c/p specialist fund management mag Only a total global economic collapse would derail the long-term growth prospects for agricultural commodities, according to Eclectica's Espen Baardsen. Baardsen, a former Premier League footballer who has managed the firm's Agricultural Futures fund since its June launch, asserts that prices of corn, wheat and soybeans still remain relatively cheap, despite inflationary pressures. He remains overweight in these commodities, citing favourable demographics, particularly in Asia, where he believes that continued urbanisation and a shift to more protein-rich diets will drive prices higher. "The more protein that you eat requires more and more grain, because virtually all the meat - chicken, pork and cattle - comes from feedlots, with animals kept in small quarters, and they eat particularly corn, soybeans and wheat," he explained. "In that sense, to create 1lb of beef, you need 7lb of grain, and for 1lb of chicken you need 2.5lb of grain." He explained that, because of lower inventories relative to usage, there's been a lack of investment in the whole agriculture supply chain for the last 35 years, and that's why prices are going up now and will continue to rise. Baardsen acknowledged that advancements in genetic engineering may present another way of satisfying higher demand for foods - which could in turn be bad news for investors. Both his fund, and Eclectica's Agriculture equities vehicle - managed by George Lee and Hugh Hendry - have been hit by downturns in June and July, though he attributes much of this to the strength of the dollar, which has had a massive impact on all commodity prices. He added: "We're producing more and more food every year, and that's partly down to genetic engineering - corn yields in the US are twice what they are in Europe because they are using modified seeds. However, demand still outstrips supply, even though supply is going up." - Thats all very well, but who is going to win the Championship?:]]
Espen is spot on. Farmland has risen in price worldwide and is still rising for the reasons given above. Buy the allotments and grow biodiesel to raise funds to Buy Back the Vic.
