Wednesday, December 5, 2012

Forget About the Heartland – Agriculture Investing Is Hot in Asia

Thanks to historically high barriers of entry, such as low liquidity, institutional investors only own roughly 3% of the agricultural farmland market, according to Bloomberg estimates. And as U.S. investments, such as farmland, fetch ever-escalating prices, investors are looking toward other markets to put their money to work.

Asia - Satellite image - PlanetObserver
 (Photo: PlanetObserver)
Many are eyeing Asia, a continent with rapidly changing consumer tastes, nutritional cognizance and discretionary spending as the place to be. Asia’s been touted not only for its non-traditional ag investment opportunities – but the region’s huge number of consumers impacts many non-Asian ag investments.

Take, for example, Deutsche Bank’s pitch to investors for Fonterra Cooperative, a New Zealand dairy. Investment analysts say Asia’s growing taste for dairy could provide an upside for investors. The demand also creates an optimal M&A climate, according to this WSJ story.

Last month, Victor Lean, managing partner of Singapore-based Caudex Asia shared his thoughts on Asia-focused private equity opportunities at AgReturn Global Investments, an investing conference in Chicago.

While investments in other emerging markets, such as Latin America, tend to focus on the perennial favorite – farmland – he focused on opportunities in extricating value in other links of the Asia supply chain, including fertilizer, post-harvest technology and processing. Whether it is dairy or farmland, Ag is clearly a place to extract profits in the near and long term.  Our next Ag Return event will be in June of 2013 stay tuned for updates and information on this sector of the market.


Peter Thompson said...

This is especially true considering that China's arable farmland is shrinking.
farmland investment

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