this problem.”
He rejected the idea of spending cutbacks on agriculture because of the global recession.
“Agriculture is so critical in terms of hunger reduction, poverty reduction and also in terms of future growth. If we do not invest in agriculture…more people will suffer from hunger and poverty,” he said.
MDGs
Download your FREE Agricultural Investment and Farmland Investment Guide here
The U.N. Millennium Development Goals are due to be achieved in 2015. The goals cover a wide range of issues, including poverty, hunger and health. Fan said the $22 billion in promised agricultural investment would help in reaching those goals.
“I think $22 billion is a good start, but it’s definitely not sufficient. More resources are required. And more importantly, these resources have to be spent more efficiently to achieve certain development goals by improving policies, governance, management and institutions,” he said.
Download your FREE Agricultural Investment and Farmland Investment Guide here
IFPRI reported African countries have taken the initiative to improve their agricultural sector.
“They have made progress in the last decade or so. Many countries have increased their spending in agriculture. We have seen some successes in many parts of Africa. Agriculture growth is accelerating, but we need to continue to do that,” said Fan.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: VOA News
G8 leaders are being called on to make stronger ties with Africa a top priority at their meeting in Deauville, France, especially regarding food security and poverty reduction. The International Food Policy Research Institute [IFPRI] warned of another food crisis unless action is taken.
“For the last decade or so, the partnership between Africa and the development agencies or the development partners, has been strengthened significantly. But I think there’s still room to improve. In particular, the G8 countries should really, really think seriously to meet the commitments they have made before,” said Shenggen Fan, IFPRI director general.
Download your FREE Agricultural Investment and Farmland Investment Guide here
It could happen again
At the L’Aquila summit in Italy in 2009, G8 leaders pledged to take action to deal with the food crisis, which saw prices rise and supplies fall. The conditions triggered riots in a number of countries in 2007 and 2008.
Fan said, “When the G8 met in Italy, they committed $22 billion to support smallholder agriculture in developing countries, particularly Africa. Today, that commitment is still there [but] they have not met much of the commitment yet.”
Download your FREE Agricultural Investment and Farmland Investment Guide here
He warned the world is poised to have another food crisis, unless the pledge is paid in full.
“I think it’s already coming. In the last 10 months, the wheat price has increased by a hundred percent. Maize price has also increased by 100%. In addition, prices for meat, dairy products have also increased,” he said.
Feeling the effects
When food prices increase many poor, not only just the consumers, but also even producers, suffer,” he said, and added, “If it happens again, we will probably lose the progress we have made in the last decade or so.”
Download your FREE Agricultural Investment and Farmland Investment Guide here
He warned women and children are the most vulnerable to volatile prices and markets. Hunger and malnutrition, he said, can permanently damage a child’s brain development. “We need to fix this problem.”
He rejected the idea of spending cutbacks on agriculture because of the global recession.
“Agriculture is so critical in terms of hunger reduction, poverty reduction and also in terms of future growth. If we do not invest in agriculture…more people will suffer from hunger and poverty,” he said.
MDGs
Download your FREE Agricultural Investment and Farmland Investment Guide here
The U.N. Millennium Development Goals are due to be achieved in 2015. The goals cover a wide range of issues, including poverty, hunger and health. Fan said the $22 billion in promised agricultural investment would help in reaching those goals.
“I think $22 billion is a good start, but it’s definitely not sufficient. More resources are required. And more importantly, these resources have to be spent more efficiently to achieve certain development goals by improving policies, governance, management and institutions,” he said.
Download your FREE Agricultural Investment and Farmland Investment Guide here
IFPRI reported African countries have taken the initiative to improve their agricultural sector.
“They have made progress in the last decade or so. Many countries have increased their spending in agriculture. We have seen some successes in many parts of Africa. Agriculture growth is accelerating, but we need to continue to do that,” said Fan.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: VOA News
Renewable Energy: Plans for giant solar farms in Somerset win approval
Download you FREE Renewable Energy Investment Brochure here
Three giant solar farms which could cover a total of 96 acres of farmland and power 4,000 homes have won approval from planners despite fierce opposition from locals.
Two schemes are for fields near the M5 near Bridgwater and a third is near the former Royal Ordnance Factory at Puriton.
Parish councils in all three locations opposed them, with Bridgwater parish council arguing that the glint from the sun shining off the photovoltaic panels would be seen from the Quantocks, and Puriton parish council saying the scheme in its area would be seen from the Polden Hills.
Council officials denied that any of the "farms" would be a blot on the landscape, or in the case of one nearest the M5, distract drivers. Sensitive screening with hedges and trees would overcome any problems they said.
Download you FREE Renewable Energy Investment Brochure here
Sedgemoor District Council's Development Control Committee approved the schemes yesterday, with conditions. Two must cease by 2046 and one by 2036, and return the land to its original state then, or before if they finish earlier. All are subject to landscaping conditions.
As Britain fights to cut carbon emissions and save energy such schemes are likely to become more common. But for some they are incompatible with the countryside. The Campaign for Rural England has said they should be on urban sites not in rural settings and the parish councils argued that they would be disruptive to wildlife. Puriton parish council said it supports renewables but the application was in the wrong location.
Download you FREE Renewable Energy Investment Brochure here
Meanwhile, Government plans for a green investment bank, which could be based in Bristol, could ensure an extra £15 billion of private investment in green infrastructure projects by 2015, Business Secretary Vince Cable told the Commons yesterday.
He unveiled further detail of the world's first public bank dedicated to the green economy.
Mr Cable told MPs that setting up the bank, which will start to lend money to areas such as offshore wind power from next year, was a "major undertaking".
With an initial capitalisation of £3 billion, the bank will be able to "tackle risks which the private sector cannot adequately finance".
He said: "In this way, the bank will mobilise projects significantly in excess of the Government's contribution. We estimate that by the end of this parliament the GIB could mobilise an extra £15 billion of private investment.
"We do not envisage that this level of activity will require a large institution – 50 to 100 professional staff during this parliament. Proposals have been made to locate the headquarters in, among others, London, Edinburgh and Bristol and a decision will be taken in due course."
Download you FREE Renewable Energy Investment Brochure here
Source: This is Somerset
Three giant solar farms which could cover a total of 96 acres of farmland and power 4,000 homes have won approval from planners despite fierce opposition from locals.
Two schemes are for fields near the M5 near Bridgwater and a third is near the former Royal Ordnance Factory at Puriton.
Parish councils in all three locations opposed them, with Bridgwater parish council arguing that the glint from the sun shining off the photovoltaic panels would be seen from the Quantocks, and Puriton parish council saying the scheme in its area would be seen from the Polden Hills.
Council officials denied that any of the "farms" would be a blot on the landscape, or in the case of one nearest the M5, distract drivers. Sensitive screening with hedges and trees would overcome any problems they said.
Download you FREE Renewable Energy Investment Brochure here
Sedgemoor District Council's Development Control Committee approved the schemes yesterday, with conditions. Two must cease by 2046 and one by 2036, and return the land to its original state then, or before if they finish earlier. All are subject to landscaping conditions.
As Britain fights to cut carbon emissions and save energy such schemes are likely to become more common. But for some they are incompatible with the countryside. The Campaign for Rural England has said they should be on urban sites not in rural settings and the parish councils argued that they would be disruptive to wildlife. Puriton parish council said it supports renewables but the application was in the wrong location.
Download you FREE Renewable Energy Investment Brochure here
Meanwhile, Government plans for a green investment bank, which could be based in Bristol, could ensure an extra £15 billion of private investment in green infrastructure projects by 2015, Business Secretary Vince Cable told the Commons yesterday.
He unveiled further detail of the world's first public bank dedicated to the green economy.
Mr Cable told MPs that setting up the bank, which will start to lend money to areas such as offshore wind power from next year, was a "major undertaking".
With an initial capitalisation of £3 billion, the bank will be able to "tackle risks which the private sector cannot adequately finance".
He said: "In this way, the bank will mobilise projects significantly in excess of the Government's contribution. We estimate that by the end of this parliament the GIB could mobilise an extra £15 billion of private investment.
"We do not envisage that this level of activity will require a large institution – 50 to 100 professional staff during this parliament. Proposals have been made to locate the headquarters in, among others, London, Edinburgh and Bristol and a decision will be taken in due course."
Download you FREE Renewable Energy Investment Brochure here
Source: This is Somerset
Hedge fund managers pour assets into farmland as doomsday food scenario approaches
Download your FREE Agricultural Investment and Farmland Investment Guide here
Going back to the land has always been thought of as a thing for hippies, eco-nuts, and doomsday survivalist, but now hedge fund managers are jumping on the bandwagon too.
The New York Observer recently spoke to such a hedge fund manager working on a fund that ranks as approximately the 15th largest farmer in America.
The media first picked up on the land investment pattern in 2008 in the February Times of London piece, "The Hedge Fund Manager Who Bought a Farm," which detailed a British hedge fund manager's attempt to play off the rising prices of grains in order to get a hold of local farmland. It was followed shortly by coverage by the Financial Times that said hedge funds and investment banks were "swapping their Gucci for gumboots".
Download your FREE Agricultural Investment and Farmland Investment Guide here
Today, the increase in the purchase of farmland both in America and abroad is so drastic that in February, Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, warned against the possibilities of a farmland bubble.
A January study commissioned by the Organization for Economic Cooperation and Development estimated the amount of private capital currently committed to farmland and agricultural infrastructure at $14 billion. It also estimated that future investments will "dwarf" what's currently being thrown into land by two to three times and projected the amount of capital potentially entering the sector over the next decade to go beyond $150 billion.
The recent spike in investments of farmland is being driven by fear. The hedge fund manager and others see a doomsday scenario brought on by a dollar crisis, out of control inflation and an uncertain political climate both domestically and globally.
Download your FREE Agricultural Investment and Farmland Investment Guide here
"The CPI supposedly today is something like 1.5 percent. We think the actual rate of inflation is something closer to 6 or 7 percent on an annual basis," said the hedge fund manager. "It's also not about what it's been over the last 10 years; it's about what it's going to be over the next 10 years."
Does he think this is an end of the world situation?
"It really is. I tell my fiancee this from time to time, and I've stopped telling her this, because it's not the most pleasant thought," he said. "We just can't keep living the way we're living. It'll end within our lifetime. We're just going to run out of certain things. We'll just have to learn how to adjust."
With recent news that the World Food Program is running out of food (http://www.upi.com/Top_News/World-N...) and the U.S. may not be far behind (http://www.dailyfinance.com/2010/01...), things are not looking good.
Download your FREE Agricultural Investment and Farmland Investment Guide here
"Sometime in the next few years, we're going to have very serious shortages of food everywhere in the world," said investor Jim Rogers on CNBC. "And prices are going to go through the roof."
The new information is just another reason this may not be a bad time for regular people to start growing their own food and even investing in farmland.
Sources for this article include:
http://www.naturalnews.com/032509_farmland_doomsday.html
http://www.observer.com/hedge-funds ...
http://www.upi.com/Top_News/World-N ...
http://www.dailyfinance.com/2010/0 1 ...
