Wheat woes spell good news for investors in agriculture

Investors beware, short term gains I agree, but speaking as someone who has worked in the agricultural industry for 37 years, I have seen more false dawns than I dare to count. Given favourable weather conditions in the northern hemisphere this autumn, farmers will not be able to resist planting a record acreage of wheat given current prices and we will be back to square one again with over supply and difficult market conditions probably exaggerated by speculators shorting.

As a hungry investor, innovation driven environmental scientist and former agriculturalist, I am looking to land based investments as both sound investment and a contribution to sustainability. Good funds with high credibility seem few and far between.

I am particularly keen on sustainable forestry investments such as investment in sustainable management of rainforests. Its a real shame that the novel schemes promoted by Emerald Knight etc are outside FSA regulation and dependent on voluntary verification of carbon credits/sustainability etc. for credibility (theyre also into Ukraine agriculture).

There is a real need for some kind of official global verification of sustainable land based investment such as a UN register by km/sq. I feel this is really where sustainable ethical investment needs to be going, eg real CO2 action/biodiversity/food production. I would get involved in developing if there was an interest. (envisci@onetel.com)

Slightly off the subject but very closely related. Any fund etc recommendations ?

Richard

No disrespect to Mr Cheung but why would he say anything else?

Glencore only want a wheat export ban to get their contracts out of trouble, the market will correct any shortage, ethanol production will drop due to input costs hitting profitability ,BP may come back into their own with gasoline production,all the stupid set aside schemes such as beetle banks need ploughing up along with wide margins for field edges bankers may like us again and lend more than 50%of value to buy agricultural land to farmers instead of speculators,remember intervention stores full of grain to cushion shortages we were slated in the press for them, give everyone at defra not required for health and food quality the sack that would get them of our backs and let us produce food not bat and vole habitats,the paperwork saved would drive a large CHP plant and the non productive wages saved could be used to manufacture agricultural machinery as it is now nearly all produced abroad with our CNC machines

we have never since rationing finished in the fifties failed to feed our nation and there is no reason for anyone to be hungry now.

I suppose money grabbing farmers will be the next headline

if you want to know where to put your money put it in agricultutal land not in some rotten bank who will not lend to agriculture and let us farm it on a profit share

All good comments - thank you.

For a broader agriculture fund then we recommend the Sarasin AgriSar as our pick for the theme in Citywire Selection.

On forestry and timber then Pictet Timber fund, launched in 2008, is still new but has faired well. iShares also offer a global forestry ETF, that tracks a basket of equities in the sector.

As someone with no vested interest in anything agricultural I find something slightly immoral and distasteful about speculators making money out of a shortage of one of the world's staple foods, don't you?

Russian wheat export ban is definitne and starts 15 August ( see Reuters announcment below)

12:40 05Aug10 RTRS-PUTIN'S SPOKESMAN SAYS RUSSIA GRAIN EXPORT BAN TO COME INTO FORCE FROM AUG 15

12:50 05Aug10 RTRS-Russia grain export ban to start Aug 15-Putin spox

MOSCOW, Aug 5 (Reuters) - Russia's grain export ban will come into force as of Aug. 15, Dmitry Peskov, the spokesman for Prime Minister Vladimir Putin, told reporters on Thursday.

Earlier on Thursday, Putin announced the ban on the export of grain and other agriculture products made from grain, as Russia battles with drought and crop loss due to the worst heatwave on record. [ID:nWLA0253]

Re: 'something slightly immoral and distasteful about speculators'

Lets think about the circumstances required for an investment in an agriculture fund to cause an increase in poverty or starvation. That's a tough one. Maybe if the fund buys enough shares to increase the share price of a company which ties-in farmers to genetically modified crops, then increases prices and bankrupts them, and the increased share price allows fund raising which is invested with the result of increasing the harm done. That's a very tenuous chain, and unless someone else can do a lot better I'd suggest that investing in an ag fund is not going to cause suffering (except to the investor if it goes wrong). That is why I do not see such investment as imoral.

It may well be distasteful to many, as taste is a personal and subjective issue.

Regarding ag funds, I haven't found many, some have performance fees and some don't (worth checking). Personally I prefer ag funds which concentrate on food production rather than 'food to fork'. If you believe in the scenario of increased demand and inflexible supply, you need to think about where the moat is ('moat' as in barriers to entry). I don't think it's particularly in restaurants or brands (especially if food gets really scarce). I would expect new entrants if agricultural machinery became a high margin business.

Victor Meldrew - I quote "High wheat prices and potential global shortages of the world’s main staple could provide short-term benefits for investors involved in the agri business". get the point now?

Victor Meldrew ( if you're still with us),

Take a look at an Agri ETF fund which I fell across recently.

tidm : AGRI (USD) or AGRP(UK £). I didn't want to invest into agri futures which to me seem like a gamble on next years weather so when I tripped into this etf fund it was like an answer to my prayer. The ETFx (managed by by ETF Securities) tracks an index of around 30 global agricultural companies engaged in four sectors: a) Seeds, Chemicals and Fertilizers, b) Equipment and Irrigation, c) Commodity Agricultural Products and d) Livestock Producers. Fees around 0.6%pa and dividends reinvested into the fund.

Fact sheet below at :

http://www.etfsecurities.com/en/updates/document_pdfs/ETF_Fact_sheet-ETFS_S-Net_ITG_Global_Agri_Business_Fund.pdf

I'm no investiment expert but this looks good to me.