Global agricultural trends in the 21st century are clearly leading to soft-commodity inflation. Popu...
Global agricultural trends in the 21st century are clearly leading to soft-commodity inflation. Population growth, increased caloric consumption and changing diet (including more protein) all contribute to a current rise in global food demand of 2.5% per year (this figure rises to over 3% if you include the growing demand for biofuels).
Based on current capacity, the world just does not have the ability to support that type of growth, and we have to rely solely on productivity growth, increasing at a little over 1% a year.
The combination of an increasing world population (due to hit nine billion by 2050, according to a United Nations report published in February 2008) with an underlying trend for urbanisation, means less agricultural land is available.
The increased growth of protein in diets is a rapidly accelerating trend in developing countries, and the drive towards organic food in the developed world - which uses land less efficiently - both add to the global strain on land.
The amount of land required to produce 1kg of beef is the same as that needed to produce 200kg of tomatoes and 160kg of potatoes, so as developing markets demand more meat, the added strain upon land is clear. Governmental demand for biofuels is also adding to the global resource problem.
Our fund (a recently launched Luxembourg-domiciled Ucits fund) looks at how these themes can also translate into investment ideas that have the potential not only to benefit investors, but also to direct much-needed investment into raising the productivity and efficiency of the agricultural sector.
With limited land resources, the emphasis has to be on improving the efficiency of crops and via investment in more efficient farm equipment in developing markets.
We believe that it is all about investing in the agricultural sector around the world on a long-term basis, aiming eventually to bring supply and demand into balance in order to feed the world's booming population in the most efficient way possible.
- Global agricultural trends in the 21st century are clearly leading to soft-commodity inflation
- Demand on agricultural resources is increasing, based on various factors
- The best way to solve the problem is through increased efficiency and productivity in the agricultural sector.
To promote 'long-term investment'
Switching 'hard and expensive'
Smaller funds still packing a punch
To drive progress