Download your FREE Agricultural Investment and Farmland Investment Guide here
Learn more: http://www.naturalnews.com/032509_farmland_doomsday.html#ixzz1NSNbZOBH
Going back to the land has always been thought of as a thing for hippies, eco-nuts, and doomsday survivalist, but now hedge fund managers are jumping on the bandwagon too.
The New York Observer recently spoke to such a hedge fund manager working on a fund that ranks as approximately the 15th largest farmer in America.
The media first picked up on the land investment pattern in 2008 in the February Times of London piece, "The Hedge Fund Manager Who Bought a Farm," which detailed a British hedge fund manager's attempt to play off the rising prices of grains in order to get a hold of local farmland. It was followed shortly by coverage by the Financial Times that said hedge funds and investment banks were "swapping their Gucci for gumboots".
Download your FREE Agricultural Investment and Farmland Investment Guide here
Today, the increase in the purchase of farmland both in America and abroad is so drastic that in February, Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, warned against the possibilities of a farmland bubble.
A January study commissioned by the Organization for Economic Cooperation and Development estimated the amount of private capital currently committed to farmland and agricultural infrastructure at $14 billion. It also estimated that future investments will "dwarf" what's currently being thrown into land by two to three times and projected the amount of capital potentially entering the sector over the next decade to go beyond $150 billion.
The recent spike in investments of farmland is being driven by fear. The hedge fund manager and others see a doomsday scenario brought on by a dollar crisis, out of control inflation and an uncertain political climate both domestically and globally.
Download your FREE Agricultural Investment and Farmland Investment Guide here
"The CPI supposedly today is something like 1.5 percent. We think the actual rate of inflation is something closer to 6 or 7 percent on an annual basis," said the hedge fund manager. "It's also not about what it's been over the last 10 years; it's about what it's going to be over the next 10 years."
Does he think this is an end of the world situation?
"It really is. I tell my fiancee this from time to time, and I've stopped telling her this, because it's not the most pleasant thought," he said. "We just can't keep living the way we're living. It'll end within our lifetime. We're just going to run out of certain things. We'll just have to learn how to adjust."
With recent news that the World Food Program is running out of food (http://www.upi.com/Top_News/World-N...) and the U.S. may not be far behind (http://www.dailyfinance.com/2010/01...), things are not looking good.
Download your FREE Agricultural Investment and Farmland Investment Guide here
"Sometime in the next few years, we're going to have very serious shortages of food everywhere in the world," said investor Jim Rogers on CNBC. "And prices are going to go through the roof."
The new information is just another reason this may not be a bad time for regular people to start growing their own food and even investing in farmland.
Sources for this article include:
http://www.naturalnews.com/032509_farmland_doomsday.html
http://www.observer.com/hedge-funds ...
http://www.upi.com/Top_News/World-N ...
http://www.dailyfinance.com/2010/0 1 ...
Download your FREE Agricultural Investment and Farmland Investment Guide here
Learn more: http://www.naturalnews.com/032509_farmland_doomsday.html#ixzz1NSNbZOBH
Pension Fund to Place $500m in Farmland Investments
Download your FREE Farmland Investment Guide here
According to AP2, the $34.6 billion Swedish national pension fund, the business has entered into a joint venture with the $453 billion US pension giant, TIAA-CREF, to invest at least $500 million in grain producing farmland in the U.S., Australia and Brazil.
David Garner, Partner at agricultural and real estate investment consultancy DGC Asset Management (www.dgcassetmanagement.com ) said: "Farmland Investment is now well on the radar of large institutional investors seeking
stable, non-correlated returns. U.S. farmland returned 11.6% per annum between 1950 and 2008, with a much lower volatitlity than traditional asset classes."
Download your FREE Farmland Investment Guide here
Many investors are now looking further afield than stocks, bonds and cash, with many choosing to allocate capital to agricultural land and timber assets in the hope of generating superior returns without altering the overall risk profile of a diversified portfolio.
Download your FREE Farmland Investment Guide here
"Farmland investments in the UK have performed particularly well this last year as values have continued to rise and farmers have enjoyed bumber prices for their crops, whilst our greenfield development projects in South America have generated an annual cash income circa. 10% since 2007, even throughout the recent financial depression." Added Mr Garner.
Investing in agricultural land certainly shows the potential to provide a good store of wealth as land values are inextricably linked to inflation and rising food prices, yet acquiring such assets can be difficult with price of entry and operational expertise preventing many smaller investors from participating.
Download your FREE Farmland Investment Guide here
Source: DGC Asset Management
According to AP2, the $34.6 billion Swedish national pension fund, the business has entered into a joint venture with the $453 billion US pension giant, TIAA-CREF, to invest at least $500 million in grain producing farmland in the U.S., Australia and Brazil.
David Garner, Partner at agricultural and real estate investment consultancy DGC Asset Management (www.dgcassetmanagement.com ) said: "Farmland Investment is now well on the radar of large institutional investors seeking
stable, non-correlated returns. U.S. farmland returned 11.6% per annum between 1950 and 2008, with a much lower volatitlity than traditional asset classes."
Download your FREE Farmland Investment Guide here
Many investors are now looking further afield than stocks, bonds and cash, with many choosing to allocate capital to agricultural land and timber assets in the hope of generating superior returns without altering the overall risk profile of a diversified portfolio.
Download your FREE Farmland Investment Guide here
"Farmland investments in the UK have performed particularly well this last year as values have continued to rise and farmers have enjoyed bumber prices for their crops, whilst our greenfield development projects in South America have generated an annual cash income circa. 10% since 2007, even throughout the recent financial depression." Added Mr Garner.
Investing in agricultural land certainly shows the potential to provide a good store of wealth as land values are inextricably linked to inflation and rising food prices, yet acquiring such assets can be difficult with price of entry and operational expertise preventing many smaller investors from participating.
Download your FREE Farmland Investment Guide here
Source: DGC Asset Management
Monday 23 May 2011
Rise in Midwest farmland prices hits 32-year high
Download your FREE Agricultural Investment and Farmland Investment Guide here
The rate of increase in Midwest farm values has hit a 32-year high, despite a rise in land for sale – and the rally does not look over yet.
Farmland prices in major agricultural states such as Illinois and Iowa soared 16%, year on year, in the first quarter of 2011, the Federal Reserve said.
The increase in the growth rate to a figure matched only once since 1979, in 2007, came despite a rise in the plots offered for sale, with the extra supplies mopped up in particular by farmers clamouring for extra land to cash in on elevated crop prices.
"The latest gains were spurred by higher commodity prices, which prompted farmers to buy additional land," the Federal Reserve's Chicago bank said.
Indeed, farmers "tended to outbid" investors in the land rush.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Market boom
The market conditions, with rising prices and volumes, would appear ideal for agents assisting in land sales, and relying on commissions for deals.
"The number of farms sold, the acreage sold, and the amount of farmland for sale grew," the Chicago Fed said.
And more than half bankers the Fed spoke to for its report forecast further gains ahead for land prices, with only 2% expecting a decline.
Download your FREE Agricultural Investment and Farmland Investment Guide here
"The rapid increase in agricultural land values may not be over," the Fed said, adding that the increases had been reflected in rental prices, which had risen nearly in line, with 14%.
Paybacks
The rise in land prices was supported by an increase in funds for lending to farmers although, at just under 70%, the loan-to-deposit ratio – a key measure of the levels to which borrowers are extending themselves – fell to a 14-year low and well below levels ringing alarm bells in banks.
Indeed, farmers paid of a stack of borrowings taken out for purchases other than land, with demand for new ones falling to a 24-year low.
"Farmers had less need to seek bank loans," the Fed said.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: Agrimoney
The rate of increase in Midwest farm values has hit a 32-year high, despite a rise in land for sale – and the rally does not look over yet.
Farmland prices in major agricultural states such as Illinois and Iowa soared 16%, year on year, in the first quarter of 2011, the Federal Reserve said.
The increase in the growth rate to a figure matched only once since 1979, in 2007, came despite a rise in the plots offered for sale, with the extra supplies mopped up in particular by farmers clamouring for extra land to cash in on elevated crop prices.
"The latest gains were spurred by higher commodity prices, which prompted farmers to buy additional land," the Federal Reserve's Chicago bank said.
Indeed, farmers "tended to outbid" investors in the land rush.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Market boom
The market conditions, with rising prices and volumes, would appear ideal for agents assisting in land sales, and relying on commissions for deals.
"The number of farms sold, the acreage sold, and the amount of farmland for sale grew," the Chicago Fed said.
And more than half bankers the Fed spoke to for its report forecast further gains ahead for land prices, with only 2% expecting a decline.
Download your FREE Agricultural Investment and Farmland Investment Guide here
"The rapid increase in agricultural land values may not be over," the Fed said, adding that the increases had been reflected in rental prices, which had risen nearly in line, with 14%.
Paybacks
The rise in land prices was supported by an increase in funds for lending to farmers although, at just under 70%, the loan-to-deposit ratio – a key measure of the levels to which borrowers are extending themselves – fell to a 14-year low and well below levels ringing alarm bells in banks.
Indeed, farmers paid of a stack of borrowings taken out for purchases other than land, with demand for new ones falling to a 24-year low.
"Farmers had less need to seek bank loans," the Fed said.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: Agrimoney
Brazil crops join list threatened by poor weather
Download your FREE Agricultural Investment and Farmland Investment Guide here
Brazil has been added to the list of major producing countries suffering weather scares, with a lack of rain threatening the loss of up to 3m tonnes of corn, and potentially some cotton too.
Up to one-half of the so-called "safrinha" corn crop, also called the winter or second harvest, could be under threat in some areas of central Brazil thanks to the early onset of the dry season, analyst Michael Cordonnier said.
The impact of the premature dry season – which started in mid-April, some three weeks ahead of schedule - has been heightened by farmers' decision to sow corn late, after a delayed harvest of summer crops.
Farmers in central Brazil were seeding corn three-to-four weeks after the ideal window closed on February 20, but were encouraged into late sowings by government concessions on cut-off dates for crop insurance claims.
"Everyone knew there was a potential problem, but had their fingers crossed that it would rain into June, as it did two years ago," Dr Cordonnier, at Soybean and Corn Advisor, told Agrimoney.com.
"Unfortunately, it has not worked out that way."
Download your FREE Agricultural Investment and Farmland Investment Guide here
About half the crop was planted "too late, and the soil moisture supplies have run out before the grain-fill process is completed".
'Getting ugly'
The setback has left Brazil facing the loss of up to 3m tonnes of safrinha corn, said Dr Cordonnier, whose own forecast of a 52m-tonne crop in 2010-11 – main and second crops combined - compares with an estimate of 55m tonnes by Conab, Brazil's official crop bureau.
The warning follows a caution from Brazil-based crop consultant Kory Melby that the harvest in Mato Grosso, which is responsible for about one-third of safrinha plantings, would come in at 6m tonnes, 1.5m tonnes below the Conab estimate.
"The local rule of thumb is never plant second crop corn after Feb 25. However, many did," Mr Melby said.
There has been "no rain since April 10", he said, adding that the situation was "getting ugly".
Cotton too?
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Dr Cordonnier added that the second cotton crop could be affected by the lack of rain too although, being "much more drought tolerant crop than corn", this was far less of an issue for the fibre.
