Which Crop is the Next to Pop?

Agriculture can be contradictory asset class, with investors often viewing the opportunities as both over-heated and under-invested. But throughout our research with investors and managers alike, all signs points to permanent crops as the next segment to pop. 

Many investors lump long-time favorite timber into the permanent crop category – and there are some relative newcomers like palm oil and perennial energy crops that are also getting attention. But more frequently, we’re hearing that the more niche permanent crops are the ones to watch. Investors love these “boutique” items, such as avocados, almonds and pistachios because they, often command higher prices resulting in higher margins. There’s even a shift within individual commodities – with the more profitable and easy-to-peel Clementine orange gaining traction over the more cumbersome Valencia version. And with last summer’s drought still fresh on the mind of many investors, permanent crops are often viewed as a more palatable investment amid environmental instability. 

Of course, there are risks. While permanent crops may be a better buy amid weather volatility, they are subject to market volatility and the whims of consumer demand. And while Asian countries are among the biggest purchasers of U.S. permanent crops, there’s some anxiety that China will become a hefty competitor in some categories in the not so distance future.

Currently row crops still dominate, accounting for roughly 70% of most Ag Investors portfolios but with permanent crops showing so much promise we expect allocations to increase.

How do permanent crops factor into your agriculture investment strategy? Tell us and get involved with the AgReturn conference series. Contact Conference Producer Diana Middleton, dmiddleton@iirusa.com, for more details.

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It’s all about the money…

In the wake of continued market volatility, the fear of the fiscal cliff, regulatory uncertainty and incredibly low yields; investors are asking how much more can they take.

(Photo: 401(K) 2012)

The answer is a lot. The reason is because they have to. Over the last six months, we have been speaking with investors of all shapes and sizes and one theme that carries through all the conversations, regardless of the size of their portfolio, is they want to put money to work. 

And while there is significant consensus among investors about getting into the markets, there is clearly no consensus as to how to access the markets. 

Some investors, like large wheel heeled managers with significant assets under management, others are focused on emerging managers, while others don’t seem to know what they want only that they want something that will earn them a return.

However, returns, it seems, may be tough to come by. We searched the web and found few articles that illustrate just how hard it is to put up returns today:

Apple: A hedge fund liability?

Eurekahedge: Hedge Funds Up Marginally In Nov.

US Hedge Funds Struggle to Get Ahead

The only way to get in the game is to start playing the game. What better way to get involved then by attending GAIM USA in January. To learn more about the conference and how attending can help you make better decisions click here.

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Two Things Agriculture Investors Can’t Miss

The researchers at IIR have spent the summer working closely with investors to gauge and measure the best investment strategies in untested sectors. Agriculture is one of the most fascinating alternative asset classes there – and because ag is so multi-faceted, deploying the right strategy is critical.

We have two exciting opportunities for agriculture investors.

New AgReturn Webinar: Aquaculture Stewardship Council (ASC): Adding Value & Transforming the Market

• Sharpen your aquaculture strategy. Aquaculture is a blossoming industry that is ripe for investment, thanks to the global appetite for responsibly farmed seafood and new certification programs and standards managed by the Aquaculture Stewardship Council (ASC). We’ll be hosting an exclusive Webinar on Tuesday, Sept. 25, 2012 at 10:00 AM EST with Chris Ninnes, CEO of ASC. He’ll be walking participants through the ASC standards and how they create value for agriculture investors. Register to participate in this complimentary live Webinar here.

The AgReturn Innovators Award

• Thrust agriculture innovation into the spotlight. We’re honoring agricultural entrepreneurs with the AgReturn Innovators Award on November13, 2012, during a ceremony at the Renaissance Chicago Downtown. The winner will be chosen by a panel of prestigious investor and industry judges, including Edward Shonsey, CEO of L1 Agrosciences Inc. and Paul Zorner, Operating Partner at Pegasus Capital Advisors L.P. 

The award honors an individual or company that is focused on making an impact in the agriculture food chain, with the winner receiving a speaking slot at AgReturn San Francisco, slated for May 2013.  Click here to see the awards criteria and nominate a company.

To get a truly in-depth look at the best agriculture investing strategies, you’ve got to be at AgReturn Global Investments this November in Chicago. The price for attending goes up on Sept. 21, 2012 – so save your seat for the lowest rate today. 

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Fifty Shades of Ag Investing

Agriculture as an asset class has gained major traction with investors of shapes and sizes in the last few years. Institutional investors’ allocations to agriculture are expected to grow from 1% of portfolios to 5% in the next five years according to industry estimates. That increase in investment is sorely needed. According to UN estimates, by 2030, the world will need at least 50% more food, 45% more energy and 30% more water. In short, the population of the planet is growing faster than its food and water supply. To learn more about the coming shortage click here.

(Photo: thegreenpages)

The metrics alone are cause for urgency, and our research shows that investors are paying attention. But with so many entry points into agriculture investing, investors are still forming their strategies.

Many institutional investor players have entered the game with farmland investments, although some are turned off by lofty valuations in the U.S. or lagging yields abroad. Others are pondering agribusiness private equity plays, both domestic and in emerging markets poised for growth.

The research is clear – there is an abundance of investment opportunities in ag across the food chain, from inputs to row crops; farms or packaged goods; grain elevators or disruptive technologies. In a relatively untested industry, investors are hungry for tried-and-true agriculture investing strategies.

Our AgReturn series, which released its agenda this week, gives investors the inside scoop on the myriad opportunities in agriculture, including commodities, farmland, biotech, crop protection and many others. This is a comprehensive view of an overwhelming space that highlights true success stories in an industry some have worried is the new cleantech.

This year’s AgReturn speakers have accomplished a lot in ag recently. They’ve debuted the hottest non-Facebook IPO of the year; sold portfolio companies to major corporate agribusinesses; or set the stage for governmental agriculture policy.

It’s a feast for investors who are hungry for opportunity. Click here to see a bit more about the November program.

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