Agricultural Asset Class Growing Strong, Experts Indicate at HighQuest Partners Conference
HighQuest Partners LLC -- TOPSFIELD, MA -- May 18, 2010 -- Similar to the dramatic growth of mutual funds in the 1990’s and exchange-traded funds (ETFs) in the 2000’s, investment options for exposure to the global agriculture sector continue to multiply. Today’s landscape accommodates a wide range of portfolio diversification strategies including liquid and illiquid alternatives (real assets) such as ag infrastructure, food processing, permanent crops, row crops, and ag/soft commodity funds as well as direct ownership in farmland through a range of financing vehicles, commodity funds, and ETF trading. Until the current surge in commodity interest took off in 2003, investments in agricultural real assets were comprised primarily of private cropland owned by wealthy investors and family offices, the occasional allocation in timberland by pension funds, and a small cadre of ag specific funds used by a small network of institutional investors seeking exposure in the sector.The number of ways for institutional investors, wealthy individuals and family offices to participate has expanded dramatically within the last five years offering a range of options worthy of the famous Morningstar cube. Over 400 professionals from 22 countries attended the Global AgInvesting 2010 conference, held May 6-7 in New York City, to learn more about this emerging asset class and to discuss various ways to deploy capital in the sector in a socially responsible and economically viable manner while generating risk-adjusted returns satisfying the most conservative college endowment or public pension fund board of trustees.
A long-time agricultural investment fund manager who invests capital in the sector in both the U.S. and Brazil commented that “six years ago, there would have been two investors in the room.” Tom Hertz, CEO of Hertz Farm Management, agreed, pointing out that while his company has been in this business for over 60 years, “at no other time has there been such wide-spread and sophisticated investor interest in the sector; the enthusiastic and serious attention being paid to this sector today is dramatically different from a few years back.”
The range of investment choices showcased at this event by various ag funds included production land for row crops (such as corn, soybeans, canola, wheat and cotton), livestock (including cattle, dairy, swine and poultry), aquaculture, permanent crops (such as almonds, fruit orchards, vineyards and oil palm), and infrastructure (barge and truck fleets, railroads, terminals and port facilities) in various combinations. Of particular note were regional options appealing to specific investor risk versus reward preferences in locations throughout the U.S., Canada, Brazil, India, Uruguay, Russia, Ukraine, Kazakhstan, Sub-Saharan Africa, Australia, New Zealand, Argentina, and Indonesia.
Grupo Iowa, one of the event sponsors, captures the spirit of these new investment options: it is run by multi-generation, transplanted Iowan soybean farmers who are offering investors soybean and cotton land investments, brokerage, and management services in Bahia, Brazil. During a session of Global AgInvesting 2010, Black River Asset Management (Cargill’s private equity unit) highlighted their investment focus on food production, food processing and distribution with a specific focus on dairy and aquaculture production throughout Asia, Central and South America. For investors seeking diversification in the global agricultural value chain, few limits exist today on the range of available choices.
-by Gregory S. Mellinger, HighQuest Partners
For more information, contact Greg Mellinger at: gmellinger@highquestpartners.com
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