Furthermore, the second cotton crop accounts for less than 20% of total cotton plantings. For corn, safrinha sowings represent about 40% of the total.
The dearth of rain was not an issue for areas growing sugar, of which Brazil is the top producer and exporter, he added.
Fires in Siberia
Brazil's dry spell adds the country to a list including Canada, the US, Europe and, increasingly the former Soviet Union, where weather extremes are causing alarm in grain markets.
In Russia, "wildfires in Siberia remind people of the drought of last year", Agritel, the crop consultancy, said.
However, there are some forecasts of rain for dry areas of northern Europe later in the week, with the potential for drier weather from next weekend in regions of the US where farmers struggling against wet conditions to get crops sown.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: Agrimoney
Brazil has been added to the list of major producing countries suffering weather scares, with a lack of rain threatening the loss of up to 3m tonnes of corn, and potentially some cotton too.
Up to one-half of the so-called "safrinha" corn crop, also called the winter or second harvest, could be under threat in some areas of central Brazil thanks to the early onset of the dry season, analyst Michael Cordonnier said.
The impact of the premature dry season – which started in mid-April, some three weeks ahead of schedule - has been heightened by farmers' decision to sow corn late, after a delayed harvest of summer crops.
Farmers in central Brazil were seeding corn three-to-four weeks after the ideal window closed on February 20, but were encouraged into late sowings by government concessions on cut-off dates for crop insurance claims.
"Everyone knew there was a potential problem, but had their fingers crossed that it would rain into June, as it did two years ago," Dr Cordonnier, at Soybean and Corn Advisor, told Agrimoney.com.
"Unfortunately, it has not worked out that way."
Download your FREE Agricultural Investment and Farmland Investment Guide here
About half the crop was planted "too late, and the soil moisture supplies have run out before the grain-fill process is completed".
'Getting ugly'
The setback has left Brazil facing the loss of up to 3m tonnes of safrinha corn, said Dr Cordonnier, whose own forecast of a 52m-tonne crop in 2010-11 – main and second crops combined - compares with an estimate of 55m tonnes by Conab, Brazil's official crop bureau.
The warning follows a caution from Brazil-based crop consultant Kory Melby that the harvest in Mato Grosso, which is responsible for about one-third of safrinha plantings, would come in at 6m tonnes, 1.5m tonnes below the Conab estimate.
"The local rule of thumb is never plant second crop corn after Feb 25. However, many did," Mr Melby said.
There has been "no rain since April 10", he said, adding that the situation was "getting ugly".
Cotton too?
Download your FREE Agricultural Investment and Farmland Investment Guide here
Dr Cordonnier added that the second cotton crop could be affected by the lack of rain too although, being "much more drought tolerant crop than corn", this was far less of an issue for the fibre.
Furthermore, the second cotton crop accounts for less than 20% of total cotton plantings. For corn, safrinha sowings represent about 40% of the total.
The dearth of rain was not an issue for areas growing sugar, of which Brazil is the top producer and exporter, he added.
Fires in Siberia
Brazil's dry spell adds the country to a list including Canada, the US, Europe and, increasingly the former Soviet Union, where weather extremes are causing alarm in grain markets.
In Russia, "wildfires in Siberia remind people of the drought of last year", Agritel, the crop consultancy, said.
However, there are some forecasts of rain for dry areas of northern Europe later in the week, with the potential for drier weather from next weekend in regions of the US where farmers struggling against wet conditions to get crops sown.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: Agrimoney
Bankers Disagree with FED Over US Farmland Values
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Farmland values could "plummet" in the US – potentially by one-half – if the market supports of low interest rates and high crop prices crumble, the US central bank has warned, heightening concerns over the market boom.
Record farmland prices, which in the Midwest increased at their fastest in 32-years in the first three months of 2011, appears rational as long as borrowing costs remain low, reducing investors' hurdle rates for returns, while elevated crop values keep actual profits high.
"Current farmland values reflect high farm revenues and low capitalisation rates," the US Federal Reserve system's Kansas bank said.
However, they "could fall sharply if crop prices sag or future interest rates rise", the bank added, warning of a "high risk" from interest rate moves.
'Values could plummet'
Download your FREE Agricultural Investment and Farmland Investment Guide here
Indeed, higher interest rates are, besides making investors more demanding of returns from their purchases, likely to present the farmland market with a second blow of a stronger dollar which, in making US exports such as crops less competitive, would undermine agricultural commodity values.
"As the economy strengthens, interest rates could rise, which may lift capitalisation rates and lower farm revenues," the bank said in a report.
"Events such as these could become a recipe for falling land values and the erosion of farm wealth."
Indeed, the market could fare worse than in the early 1980s, when a jump in interest rates, coupled with lower US farm exports and weaker commodity prices, fuelled at 40% slide in US farmland values – even after taking inflation into account.
Download your FREE Agricultural Investment and Farmland Investment Guide here
"If similar events occur in today's environment, farmland values could plummet," the briefing said, with this scenario implying as halving in Nebraska prices.
"Other regions face similar risks."
Market bubble?
Thomas Hoenig, the president of the Fed's Kansas City bank, has been for some while a sceptic of the rise in farmland prices, warning in February that ''history has taught us that it is nearly impossible to determine how much of the farmland boom may be an unsustainable bubble driven by financial markets".
Download your FREE Agricultural Investment and Farmland Investment Guide here
Other observers who have voiced concerns include Robert Shiller, the Yale economist who warned in March that the farmland was a "dark horse" as the site of the next market bubble, while regulators at the Federal Deposit Insurance Corp have highlighted the sector's resilience at a time of weakness elsewhere in the economy.
"While we don't see a credit problem in agriculture at this time, the steep rise in farmland prices we have seen in recent years creates the potential for agriculture credit problems sometime down the road," Sheila Bair, FSIC chairman, said, also in March.
Alternative views
However, many other bankers are more sanguine about the market, with two-thirds of those surveyed by the Fed's Kansas City bank for a report two weeks ago believing prices would level off, rather than tumble, following growth of 20% in the first quarter.
A report from the system's Chicago bank last week showed more than half bankers expecting the market price growth to continue, while adding that farmers' borrowing, compared with deposits, remained comfortably below level triggering alarm bells.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: Agrimoney
Farmland values could "plummet" in the US – potentially by one-half – if the market supports of low interest rates and high crop prices crumble, the US central bank has warned, heightening concerns over the market boom.
Record farmland prices, which in the Midwest increased at their fastest in 32-years in the first three months of 2011, appears rational as long as borrowing costs remain low, reducing investors' hurdle rates for returns, while elevated crop values keep actual profits high.
"Current farmland values reflect high farm revenues and low capitalisation rates," the US Federal Reserve system's Kansas bank said.
However, they "could fall sharply if crop prices sag or future interest rates rise", the bank added, warning of a "high risk" from interest rate moves.
'Values could plummet'
Download your FREE Agricultural Investment and Farmland Investment Guide here
Indeed, higher interest rates are, besides making investors more demanding of returns from their purchases, likely to present the farmland market with a second blow of a stronger dollar which, in making US exports such as crops less competitive, would undermine agricultural commodity values.
"As the economy strengthens, interest rates could rise, which may lift capitalisation rates and lower farm revenues," the bank said in a report.
"Events such as these could become a recipe for falling land values and the erosion of farm wealth."
Indeed, the market could fare worse than in the early 1980s, when a jump in interest rates, coupled with lower US farm exports and weaker commodity prices, fuelled at 40% slide in US farmland values – even after taking inflation into account.
Download your FREE Agricultural Investment and Farmland Investment Guide here
"If similar events occur in today's environment, farmland values could plummet," the briefing said, with this scenario implying as halving in Nebraska prices.
"Other regions face similar risks."
Market bubble?
Thomas Hoenig, the president of the Fed's Kansas City bank, has been for some while a sceptic of the rise in farmland prices, warning in February that ''history has taught us that it is nearly impossible to determine how much of the farmland boom may be an unsustainable bubble driven by financial markets".
Download your FREE Agricultural Investment and Farmland Investment Guide here
Other observers who have voiced concerns include Robert Shiller, the Yale economist who warned in March that the farmland was a "dark horse" as the site of the next market bubble, while regulators at the Federal Deposit Insurance Corp have highlighted the sector's resilience at a time of weakness elsewhere in the economy.
"While we don't see a credit problem in agriculture at this time, the steep rise in farmland prices we have seen in recent years creates the potential for agriculture credit problems sometime down the road," Sheila Bair, FSIC chairman, said, also in March.
Alternative views
However, many other bankers are more sanguine about the market, with two-thirds of those surveyed by the Fed's Kansas City bank for a report two weeks ago believing prices would level off, rather than tumble, following growth of 20% in the first quarter.
A report from the system's Chicago bank last week showed more than half bankers expecting the market price growth to continue, while adding that farmers' borrowing, compared with deposits, remained comfortably below level triggering alarm bells.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: Agrimoney
Uganda Keen to Lease Farmland to Bangladesh
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DHAKA (Reuters) - Uganda is ready to lease 60,000 hectares of farmland to Bangladeshi firms looking to grow food in Africa as part of government efforts to ensure food security for its growing population, a Bangladeshi official said.
"The Ugandan government is keen to lease vast unused arable land to Bangladeshi business firms to enhance production with the use of more advanced and sustainable technology," Abul Hossain, consul to the African country said on Sunday.
Food prices have risen sharply over the past year, prompting Bangladesh to look into ways of securing supplies for its more than 150 million people. Last year, a government delegation visited African countries to explore farming opportunities.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Uganda was very suitable for farm investment due to factors including political stability, Hossain told a news conference.
Nitol Group has already signed a memorandum with Uganda to lease 10,000 hectares of land to grow rice, a staple food for Bangladeshis.
"Africa is calling. It will open up huge opportunities for Bangladeshi entrepreneurs," Nitol owner Abdul Matlub Ahmed said.
Bangladesh, once self-sufficient in rice production, has become a big importer recently, a fact analysts blamed on a growing population and shrinking farmland due to rapid industrialisation and urbanisation.
Some 25,000 people are needed for farming, of which 10 percent will be Bangladeshi farmers.
"Around 77,000 tonnes of rice would be produced. 20 percent of rice will be given to Uganda and the rest will be sent to Bangladesh at cost plus 10 percent pricing," Ahmed said.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: Reuters
DHAKA (Reuters) - Uganda is ready to lease 60,000 hectares of farmland to Bangladeshi firms looking to grow food in Africa as part of government efforts to ensure food security for its growing population, a Bangladeshi official said.
"The Ugandan government is keen to lease vast unused arable land to Bangladeshi business firms to enhance production with the use of more advanced and sustainable technology," Abul Hossain, consul to the African country said on Sunday.
Food prices have risen sharply over the past year, prompting Bangladesh to look into ways of securing supplies for its more than 150 million people. Last year, a government delegation visited African countries to explore farming opportunities.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Uganda was very suitable for farm investment due to factors including political stability, Hossain told a news conference.
Nitol Group has already signed a memorandum with Uganda to lease 10,000 hectares of land to grow rice, a staple food for Bangladeshis.
"Africa is calling. It will open up huge opportunities for Bangladeshi entrepreneurs," Nitol owner Abdul Matlub Ahmed said.
