Agri Business

Agriculture has become an attractive investment destination for a number of reasons. Most important of all are the strong market fundamentals in support of the sector, on both the demand and supply side.

An increasing population, changing demographics, reductions in arable land and climate change have led to an urgent need for more food and increased productivity.

Asset Class Performance

Agriculture has historically outperformed other asset classes including stocks, bonds and real estate. Agriculture has yielded 13.69% since 2000 with a standard deviation of only 7.58%.

African Swine Flu

China, the world's largest pork consumer, producer, and importer, experienced the largest animal outbreak in history, ASF, in late 2018. With no approved vaccine, mass slaughter was the only way to prevent transmission.

The outbreak cost the industry $130 billion, and China increased pork imports from countries like Brazil and the US, causing other countries like the Philippines to struggle.

Why the Philippines?

Demand for pork in the Philippines far exceeds available supply and will be this way for years.

(1) Domestic production has dropped 34% over the past two years due to ASF and (2) imports rose 142% in 2021 but are unable to cover the shortfall due to high tariffs and insufficient global supply as most supply is being sent to China. Today, a 600k mt pork shortage.

The Philippines as a country is the 8th largest consumer in the world yet the only one facing such a deep and prolonged crisis. For example, China is expected to recover its lost domestic production by next year but this will take years for the Philippines - due to poor breeding stock, low quality farms and because it is one of the only countries in the world lacking an import disease examination area.

Agriculture as An Asset

Agriculture falls under the broad asset class known as "real assets" which are physical in nature and provide hard tangible ownership. Other real assets include real estate and commodities such as gold. Agriculture as a sector has been rising in prominence over the past decade reaching over 8 USD trillion in value.

To put this figure into perspective it is larger than the value of all gold ever mined and the global professionally managed real estate industry. Additionally, the industry accounts for approximately 30% of global GDP.

Food Security and Sustainability

Significant investment is required into the agricultural sector in terms of capacity and more efficient sustainable methods of production.