Calculating the amount of land planted with agri produce, 2012 should have seen the biggest harvests ever in the US, the world’s largest grain exporter. But it did not exactly happen like that. The country’s corn-belt was hit by the worst droughts since the 1930s and the impact on global food markets was exacerbated by dry weather in Russia and Brazil.
This is set to lead to a period of “agflation”, with food prices due to hit new record highs in 2013, according to Rabobank’s Food and Agribusiness Research unit.
The current bout of price rises is mainly affecting commodities that are largely used in animal feed such as corn and soybeans, as opposed to the last bout of food inflation in 2008, when the price of staple foods such as wheat, maize and rice doubled, hitting the world’s poor hardest.
Agricultural companies however are priced significantly below their long term averages as equity investors have not yet adjusted to this new normal.
“Demand for agricultural commodities is expected to outweigh supply as these key macro trends continue,” says a report from the UN’s Principles for Responsible Investment*.
As well as pension funds, the sector is attracting insurance companies and sovereign wealth funds, no doubt aided by the increasing press coverage, educational efforts by funds like the Food and Water funds from Global Fund Exchange and a number of investor conferences on the subject.
On February 26th and 27th, Anric Blatt, portfolio manager of the Food and Water focused AquaTerra fund will be speaking at the Global Ag Conference in Abu Dhabi. Click here to read more about the conference, download the program and register.
Global AgInvesting Middle East (February 25-27, 2013) offers a comprehensive overview of agriculture investment opportunities, risks, and return profiles across all major global production regions, as well as strategies for diversified ag portfolios including regional variation, private equity, liquid investments, water, and protein plays. Produced by HighQuest Partners, GAI Middle East will highlight strategies for ensuring food security, including outsourcing and technological advances. Panel discussions will provide attendees with a picture of the agriculture investing landscape and a clear idea of where the real money is moving in the space.
GAI Middle East is produced in conjunction with the Food Security Center of Abu Dhabi