Bangladesh, once self-sufficient in rice production, has become a big importer recently, a fact analysts blamed on a growing population and shrinking farmland due to rapid industrialisation and urbanisation.
Some 25,000 people are needed for farming, of which 10 percent will be Bangladeshi farmers.
"Around 77,000 tonnes of rice would be produced. 20 percent of rice will be given to Uganda and the rest will be sent to Bangladesh at cost plus 10 percent pricing," Ahmed said.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: Reuters
Tuesday 17 May 2011
Pension Fund Investors may be to Blame For Food Prices
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GENEVA, May 17, 2011 (IPS) - Long-term investors like pension funds are probably the reason why the prices of commodities, including crops, have been driven to a higher level than in 2008 when food riots erupted in 30 countries, according to the British nongovernmental organisation Christian Aid.
"In recent years, the way food prices have risen has mirrored the way investment has flowed into the individual commodities futures markets", Andrew Hogg, campaigns editor at Christian Aid, told IPS in an interview.
The social justice organisation has just released "Hungry for justice: Fighting starvation in an age of plenty", a study indicating that between Jan. 2005 and Jun. 2008, food prices rose by an average of 83 percent. And it is even worse now: in Feb. 2011, they trumped the record figures of Jun. 2008 when food riots erupted in some 30 countries.
Download your FREE Agricultural Investment and Farmland Investment Guide here
While financial speculation in agricultural products has largely contributed to this increase, the study suggests that the main responsibility does not lie with hedge funds and "cowboy" speculators, as usually assumed, but rather with the more prudent institutional investors such as pension funds.
"While we are not able to definitively prove that investment in commodity futures is driving up food prices, we are saying that the similarities in increases makes a strong case for urgent investigation into whether this enormous amount of money is contributing to global hunger," Hogg specified.
In financial jargon, "futures" are what is believed a crop would be worth at some defined point in the future when it will be harvested.
While these products have been around for hundreds of years - usually as a way of giving farmers an advance income to invest in production - today companies have a huge amount of money to invest in the respective values of crops.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Another major turn has been the creation of commodity index funds, that is, indices of commodities bundled together.
Goldman Sachs opened the first commodity index fund in 1991. The bank selected 18 commodities, including wheat, coffee, cocoa and pork, and invited investors to invest in this bundle of commodities rather than in individual ones. Since then, other indices have appeared.
Following the U.S.’s deregulation of commodities trading in indices in 2000, these funds began to attract an influx of non-traditional investors, such as pension funds and managed investment funds that were betting on the rise of commodities after the burst of the dot-com bubble.
The total value held by institutional investors in these funds increased from 15 billion dollars in 2003 to 317 billion dollars in mid-2008.
In contrast with hedge funds where selling and buying of shares happen at a rapid pace and where funds move "against the market" – they buy when the price is low and sell when it is high – long-term institutional investors look for "safe" returns. And since people will always need to eat, food crops are seen as low risk investments.
Download your FREE Agricultural Investment and Farmland Investment Guide here
"Never again should policymakers agree to such regulatory changes without assessing their impact on the poor in developing countries," Hogg exclaimed. "It is impossible now to ban investment in commodity futures but we send a strong warning that these consequences had not been predicted. People should have thought about this more."
The Food and Agriculture Organisation estimates that almost one billion people experience chronic hunger. "This is a scandal in an age where we should be able to feed everybody," Hogg commented.
"There will always be shortages due to events like earthquakes, wars or cyclones, but they can be remedied with international aid. The persistent problem of hunger should attract our concern, particularly since things may get even worse in future," added Hogg.
One of the main threats to chronic hunger comes from climate change. Some surveys suggest that if nothing is done, the number of malnourished children under five is going to be 24 million higher in 2050 than if the climate had remained unchanged.
Download your FREE Agricultural Investment and Farmland Investment Guide here
In Africa it is predicted that, by 2020, some 75 to 250 million people in places such as northern Kenya will be exposed to increased water stress that will drive them to urban areas.
Another neglected issue is investment in agriculture. "We call for sustainable agricultural practices and more investment in agriculture," Hogg continued.
"Agriculture has been badly hit because the West has tried to impose economic policies on developing countries that have not worked. What we suggest is that investment and research be increased. Ultimately the small-holder farmer could be the solution to the question of food security."
Download your FREE Agricultural Investment and Farmland Investment Guide here
In the first half of May a cabinet minister of Cameroon, speaking in Geneva, called it a "scandal" that the West African country imports 90 percent of the rice it consumes. He issued a plea to foreigners to invest in agriculture in Cameroon.
He insisted, however, that as his country aims to be self-sufficient, the resulting crops should primarily feed the local population with only the surplus being exported. Also, value addition should be done locally.
Hogg pointed out that Christian Aid does not believe that foreign direct investment (FDI) is necessarily devoid of benefits for locals.
If provisions are put in place to protect the livelihoods and land rights of people, FDI could be to their advantage. But it should be recognised that people living on the land might not have enough negotiating power to protect their livelihoods, therefore contracts have to be carefully scrutinised.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: IPS News
GENEVA, May 17, 2011 (IPS) - Long-term investors like pension funds are probably the reason why the prices of commodities, including crops, have been driven to a higher level than in 2008 when food riots erupted in 30 countries, according to the British nongovernmental organisation Christian Aid.
"In recent years, the way food prices have risen has mirrored the way investment has flowed into the individual commodities futures markets", Andrew Hogg, campaigns editor at Christian Aid, told IPS in an interview.
The social justice organisation has just released "Hungry for justice: Fighting starvation in an age of plenty", a study indicating that between Jan. 2005 and Jun. 2008, food prices rose by an average of 83 percent. And it is even worse now: in Feb. 2011, they trumped the record figures of Jun. 2008 when food riots erupted in some 30 countries.
Download your FREE Agricultural Investment and Farmland Investment Guide here
While financial speculation in agricultural products has largely contributed to this increase, the study suggests that the main responsibility does not lie with hedge funds and "cowboy" speculators, as usually assumed, but rather with the more prudent institutional investors such as pension funds.
"While we are not able to definitively prove that investment in commodity futures is driving up food prices, we are saying that the similarities in increases makes a strong case for urgent investigation into whether this enormous amount of money is contributing to global hunger," Hogg specified.
In financial jargon, "futures" are what is believed a crop would be worth at some defined point in the future when it will be harvested.
While these products have been around for hundreds of years - usually as a way of giving farmers an advance income to invest in production - today companies have a huge amount of money to invest in the respective values of crops.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Another major turn has been the creation of commodity index funds, that is, indices of commodities bundled together.
Goldman Sachs opened the first commodity index fund in 1991. The bank selected 18 commodities, including wheat, coffee, cocoa and pork, and invited investors to invest in this bundle of commodities rather than in individual ones. Since then, other indices have appeared.
Following the U.S.’s deregulation of commodities trading in indices in 2000, these funds began to attract an influx of non-traditional investors, such as pension funds and managed investment funds that were betting on the rise of commodities after the burst of the dot-com bubble.
The total value held by institutional investors in these funds increased from 15 billion dollars in 2003 to 317 billion dollars in mid-2008.
In contrast with hedge funds where selling and buying of shares happen at a rapid pace and where funds move "against the market" – they buy when the price is low and sell when it is high – long-term institutional investors look for "safe" returns. And since people will always need to eat, food crops are seen as low risk investments.
Download your FREE Agricultural Investment and Farmland Investment Guide here
"Never again should policymakers agree to such regulatory changes without assessing their impact on the poor in developing countries," Hogg exclaimed. "It is impossible now to ban investment in commodity futures but we send a strong warning that these consequences had not been predicted. People should have thought about this more."
The Food and Agriculture Organisation estimates that almost one billion people experience chronic hunger. "This is a scandal in an age where we should be able to feed everybody," Hogg commented.
"There will always be shortages due to events like earthquakes, wars or cyclones, but they can be remedied with international aid. The persistent problem of hunger should attract our concern, particularly since things may get even worse in future," added Hogg.
One of the main threats to chronic hunger comes from climate change. Some surveys suggest that if nothing is done, the number of malnourished children under five is going to be 24 million higher in 2050 than if the climate had remained unchanged.
Download your FREE Agricultural Investment and Farmland Investment Guide here
In Africa it is predicted that, by 2020, some 75 to 250 million people in places such as northern Kenya will be exposed to increased water stress that will drive them to urban areas.
Another neglected issue is investment in agriculture. "We call for sustainable agricultural practices and more investment in agriculture," Hogg continued.
"Agriculture has been badly hit because the West has tried to impose economic policies on developing countries that have not worked. What we suggest is that investment and research be increased. Ultimately the small-holder farmer could be the solution to the question of food security."
Download your FREE Agricultural Investment and Farmland Investment Guide here
In the first half of May a cabinet minister of Cameroon, speaking in Geneva, called it a "scandal" that the West African country imports 90 percent of the rice it consumes. He issued a plea to foreigners to invest in agriculture in Cameroon.
He insisted, however, that as his country aims to be self-sufficient, the resulting crops should primarily feed the local population with only the surplus being exported. Also, value addition should be done locally.
Hogg pointed out that Christian Aid does not believe that foreign direct investment (FDI) is necessarily devoid of benefits for locals.
If provisions are put in place to protect the livelihoods and land rights of people, FDI could be to their advantage. But it should be recognised that people living on the land might not have enough negotiating power to protect their livelihoods, therefore contracts have to be carefully scrutinised.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: IPS News
farmland Investments Fertile Ground for Investors
Download your FREE Farmland Investment Guide here
There is a scramble for farmland globally, and it turns out it is not just to grow food. Investors are discovering returns on farming land that rival those of the U.S. stock market.
Some Wall Street luminaries have long been fans of farmland as part of an investment portfolio. Why? The Standard & Poor's 500-benchmark index's average annual return was 11.8 percent between 1950-2008, while the return on farmland with capital appreciation and current yield was 11.6 percent.
"But the volatility of the S&P is about double that of farmland," notes Shonda Warner, manager of Chess Ag Full Harvest Partners L.L.C., which manages the Full Harvest Agricultural Opportunities hedge funds that invest in farmland.
Download your FREE Farmland Investment Guide here
What makes up farmland's returns? There are three components:
Capital appreciation of the land itself.
The current cash yield, from grown crops harvested every year.
Assets such as livestock and seed sales, hunting rights, mineral rights, water rights, even wind rights.
Farmland prices in Pennsylvania between 2006 and 2010 have risen from an average of $4,380 per acre to $5,000 per acre.
Download your FREE Farmland Investment Guide here
There are ways to track the investment returns on farmland, but not as many vehicles for typical retail investors to actually wager their own money. However, more are coming.
For decades, investing in farmland was the province of insurance companies. They smartly viewed farmland as a highly correlated inflation hedge and diversification tool. Jeremy Grantham, who runs the billion-dollar GMO L.L.C. investment funds in Boston, recently said his personal "very long-term recommendations remain the same: Forestry and good agricultural land."
Hancock Agricultural Investment Group (HAIG) is the largest institutional farmland manager in the United States, managing $1.2 billion in agricultural land for institutional investors, including public and corporate pension funds and Taft-Hartley plans for unions. HAIG's farmland consists of 180,000 acres in the United States, Australia, and Canada. But HAIG's minimum investment starts at $5 million.
