The key themes for agri-investment success you probably know nothing about What is involved? What does it take? What do you have to do?……and how much does it cost? This is the science (not alchemy) of transforming farms from underperforming conventional orthodoxy into healthy, resilient, successful ecological systems. It is not alchemy as it is real and we are not creating ‘nuggets of the purest green’. Capex is not the […]
Catchy Headline You may recently have seen the following article http://nacla.org/news/2017/01/06/how-tiaa-funds-environmental-disaster-latin-america, or at least seen it covered elsewhere. It is certainly a catchy title. Perhaps not one that investment institutions would seek to be part of but, nonetheless, that is how it turned out. So how did so many serious and ‘sustainable’ (groan) investment institutions become committed to a strategy approach that generated the one thing they all claim to […]
March 2017 New Zealand Update The latest dairy auction saw prices decrease by 6.3%; the second decline in a row. Fonterra’s payout forecast for the season 16/17 of $6.00/KgMS is holding firm. This decline is not yet putting the payout forecast under too much pressure. New Zealand’s terms of trade rose 5.7% in the fourth quarter of 2016. Export prices rose 5.7% and import prices rose 0.1%. Dairy led the […]
December 2016 New Zealand Update The latest dairy auction saw prices decrease by 0.5% with the key whole milk powder declining by 0.8%. Fonterra’s recently revised forecast for the season 16/17 of $6.00/KgMS is well up from the opening forecast $4.25/KgMS. This decline in the auction is the first since early October and appears to be something of a consolidation after recent significant increases. The organic forecast is unchanged at […]
September 2016 New Zealand Update The latest dairy auction saw prices increase by 7.7% with the key whole milk powder up 3.7%. Fonterra’s recently revised forecast for the season 16/17 of $4.75/KgMS is up from the opening forecast $4.25/KgMS. It is however, still below the estimated average cost of production of $5.05/KgMS for this season. Losses continue to be the reality for conventional producers although the mood is certainly improved. […]
We have noticed increased interest at the paddock level in organic management systems at the same time as we are experiencing a wave of active interest from an investment perspective. In this note we explore some of the implications of these developments. Appetite for Organic As investor demand for genuine and measurable HSI (high sustainability investments) increases, so too does interest in an organic approach at the paddock level; driven […]
Conventional production has had two years of large losses and is expected to have a third in this coming season (2016/17) Average cost of production for conventional is $5.25/KgMS with a milk price of $3.90/KgMS this year and $4.25/KgMS is the opening forecast for the next season (16/17) Organic average cost of production is below $4/KgMS and the organic milk price forecast for 16/17 is $9.20/KgMS Yields from grass […]
Liquidity Both Ways Acquiring farms is not like trading futures. I know because I have done both. Liquidity is often mentioned in the context of farmland and its relative lack thereof. When people do mention this however it does not seem to extend to the other side, i.e. buying not selling. The implication being that when you wish to buy there will be a positive river of exceptional asset availability. […]
Through disruption and distress one sector keeps winning. Welcome to the reality of food’s greatest success story. ORGANIC Long-term Success What other sector is so profitable with strong growing demand and constrained supply and over such a long period of time? What other sector has all these performance advantages and yet historically has been ignored, denied or derided. Investor Jim Rogers has pointed out previously that when they ridicule your […]
Fonterra, the large NZ dairy farmer owned milk processor and exporter, recently announced their organic price forecast for season 2016/17 at $9.20/KgMS. This is an astonishing 236% above the conventional forecast for 15/16 of $3.90/KgMS. Even with the increase in the conventional forecast for 16/17 to $4.25/KgMS, the premium for organic is still three figures in percentage terms. The difference at the farm gate in practical terms is between significant […]