With certain areas not able to cope due to typhoon damage or
hurricanes literally tearing everything up all over the place it would be wise
to look for relatively safe places to plant your agricultural investment. For
rice, Thailand is still a world leader despite recent flooding. For other
foodstuffs, it is hard to look further than Brazil. The Financial Times (FT) had
a headline earlier in 2010 which said, “Superpower Is Ready to Feed the World.”
For those surprised by this comment, it should be remembered that Brazil is the
top exporter of beef and chicken as well as green coffee, soya, orange juice,
ethanol and sugar. It is also number four in pork and maize. However, there are
problems. As the FT report goes on to say, “In Brazil, analysts say output is
reaching its limit and the investment needed for growth, especially in transport
infrastructure is falling short.” Transport not only includes roads but rail and
waterways. It is interesting that Roberto Rodrigues, the former Brazilian
Minister of Agriculture says, “If I was an investor, I would put my money in
logistics and fertilizer. The opportunities are fantastic.” Remember how
beneficial fertilizer would be to the Indian farmer as well - also see below.
We touched earlier on the world’s population and how it is
the cause of many of its problems. We will discuss the elderly later but we also
need to look at the young. In many countries, a large percentage of the
population are teenagers. We need to, and please forgive the pun, harvest their
potential and take advantage of their vitality. How? I do not know but there is
always something round the corner. For example, there were massive food
shortages after the Second World War but these were soon covered (some might say
masked) by the Green Revolution. This was a brilliant piece of breeding work by
researchers in Mexico and the Philippines who bred stiff-strawed varieties of
wheat and rice that could stand up to high nitrogen fertilizer applications and
which had high yield potentials. The results were almost unbelievable increases
in grain production.
Whilst oil prices were low the package of inputs required by
the high yielding varieties were affordable by all, even by countries which had
only negligible amounts of foreign exchange. Though countries were not always
consistent in their priorities, it is true to say that the use of fertilizers
and farm machinery increased quite markedly in the developing countries during
the 1960s and 1970s. In Bangladesh, for example, the use of commercial
fertilizers rose from 275,000 tons in 1969 to 830,000 in 1981. A significant
increase, though small compared to the 48 million tons used by America in 1982.
With application and invention it is plain to see that
agriculture and farming is in a position to provide many investment
opportunities which will benefit not only the investor but the world generally.
In the last decade alone, the rapid expansion of the emerging
market economies and the creation of a middle class for the first time in these
countries has made it patently clear that food, land, water and energy are
becoming ever more important. It is only a couple of years ago that oil prices
reached an all time high and so put up the price of almost everything. This is
one of the reasons that China has been combing the globe buying up physical
assets wherever it can. It is protecting its future supply of resources and is
one of the reasons why it owns so much of Africa.
Thus is can be seen that the growth in population and the
increase in wealth of people all over the world is one of the main reasons for
the upsurge in demand for all natural resources - including rare earths (see
previous article).
Another ‘benefit’, from an investment point of view, of an
expanding population is the fact that people will get older. In a recent article
in the UK Telegraph, it was reported that the Department of Work and Pensions
expect that nearly a fifth of the people alive now in the UK will survive until
they are at least 100 years of age. These factors will put strain on the
healthcare sector and not just the pharmaceutical industries. There will be a
growing need for sustainable healthcare facilities, retirement villages,
hospitals and medical centres. All of these will require investment.
Not only this, but the basic fact is that infrastructure
development has fallen behind the rate of urbanization in the developing
nations. This has led to a poor quality in living conditions, overcrowding and
poor sanitation. All of this has increased the levels of fatality and sick
leave.
The improvement in living conditions also requires the
provision of healthcare in many different forms. One of the more pertinent facts
is that a two tier system is being formed whereby the basics are covered by the
government and the private sector will take care of those who can afford it.
This also allows the opportunity for investment at both the corporate and
individual levels.
The basics are that even though population growth is a major
cause of the world’s problems at the moment, it is also providing many
investment opportunities. The more people there are then the more food, water,
energy, land, infrastructure, healthcare and education they are going to need.
All of these require funding and so provide opportunities for the investor.
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The above data and research was compiled from sources
believed to be reliable. However, neither MBMG International Ltd nor its
officers can accept any liability for any errors or omissions in the above
article nor bear any responsibility for any losses achieved as a result of any
actions taken or not taken as a consequence of reading the above article. For
more information please contact Graham Macdonald on [email protected]
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