Download your FREE Farmland Investment Guide here
CalPERS,the California Public Employees Retirement System, has long owned an investment in Premier Pacific Vineyards (http://is.gd/UWjqWA).
What about the rest of us? To start tracking the sector, check out the S&P GSCI Agricultural Index, the DJ-UBS Agriculture Sub-Index, or the JP Morgan Commodity Curve Agriculture Index (http://is.gd/Wa04vX).
For direct investors, American Farmland plans an IPO that would be a roll-up of grain farmers from around the American Midwest, in particular the Dakotas. Marketing director Todd Dyer says the future public company models its business plan after Waste Management, which transformed a highly fragmented industry into a large public corporation. Farmland will remain in demand, he says.
Download your FREE Farmland Investment Guide here
Investors might be surprised to find out that the top countries ranked by arable hectares (1 hectare equals 10,000 square meters) of land are the United States, India, China, Russia, and Brazil. But the developing countries in the group are grappling with exploding populations.
"More food will have to be grown in the next 50 years than in the past 10,000," Dyer said.
Exchange-traded funds in agriculture exist but don't trade very well or very often, warns Chess Ag's Warner, who grew up a Nebraska farm girl and then worked as a futures trader for Goldman Sachs. "ETFs are popular, but the liquidity can go away quickly," she said.
Download your FREE Farmland Investment Guide here
Among the exchange-traded vehicles is the Dow Jones-UBS Agriculture Subindex Total Return fund that tracks an eponymous index. UBS Bloomberg Constant Maturity Commodity Index Livestock ETN seeks to track the price and performance yield of the UBS Bloomberg CMCI Livestock Total Return Index, a basket of livestock future contracts. Two food ETNs are available: The UBS Bloomberg CMCI Food Index tracks a basket of agriculture and livestock futures contracts, while the UBS Bloomberg CMCI Agriculture ETN tracks an agriculture index.
Mutual funds also are making a play on agriculture. John Lekas is portfolio manager at Leader Capital Corp., investors for the Leader Total Return Fund (symbol: LCTRX).
Lekas also sees a strong future for investing in farmland: "The United States has almost 3 acres of farmland per capita. By comparison, China only has about .23 acres per person. In 2009, the U.S. produced 39 percent of the world's corn and shipped over 20 percent of its production overseas."
Best of all, farmland's value keeps up with inflation, while the returns are uncorrelated with stocks when the market tanks, Warner says. Farmland is a hard asset and right now, not heavily leveraged, like in the 1970s and early 1980s, when many American farmers borrowed to the hilt and went bust during the double-digit interest-rate period.
Download your FREE Farmland Investment Guide here
Read more: http://www.philly.com/philly/business/121972534.html#ixzz1MbtNlG5D
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There is a scramble for farmland globally, and it turns out it is not just to grow food. Investors are discovering returns on farming land that rival those of the U.S. stock market.
Some Wall Street luminaries have long been fans of farmland as part of an investment portfolio. Why? The Standard & Poor's 500-benchmark index's average annual return was 11.8 percent between 1950-2008, while the return on farmland with capital appreciation and current yield was 11.6 percent.
"But the volatility of the S&P is about double that of farmland," notes Shonda Warner, manager of Chess Ag Full Harvest Partners L.L.C., which manages the Full Harvest Agricultural Opportunities hedge funds that invest in farmland.
Download your FREE Farmland Investment Guide here
What makes up farmland's returns? There are three components:
Capital appreciation of the land itself.
The current cash yield, from grown crops harvested every year.
Assets such as livestock and seed sales, hunting rights, mineral rights, water rights, even wind rights.
Farmland prices in Pennsylvania between 2006 and 2010 have risen from an average of $4,380 per acre to $5,000 per acre.
Download your FREE Farmland Investment Guide here
There are ways to track the investment returns on farmland, but not as many vehicles for typical retail investors to actually wager their own money. However, more are coming.
For decades, investing in farmland was the province of insurance companies. They smartly viewed farmland as a highly correlated inflation hedge and diversification tool. Jeremy Grantham, who runs the billion-dollar GMO L.L.C. investment funds in Boston, recently said his personal "very long-term recommendations remain the same: Forestry and good agricultural land."
Hancock Agricultural Investment Group (HAIG) is the largest institutional farmland manager in the United States, managing $1.2 billion in agricultural land for institutional investors, including public and corporate pension funds and Taft-Hartley plans for unions. HAIG's farmland consists of 180,000 acres in the United States, Australia, and Canada. But HAIG's minimum investment starts at $5 million.
Download your FREE Farmland Investment Guide here
CalPERS,the California Public Employees Retirement System, has long owned an investment in Premier Pacific Vineyards (http://is.gd/UWjqWA).
What about the rest of us? To start tracking the sector, check out the S&P GSCI Agricultural Index, the DJ-UBS Agriculture Sub-Index, or the JP Morgan Commodity Curve Agriculture Index (http://is.gd/Wa04vX).
For direct investors, American Farmland plans an IPO that would be a roll-up of grain farmers from around the American Midwest, in particular the Dakotas. Marketing director Todd Dyer says the future public company models its business plan after Waste Management, which transformed a highly fragmented industry into a large public corporation. Farmland will remain in demand, he says.
Download your FREE Farmland Investment Guide here
Investors might be surprised to find out that the top countries ranked by arable hectares (1 hectare equals 10,000 square meters) of land are the United States, India, China, Russia, and Brazil. But the developing countries in the group are grappling with exploding populations.
"More food will have to be grown in the next 50 years than in the past 10,000," Dyer said.
Exchange-traded funds in agriculture exist but don't trade very well or very often, warns Chess Ag's Warner, who grew up a Nebraska farm girl and then worked as a futures trader for Goldman Sachs. "ETFs are popular, but the liquidity can go away quickly," she said.
Download your FREE Farmland Investment Guide here
Among the exchange-traded vehicles is the Dow Jones-UBS Agriculture Subindex Total Return fund that tracks an eponymous index. UBS Bloomberg Constant Maturity Commodity Index Livestock ETN seeks to track the price and performance yield of the UBS Bloomberg CMCI Livestock Total Return Index, a basket of livestock future contracts. Two food ETNs are available: The UBS Bloomberg CMCI Food Index tracks a basket of agriculture and livestock futures contracts, while the UBS Bloomberg CMCI Agriculture ETN tracks an agriculture index.
Mutual funds also are making a play on agriculture. John Lekas is portfolio manager at Leader Capital Corp., investors for the Leader Total Return Fund (symbol: LCTRX).
Lekas also sees a strong future for investing in farmland: "The United States has almost 3 acres of farmland per capita. By comparison, China only has about .23 acres per person. In 2009, the U.S. produced 39 percent of the world's corn and shipped over 20 percent of its production overseas."
Best of all, farmland's value keeps up with inflation, while the returns are uncorrelated with stocks when the market tanks, Warner says. Farmland is a hard asset and right now, not heavily leveraged, like in the 1970s and early 1980s, when many American farmers borrowed to the hilt and went bust during the double-digit interest-rate period.
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Agriculture Investment Set for Boom
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Australia's agricultural industry stands to benefit from Asia's economic growth just as much as the booming resources sector, Treasurer Wayne Swan says.
Mr Swan says the country's farmers will see a rise in demand from developing economies across Asia.
The number of middle class consumers in Asia is expected to increase by more than 1.2 billion by 2020, growth that will drive the local resources sector, as well as other areas of the economy, he says.
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"Agriculture is also going to be one of those industries that is going to be a significant beneficiary of the middle classing of Asia," he told a NSW Business Chamber event in Sydney on Monday.
"Because essentially the demand that we see for iron ore and coal is going to be replicated, maybe not at the same level, when it comes to basic agricultural products.
"So demand is going to pick up."
The prospects for the domestic agricultural sector were mostly ignored by local investors, but the strength of the industry was recognised around the world, he said.
"I believe that we will see in the not-too-distant future much more investment interest in agriculture in Australia, and we will see that reflected in the health and the wealth of that sector," Mr Swan said.
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Source: SMH.com.au
Australia's agricultural industry stands to benefit from Asia's economic growth just as much as the booming resources sector, Treasurer Wayne Swan says.
Mr Swan says the country's farmers will see a rise in demand from developing economies across Asia.
The number of middle class consumers in Asia is expected to increase by more than 1.2 billion by 2020, growth that will drive the local resources sector, as well as other areas of the economy, he says.
Download your FREE Agriculture Investment and Farmland Investment Guide here
"Agriculture is also going to be one of those industries that is going to be a significant beneficiary of the middle classing of Asia," he told a NSW Business Chamber event in Sydney on Monday.
"Because essentially the demand that we see for iron ore and coal is going to be replicated, maybe not at the same level, when it comes to basic agricultural products.
"So demand is going to pick up."
The prospects for the domestic agricultural sector were mostly ignored by local investors, but the strength of the industry was recognised around the world, he said.
"I believe that we will see in the not-too-distant future much more investment interest in agriculture in Australia, and we will see that reflected in the health and the wealth of that sector," Mr Swan said.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: SMH.com.au
Farmland Investment Best Bet for 10 years: Schiller
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With the exception of farmland, investors should keep their expectations for investment returns low for at least the next 10 years, according to Robert Shiller, an economics professor at Yale University.
Speaking during an opening session of the Investment Management Consultants Association's annual conference in Las Vegas, Mr. Shiller said he expects stocks to gain a mere 2% to 3% annually over the next decade.
In his presentation, Mr.Shiller, well known for his S&P/Case-Shiller Home Price indexes, illustrated how farmland participated in the real estate bubble from 2000 to 2005, but did not fall in stride over the past few years.
“My only bullish call is farmland,” he said.
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The reason farmland has held much of the gains that it built up during the real estate bubble, he said, is because, unlike housing, there is a limited supply.
“A single logical error that people make when buying a home is that they think buying a home is the same as buying land,” he said. “But in the total price of a house, only 20% is the land.”
Mr. Shiller also covered some of the driving forces behind the financial crisis, which he described as the worst financial crisis since the Great Depression.
“Even at this point, with the recession technically over, we are in the worst financial shape we've been in since the Great Depression,” he said.
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Mr. Shiller mentioned the usual suspects in explaining the crisis, including relaxed lending practices, a disproportionate percentage of subprime loans, weak regulatory oversight and a government policy that encouraged more mortgage lending.
But the real question people should be asking, he said, is why we ended up in that position to begin with?
“You can't just blame the regulators, because people weren't calling for regulators to do something about it during the housing boom,” he said.
In terms of his generally gloomy investment outlook, Mr. Shiller calculated the real unemployment rate — including the unemployed, underemployed, as well as those people that have been forced into early retirement — at 15.9% or about one-sixth of the adult population in the United States.
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The downward trend of the latest consumer confidence data also should be recognized, he added.
“It worries me because if people don't have confidence, they don't spend money,” he said.
Mr. Shiller also pointed out that the homebuilding industry, and probably the banking industry, actually started feeling the pressure at least two years before the start of the financial crisis in 2007.
According to his research, consumer traffic at real estate properties started to fall dramatically in 2005, and that was followed by a dramatic decline in housing permits.
“It was almost like somebody blew a whistle that only dogs and homebuyers could hear,” he said.
Download your FREE Farmland Investment Guide here
Source: Investment News
With the exception of farmland, investors should keep their expectations for investment returns low for at least the next 10 years, according to Robert Shiller, an economics professor at Yale University.
Speaking during an opening session of the Investment Management Consultants Association's annual conference in Las Vegas, Mr. Shiller said he expects stocks to gain a mere 2% to 3% annually over the next decade.
In his presentation, Mr.Shiller, well known for his S&P/Case-Shiller Home Price indexes, illustrated how farmland participated in the real estate bubble from 2000 to 2005, but did not fall in stride over the past few years.
“My only bullish call is farmland,” he said.
Download your FREE Farmland Investment Guide here
The reason farmland has held much of the gains that it built up during the real estate bubble, he said, is because, unlike housing, there is a limited supply.
“A single logical error that people make when buying a home is that they think buying a home is the same as buying land,” he said. “But in the total price of a house, only 20% is the land.”
Mr. Shiller also covered some of the driving forces behind the financial crisis, which he described as the worst financial crisis since the Great Depression.
“Even at this point, with the recession technically over, we are in the worst financial shape we've been in since the Great Depression,” he said.
Download your FREE Farmland Investment Guide here
Mr. Shiller mentioned the usual suspects in explaining the crisis, including relaxed lending practices, a disproportionate percentage of subprime loans, weak regulatory oversight and a government policy that encouraged more mortgage lending.
But the real question people should be asking, he said, is why we ended up in that position to begin with?
“You can't just blame the regulators, because people weren't calling for regulators to do something about it during the housing boom,” he said.
In terms of his generally gloomy investment outlook, Mr. Shiller calculated the real unemployment rate — including the unemployed, underemployed, as well as those people that have been forced into early retirement — at 15.9% or about one-sixth of the adult population in the United States.
Download your FREE Farmland Investment Guide here
The downward trend of the latest consumer confidence data also should be recognized, he added.
“It worries me because if people don't have confidence, they don't spend money,” he said.
Mr. Shiller also pointed out that the homebuilding industry, and probably the banking industry, actually started feeling the pressure at least two years before the start of the financial crisis in 2007.
According to his research, consumer traffic at real estate properties started to fall dramatically in 2005, and that was followed by a dramatic decline in housing permits.
“It was almost like somebody blew a whistle that only dogs and homebuyers could hear,” he said.
Download your FREE Farmland Investment Guide here
Source: Investment News
Monday 16 May 2011
Buy Farmland, It Is A Real Asset And Can Only Grow More Valuable
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Always keep an eye on where the money is going. In the world of investment, increasingly dominated by a small group of big fund managers, the moves of the truly smart money often generate truly self-fulfilling prophecies.
First, you can buy emerging currencies and wait for them to rise.
Second, you can dive into US farmland. The logic: agricultural demand is rising and will not go away. The febrile situation in developing countries rules out their farmland as an option – the chance of political disruption to supply is just too great.
Download your FREE Farmland Investment Guide here
So buy US farmland – it is a real asset, and it can only grow more valuable as the shortage of agricultural commodities grows more acute. And, indeed, last year the price of good farmland in Iowa rose by 18 per cent, according to the Federal Reserve Bank of Chicago, with plenty of anecdotal evidence that prices are continuing too increase.
Finally, there is gold. It is no longer merely the “goldbugs”, convinced that the shiny metal is the one true currency, who buy gold. Many other investors who are not normally happy about investing in a commodity that produces no yield, and costs much to carry, now see it as the best way to hedge against a likely generalised inflation. This is a bet on the herd – they expect others to pile into gold, so they are doing so too.
Download your FREE Farmland Investment Guide here
Source: FT.com
Always keep an eye on where the money is going. In the world of investment, increasingly dominated by a small group of big fund managers, the moves of the truly smart money often generate truly self-fulfilling prophecies.
First, you can buy emerging currencies and wait for them to rise.
Second, you can dive into US farmland. The logic: agricultural demand is rising and will not go away. The febrile situation in developing countries rules out their farmland as an option – the chance of political disruption to supply is just too great.
Download your FREE Farmland Investment Guide here
So buy US farmland – it is a real asset, and it can only grow more valuable as the shortage of agricultural commodities grows more acute. And, indeed, last year the price of good farmland in Iowa rose by 18 per cent, according to the Federal Reserve Bank of Chicago, with plenty of anecdotal evidence that prices are continuing too increase.
Finally, there is gold. It is no longer merely the “goldbugs”, convinced that the shiny metal is the one true currency, who buy gold. Many other investors who are not normally happy about investing in a commodity that produces no yield, and costs much to carry, now see it as the best way to hedge against a likely generalised inflation. This is a bet on the herd – they expect others to pile into gold, so they are doing so too.
Download your FREE Farmland Investment Guide here
Source: FT.com
Sunday 15 May 2011
Chinese Companies Seek to Invest In Bulgarian Agriculture
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Chinese companies have demonstrated committed interest in investment in Bulgaria's agriculture, according to Agriculture and Foods Minister Miroslav Naydenov.
Naydenov met Friday with a Chinese business delegation, including Tianjin State Farms Agribusiness Group Company, which declared its readiness to rent 100 000 decares of land, mostly in Northwestern Bulgaria.
Tianjin State Farms Agribusiness Group Company is seeking to buy or rent 12 000 decares in the Vidin District, and more land in the districts of Vratsa and Montana, also in the Northwest, which is the poorest region in the EU. In addition, the Chinese corporation is interested in some 40 000 decares of land in the Yambol District in the southeast.
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According to the Vice President of the company, Li Liyan Suo, the potential investors are interested in breeding corn and forage crops, and to export the produce to China.
He pointed out that China is currently importing the same agricultural products from the USA, and that their investment in Bulgaria will create jobs and stimulate domestic demand.
Tianjin State Farms Agribusiness Group Company is the first agricultural cooperative in the Chinese province Tianjin; it deals with food industry, agriculture, cattle breeding, metallurgy, and real estate.
"Foreign investment is welcome in the Bulgarian agriculture," Minister Naydenov told the Chinese investors stressing that they will be able to take advantage of all respective tax cuts and breaks.
Mrs. Dzang Chu Ya, a representative of the Sino French Venture Dynasty Winery, said her company wanted to buy a winery in Bulgaria and to export its produce to China, and/or to buy or rent vineyards in the country. In her words, the Sino French Venture Dynasty Winery has a guaranteed market, and is currently facing shortages of produce to sell.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: www.novinite.com/view_news.php?id=128206
Chinese companies have demonstrated committed interest in investment in Bulgaria's agriculture, according to Agriculture and Foods Minister Miroslav Naydenov.
Naydenov met Friday with a Chinese business delegation, including Tianjin State Farms Agribusiness Group Company, which declared its readiness to rent 100 000 decares of land, mostly in Northwestern Bulgaria.
Tianjin State Farms Agribusiness Group Company is seeking to buy or rent 12 000 decares in the Vidin District, and more land in the districts of Vratsa and Montana, also in the Northwest, which is the poorest region in the EU. In addition, the Chinese corporation is interested in some 40 000 decares of land in the Yambol District in the southeast.
Download your FREE Agricultural Investment and Farmland Investment Guide here
According to the Vice President of the company, Li Liyan Suo, the potential investors are interested in breeding corn and forage crops, and to export the produce to China.
He pointed out that China is currently importing the same agricultural products from the USA, and that their investment in Bulgaria will create jobs and stimulate domestic demand.
Tianjin State Farms Agribusiness Group Company is the first agricultural cooperative in the Chinese province Tianjin; it deals with food industry, agriculture, cattle breeding, metallurgy, and real estate.
"Foreign investment is welcome in the Bulgarian agriculture," Minister Naydenov told the Chinese investors stressing that they will be able to take advantage of all respective tax cuts and breaks.
Mrs. Dzang Chu Ya, a representative of the Sino French Venture Dynasty Winery, said her company wanted to buy a winery in Bulgaria and to export its produce to China, and/or to buy or rent vineyards in the country. In her words, the Sino French Venture Dynasty Winery has a guaranteed market, and is currently facing shortages of produce to sell.
Download your FREE Agricultural Investment and Farmland Investment Guide here
Source: www.novinite.com/view_news.php?id=128206
Thursday 12 May 2011
Corn Demand Driven by Emerging Markets
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Demand for corn, soybeans and sugar will continue to be driven by imports from emerging markets, said Patrick Armstrong, Managing Partner of Distinction Asset Management Wednesday.
Patrick Armstrong said year-end corn inventories fell by 16% from the previous year, and he expects Chinese imports of corn to rise from 1.5 million metric tons to well over 10 million tons in the next three years.
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"The long-term demand case is driven by income growth and increased purchasing power from emerging markets consumers," Armstrong said.
Regarding last week's sell-off, "we have rebuilt positions in agricultural commodities in our Multi-Asset Real Return funds following last week's broad-based commodity sell-off," said Armstrong.
Armstrong attributed last week's sell-off to silver, "the canary in the coalmine."
He added, "the sell-off was led by silver, a commodity very much in a bubble driven by speculative activity. It's also a commodity that can be manipulated by investment banks and the hedgefunds."
At present, 6% of Distinction's portfolio exposure lies with agriculture. The asset manager medium-term adopts a bullish stance for sugar, despite the recent losses witnessed in futures markets.
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"Short-term supply of sugar does exceed demand. But further out, with China consuming more coffee and coca-cola, the supply picture will most definitely change," Armstrong added.
Armstrong said inventory draw down would definitely be witnessed in corn markets however over the next 12 months.
Regarding Asia growth, Armstrong said China would not be able to sustain growth forever and concerns of inflation are now noted by the government. "A shift from an export driven economy to an economy that deals primarily with internal consumption could happen, leading to a sustainable trajectory growth for the country."
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Source: www.agriculture.com
Demand for corn, soybeans and sugar will continue to be driven by imports from emerging markets, said Patrick Armstrong, Managing Partner of Distinction Asset Management Wednesday.
Patrick Armstrong said year-end corn inventories fell by 16% from the previous year, and he expects Chinese imports of corn to rise from 1.5 million metric tons to well over 10 million tons in the next three years.
Download your FREE Agriculture Investment and Farmland Investment Guide here
"The long-term demand case is driven by income growth and increased purchasing power from emerging markets consumers," Armstrong said.
Regarding last week's sell-off, "we have rebuilt positions in agricultural commodities in our Multi-Asset Real Return funds following last week's broad-based commodity sell-off," said Armstrong.
Armstrong attributed last week's sell-off to silver, "the canary in the coalmine."
He added, "the sell-off was led by silver, a commodity very much in a bubble driven by speculative activity. It's also a commodity that can be manipulated by investment banks and the hedgefunds."
At present, 6% of Distinction's portfolio exposure lies with agriculture. The asset manager medium-term adopts a bullish stance for sugar, despite the recent losses witnessed in futures markets.
Download your FREE Agriculture Investment and Farmland Investment Guide here
"Short-term supply of sugar does exceed demand. But further out, with China consuming more coffee and coca-cola, the supply picture will most definitely change," Armstrong added.
Armstrong said inventory draw down would definitely be witnessed in corn markets however over the next 12 months.
Regarding Asia growth, Armstrong said China would not be able to sustain growth forever and concerns of inflation are now noted by the government. "A shift from an export driven economy to an economy that deals primarily with internal consumption could happen, leading to a sustainable trajectory growth for the country."
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: www.agriculture.com
Agriculture Investments: Profit in Commodities
By Larry D. Spears, Contributing Writer, Money Morning
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Commodities have received an unprecedented amount of attention over the past year, largely because of the rising price of gasoline and dramatic moves by the precious metals.
However, gold, silver and oil haven't been the only high-flyers. Although they haven't generated nearly as many headlines, agricultural commodities markets also have seen substantial price gains over the past year.
And, given steadily growing supply-demand imbalances linked to a mushrooming global population, upward price pressure in agricultural commodities markets will almost certainly persist for years to come -- meaning repeated profit opportunities for investors savvy enough to ride the trends.
Download your FREE Agriculture Investment and Farmland Investment Guide here
While there had been some rumblings of concern about rising grain prices and their effect on the cost of meat products, it wasn't until mid-April that the yearlong acceleration in the price of foodstuffs made the top of the newscasts.
That's when Starbucks Corp. (Nasdaq: SBUX) informed its legions of coffee addicts its prices would be raised because the company could no longer absorb the added cost of the bulk Arabica coffee beans it brews.
At the time, Intercontinental Exchange Inc. (NYSE: ICE) futures for July delivery of those beans were trading at $3.025 a pound - more than double their price in May 2010. By last week (May 3), July coffee futures had climbed to $3.089 a pound, a 35-year-high, before retreating late-week in trading.
Starbucks reported a 20% increase in first-quarter profit, but the company was quick to justify retail price increases by adding that it expected input costs to trim its full-year 2011 earnings by at least 22 cents a share.
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Of course, of all the leading food commodities, coffee is the least essential to the average U.S. or global consumer, so the decision to pay those higher prices - at Starbucks, the grocery store or elsewhere - is largely discretionary.
However, that's not the case with most other food commodity products - and the coffee concerns were amplified when the U.S. Department of Labor's Bureau of Labor Statistics issued its report on the March Consumer Price Index (CPI).
That report noted that prices for all consumer items rose just 0.1% in March, but prices for all food items jumped 0.8%, and prices for groceries (classed as "food at home") were up a full 1.1% - bringing the year-over-year increase to 3.6%. More alarming was the fact that the March food-price hikes came on top of respective increases of 0.5% and 0.6% in January and February.
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Globally, The World Bank's Food Price Index remains near its all-time high, set in early 2008. The March numbers indicated food-price increases were running about 5% higher in poor and developing nations than in the developed countries. Regardless of the region, however, every key global food commodity was significantly higher than a year ago save for rice, prices for which were described as "stable."
The World Bank also definitively linked the rising cost of energy to price hikes for food, saying that every 10% increase in the price of crude oil resulted in a 2.7% jump in the overall cost of food.
Obviously, you hate to see the impact of such numbers on your grocery bill - but they certainly offer substantial incentive from an investment perspective.
You simply cannot ignore the potential to capture single-contract gains ranging from $9,300 to as much as $65,025 for your futures portfolio. Even if the entry and exit timing was off by 20%, or even 30% - missing both lows and highs - nearly every food commodity produced upper triple-digit gains on the typical futures margin deposit for 2010-2011.
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And, as noted earlier, prospects appear ripe for similar moves in the future - on both a short-term and a long-term basis.
A Short-Term Bounce in Agricultural Commodities
Short-term, food commodities have pulled back from last month's highs - largely due to profit-taking and sympathy selling in response to the downturn in the metals and oil prices. Even coffee, which didn't peak until May 3, retreated more than 20 cents a pound to close at 287.77 on Friday, May 6.
Most analysts view these pullbacks as temporary, since there's been no real change in the fundamentals that supported the earlier price increases. That makes the current pullback a good buying opportunity.
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In the corn market, for example, U.S. plantings for the week of May 2-6 came in at just 13%, the third slowest pace since 1986 and well below the 10-year average of 43%. Ohio, Indiana and Iowa reported respective plantings to date of just 1%, 2% and 8% of expected seasonal totals. The odds that farmers will close the planting gap are getting slimmer by the day, since large sections of prime U.S. corn-growing land are currently suffering either flooding or severe drought. That signals another weak yearly corn harvest, adding to last year's poor average yield of just 152.8 bushels per acre.
Conditions are also bullish near-term in the cattle market, with many herds being pulled off drought-withered or fire-ravaged pasture land in Texas, New Mexico and Oklahoma and placed on feed, which will raise costs - and consumer prices. The arrival of the summer barbeque season and a forecast drop in gas prices could also conspire to increase consumer demand, sparking a general beef price rebound.
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According to Inside Futures, a leading commodity analytical service, pork fundamentals also remain unchanged from when prices soared to record highs last fall and again this spring.
And the coffee market continues to face the same fundamental support it did before its recent pullback - tight supplies due to poor harvests in several prime growing regions, coupled with rising demand in both developing and developed countries. As an example of continued growing demand, India saw its export orders climb 46.4% between January and April of this year, with most of its crop going to Italy, Russia and Germany.
In short, the recent pullback in the food commodities should be viewed as a healthy retracement and a new near-term buying opportunity, not a major trend reversal.
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A Long-Term Look at Agricultural Commodities
Longer-term, the outlook for food commodities is even stronger. The United Nations Food and Agriculture Organization (FAO) projects of an increase of 2.3 billion in the world population by 2050 - to more than 9 billion. Nearly all of that growth is expected to come from developing countries. This population growth will require a 70% increase in global food production, with needs in developing nations nearly doubling.
Given the dwindling availability of arable land on the planet, meeting this exploding food demand will require new farming techniques, new crop technologies, new types of seeds and fertilizers, a whole new approach to agriculture - if it's even possible.
The FAO report estimates private investment of $209 billion a year will be needed just to keep the percentage of the world population that goes hungry at current levels. If world hunger is to be significantly reduced, that investment number must skyrocket to $359 billion a year.
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This huge spurt of population growth will affect future food commodity prices in a number of ways. We'll face not just shrinking supply and steadily growing demand, but also, in terms of politics, territorial conflicts and control of distribution systems.
Just this past weekend, U.S. Secretary of State Hillary Rodham Clinton addressed a meeting of the FAO at its headquarters in Rome, warning that global food shortages and spiraling prices could lead to widespread social unrest and political and economic destabilization. She urged immediate action to develop new policies aimed at preventing a repeat of 2007-2008 food riots that hit dozens of developing countries around the globe.
Clinton also urged a united worldwide effort to hold down food commodity costs and boost agricultural production. However, she admitted food prices will continue to rise for the foreseeable future, citing the World Bank's report that its Food Price Index climbed 15% between October 2010 and January 2011 alone.
So given the huge projected increase in world population and the bullish price implications of steadily increasing demand for food commodities, how can you best take advantage of the investment potential the sector offers?
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Investing in Agricultural Commodities Markets
Basically, there are three ways to invest in agricultural commodities markets.
First, if you have sufficient capital and a large tolerance for risk and volatility, you can invest directly in the futures markets, examining the fundamentals and technical outlook in greater detail and opting for the food commodities you believe hold the greatest potential.
Secondly, you can focus on the individual stocks of companies that either harvest or distribute basic foods and will benefit from rising demand, or companies that develop the new agricultural technologies and equipment needed to meet those demands.
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Three potential investment options include:
BRF-Brasil Foods S.A. (NYSE ADR: BRFS): One of the 50 fastest-growing international companies listed on U.S. exchanges, BRFS focuses on the production and sale of poultry, pork, beef, milk, dairy products and processed food. The company and its subsidiaries supply markets in Brazil and 140 other countries, including many developing nations. BRFS has reported steadily increasing quarterly profits since 2009, with earnings totaling 57 cents a share over the past 12 months. The stock, which pays a modest dividend giving a current yield of 1.29%, hit a high of $20.79 in late April, nearly double its May 2010 low of $11.35.
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Deere & Company (NYSE: DE): If global farmers are to meet rising demand from developing nations, they won't do it with teams of oxen and wooden plows. Deere is the world's largest manufacturer of agricultural equipment - from plows and planters to tractors and harvesters. As such, it will get a big chunk of that projected $209 billion to $359 billion in required annual spending, adding to profits that already totaled $4.98 a share over the past 12 months. With the investment, you'll get a dividend of $1.40 a share (1.49%) and the wisdom of lots of analysts for institutions, which hold 73% of the stock.
Monsanto Company (NYSE: MON), recent price $65.27 - Just as Deere will benefit from rising global agricultural-equipment sales, Monsanto will profit from the need for new crop technologies. As one of the world's top developers and suppliers of seeds and herbicides, as well as research into agricultural biotechnology and hybridization (known as "genomics"), MON has a leading role in increasing global crop yields and improving farmland arability. The company's most recent 12-month earnings came in at $2.32 a share and its $1.12 dividend provides a yield of 1.69%.
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Finally, perhaps the easiest way to gain access to a broad spectrum of higher food prices is through shares in one or more of the exchange-traded funds (ETFs) and exchange-traded notes (ETNs) that target agricultural commodities markets.
Two of the top funds, plus one newcomer, include:
Market Vectors Agribusiness Fund (NYSE: MOO): This fund attempts to track the price and yield performance of the DAXglobal Agribusiness Index (DXAG), which is calculated by Germany's Deutsche Boerse AG, based on prices for the stocks of agribusiness companies whose shares trade on major international exchanges. Fund investments focus on five different sub-sectors, including agri-product and livestock operations, agricultural chemicals, equipment and ethanol/biodiesel. The fund, with a market capitalization of $3.75 billion, has a below-industry-average expense ratio of 0.55%.
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E-TRACS UBS Bloomberg CMCI Food ETN (NYSE: FUD): FUD tracks the 13 agricultural food and livestock futures contracts included in the UBS Bloomberg CMCI Food Total Return index. While the fund focuses on near-term contracts, it smooths out short-term price volatility by investing in three different maturities for each individual commodity. The expense ratio is 0.65%, below the industry average, and the fund has $42.9 million in net assets.
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Global X Food ETF (NYSE: EATX): The newest entry in the food ETF market (and on the ETF roster in general), EATX shares just began trading the first week in May. Geared solely around the consumption of food - including commercial fishing and fish farming - the fund attempts to mirror the performance of the Solactive Global Food Index, which tracks the 50 largest international firms with primary operations in production, development or distribution of food or food ingredients. Unlike the index, however, the fund will limit the holdings in any single company to 4.75% of assets, rebalancing every six months, and will also emphasize investments in firms serving the developing countries. Holdings include such giants as General Mills Inc. (NYSE: GIS), Kraft Foods Inc. (NYSE: KFT) and HJ Heinz Co. (NYSE: HNZ), but smaller companies from 17 countries round out the fund's portfolio. Initial capitalization was not announced, but the operators anticipate having an expense ratio of 0.65%. And, for those who like to mix social activism with their investing, Global X has promised that all profits from the fund will go to fight global hunger.
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Obviously, solutions to world hunger remain far in the future - but, if you put your money behind any of these food commodity-related investments, it's unlikely you'll wind up hungry for profits.
Download your FREE Agriculture Investment and Farmland Investment Guide here
Source: Money Morning
Download your FREE Agriculture Investment and Farmland Investment Guide here
Commodities have received an unprecedented amount of attention over the past year, largely because of the rising price of gasoline and dramatic moves by the precious metals.
However, gold, silver and oil haven't been the only high-flyers. Although they haven't generated nearly as many headlines, agricultural commodities markets also have seen substantial price gains over the past year.
And, given steadily growing supply-demand imbalances linked to a mushrooming global population, upward price pressure in agricultural commodities markets will almost certainly persist for years to come -- meaning repeated profit opportunities for investors savvy enough to ride the trends.
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While there had been some rumblings of concern about rising grain prices and their effect on the cost of meat products, it wasn't until mid-April that the yearlong acceleration in the price of foodstuffs made the top of the newscasts.
That's when Starbucks Corp. (Nasdaq: SBUX) informed its legions of coffee addicts its prices would be raised because the company could no longer absorb the added cost of the bulk Arabica coffee beans it brews.
At the time, Intercontinental Exchange Inc. (NYSE: ICE) futures for July delivery of those beans were trading at $3.025 a pound - more than double their price in May 2010. By last week (May 3), July coffee futures had climbed to $3.089 a pound, a 35-year-high, before retreating late-week in trading.
Starbucks reported a 20% increase in first-quarter profit, but the company was quick to justify retail price increases by adding that it expected input costs to trim its full-year 2011 earnings by at least 22 cents a share.
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Of course, of all the leading food commodities, coffee is the least essential to the average U.S. or global consumer, so the decision to pay those higher prices - at Starbucks, the grocery store or elsewhere - is largely discretionary.
However, that's not the case with most other food commodity products - and the coffee concerns were amplified when the U.S. Department of Labor's Bureau of Labor Statistics issued its report on the March Consumer Price Index (CPI).
That report noted that prices for all consumer items rose just 0.1% in March, but prices for all food items jumped 0.8%, and prices for groceries (classed as "food at home") were up a full 1.1% - bringing the year-over-year increase to 3.6%. More alarming was the fact that the March food-price hikes came on top of respective increases of 0.5% and 0.6% in January and February.
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Globally, The World Bank's Food Price Index remains near its all-time high, set in early 2008. The March numbers indicated food-price increases were running about 5% higher in poor and developing nations than in the developed countries. Regardless of the region, however, every key global food commodity was significantly higher than a year ago save for rice, prices for which were described as "stable."
The World Bank also definitively linked the rising cost of energy to price hikes for food, saying that every 10% increase in the price of crude oil resulted in a 2.7% jump in the overall cost of food.
Obviously, you hate to see the impact of such numbers on your grocery bill - but they certainly offer substantial incentive from an investment perspective.
You simply cannot ignore the potential to capture single-contract gains ranging from $9,300 to as much as $65,025 for your futures portfolio. Even if the entry and exit timing was off by 20%, or even 30% - missing both lows and highs - nearly every food commodity produced upper triple-digit gains on the typical futures margin deposit for 2010-2011.
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And, as noted earlier, prospects appear ripe for similar moves in the future - on both a short-term and a long-term basis.
A Short-Term Bounce in Agricultural Commodities
Short-term, food commodities have pulled back from last month's highs - largely due to profit-taking and sympathy selling in response to the downturn in the metals and oil prices. Even coffee, which didn't peak until May 3, retreated more than 20 cents a pound to close at 287.77 on Friday, May 6.
Most analysts view these pullbacks as temporary, since there's been no real change in the fundamentals that supported the earlier price increases. That makes the current pullback a good buying opportunity.
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In the corn market, for example, U.S. plantings for the week of May 2-6 came in at just 13%, the third slowest pace since 1986 and well below the 10-year average of 43%. Ohio, Indiana and Iowa reported respective plantings to date of just 1%, 2% and 8% of expected seasonal totals. The odds that farmers will close the planting gap are getting slimmer by the day, since large sections of prime U.S. corn-growing land are currently suffering either flooding or severe drought. That signals another weak yearly corn harvest, adding to last year's poor average yield of just 152.8 bushels per acre.
Conditions are also bullish near-term in the cattle market, with many herds being pulled off drought-withered or fire-ravaged pasture land in Texas, New Mexico and Oklahoma and placed on feed, which will raise costs - and consumer prices. The arrival of the summer barbeque season and a forecast drop in gas prices could also conspire to increase consumer demand, sparking a general beef price rebound.
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According to Inside Futures, a leading commodity analytical service, pork fundamentals also remain unchanged from when prices soared to record highs last fall and again this spring.
And the coffee market continues to face the same fundamental support it did before its recent pullback - tight supplies due to poor harvests in several prime growing regions, coupled with rising demand in both developing and developed countries. As an example of continued growing demand, India saw its export orders climb 46.4% between January and April of this year, with most of its crop going to Italy, Russia and Germany.
In short, the recent pullback in the food commodities should be viewed as a healthy retracement and a new near-term buying opportunity, not a major trend reversal.
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A Long-Term Look at Agricultural Commodities
Longer-term, the outlook for food commodities is even stronger. The United Nations Food and Agriculture Organization (FAO) projects of an increase of 2.3 billion in the world population by 2050 - to more than 9 billion. Nearly all of that growth is expected to come from developing countries. This population growth will require a 70% increase in global food production, with needs in developing nations nearly doubling.
Given the dwindling availability of arable land on the planet, meeting this exploding food demand will require new farming techniques, new crop technologies, new types of seeds and fertilizers, a whole new approach to agriculture - if it's even possible.
The FAO report estimates private investment of $209 billion a year will be needed just to keep the percentage of the world population that goes hungry at current levels. If world hunger is to be significantly reduced, that investment number must skyrocket to $359 billion a year.
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This huge spurt of population growth will affect future food commodity prices in a number of ways. We'll face not just shrinking supply and steadily growing demand, but also, in terms of politics, territorial conflicts and control of distribution systems.
Just this past weekend, U.S. Secretary of State Hillary Rodham Clinton addressed a meeting of the FAO at its headquarters in Rome, warning that global food shortages and spiraling prices could lead to widespread social unrest and political and economic destabilization. She urged immediate action to develop new policies aimed at preventing a repeat of 2007-2008 food riots that hit dozens of developing countries around the globe.
Clinton also urged a united worldwide effort to hold down food commodity costs and boost agricultural production. However, she admitted food prices will continue to rise for the foreseeable future, citing the World Bank's report that its Food Price Index climbed 15% between October 2010 and January 2011 alone.
So given the huge projected increase in world population and the bullish price implications of steadily increasing demand for food commodities, how can you best take advantage of the investment potential the sector offers?
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Investing in Agricultural Commodities Markets
Basically, there are three ways to invest in agricultural commodities markets.
First, if you have sufficient capital and a large tolerance for risk and volatility, you can invest directly in the futures markets, examining the fundamentals and technical outlook in greater detail and opting for the food commodities you believe hold the greatest potential.
Secondly, you can focus on the individual stocks of companies that either harvest or distribute basic foods and will benefit from rising demand, or companies that develop the new agricultural technologies and equipment needed to meet those demands.
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Three potential investment options include:
BRF-Brasil Foods S.A. (NYSE ADR: BRFS): One of the 50 fastest-growing international companies listed on U.S. exchanges, BRFS focuses on the production and sale of poultry, pork, beef, milk, dairy products and processed food. The company and its subsidiaries supply markets in Brazil and 140 other countries, including many developing nations. BRFS has reported steadily increasing quarterly profits since 2009, with earnings totaling 57 cents a share over the past 12 months. The stock, which pays a modest dividend giving a current yield of 1.29%, hit a high of $20.79 in late April, nearly double its May 2010 low of $11.35.
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Deere & Company (NYSE: DE): If global farmers are to meet rising demand from developing nations, they won't do it with teams of oxen and wooden plows. Deere is the world's largest manufacturer of agricultural equipment - from plows and planters to tractors and harvesters. As such, it will get a big chunk of that projected $209 billion to $359 billion in required annual spending, adding to profits that already totaled $4.98 a share over the past 12 months. With the investment, you'll get a dividend of $1.40 a share (1.49%) and the wisdom of lots of analysts for institutions, which hold 73% of the stock.
Monsanto Company (NYSE: MON), recent price $65.27 - Just as Deere will benefit from rising global agricultural-equipment sales, Monsanto will profit from the need for new crop technologies. As one of the world's top developers and suppliers of seeds and herbicides, as well as research into agricultural biotechnology and hybridization (known as "genomics"), MON has a leading role in increasing global crop yields and improving farmland arability. The company's most recent 12-month earnings came in at $2.32 a share and its $1.12 dividend provides a yield of 1.69%.
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Finally, perhaps the easiest way to gain access to a broad spectrum of higher food prices is through shares in one or more of the exchange-traded funds (ETFs) and exchange-traded notes (ETNs) that target agricultural commodities markets.
Two of the top funds, plus one newcomer, include:
Market Vectors Agribusiness Fund (NYSE: MOO): This fund attempts to track the price and yield performance of the DAXglobal Agribusiness Index (DXAG), which is calculated by Germany's Deutsche Boerse AG, based on prices for the stocks of agribusiness companies whose shares trade on major international exchanges. Fund investments focus on five different sub-sectors, including agri-product and livestock operations, agricultural chemicals, equipment and ethanol/biodiesel. The fund, with a market capitalization of $3.75 billion, has a below-industry-average expense ratio of 0.55%.
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E-TRACS UBS Bloomberg CMCI Food ETN (NYSE: FUD): FUD tracks the 13 agricultural food and livestock futures contracts included in the UBS Bloomberg CMCI Food Total Return index. While the fund focuses on near-term contracts, it smooths out short-term price volatility by investing in three different maturities for each individual commodity. The expense ratio is 0.65%, below the industry average, and the fund has $42.9 million in net assets.
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Global X Food ETF (NYSE: EATX): The newest entry in the food ETF market (and on the ETF roster in general), EATX shares just began trading the first week in May. Geared solely around the consumption of food - including commercial fishing and fish farming - the fund attempts to mirror the performance of the Solactive Global Food Index, which tracks the 50 largest international firms with primary operations in production, development or distribution of food or food ingredients. Unlike the index, however, the fund will limit the holdings in any single company to 4.75% of assets, rebalancing every six months, and will also emphasize investments in firms serving the developing countries. Holdings include such giants as General Mills Inc. (NYSE: GIS), Kraft Foods Inc. (NYSE: KFT) and HJ Heinz Co. (NYSE: HNZ), but smaller companies from 17 countries round out the fund's portfolio. Initial capitalization was not announced, but the operators anticipate having an expense ratio of 0.65%. And, for those who like to mix social activism with their investing, Global X has promised that all profits from the fund will go to fight global hunger.
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Obviously, solutions to world hunger remain far in the future - but, if you put your money behind any of these food commodity-related investments, it's unlikely you'll wind up hungry for profits.
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Source: Money Morning
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