Amid the world’s exponentially growing population, companies that are improving the use of arable land are likely to outperform other asset classes, according to Terra Capital.
The boutique investment firm’s founder and chief investment officer, Jeremy Bond, said the food related sector was continuing to attract investor attention and it was for good reason.
The world population was growing at 1.2 per cent per annum, with Asia contributing to a lot of that growth, he said.
“There are issues around availability of fresh water, pest and disease problems, which adds to the existing woes of decreasing arable land available, and bigger issues with declining productivity and salinity problems”.
Because of that, Bond was eyeing companies that had significant technological or business model innovation.
The commercial seed industry was dominated by a small number of transnational pharmaceutical companies who either acquired or merged with their competitors, he said.
Since transgenic crops had been commercialised in the mid-1990s, the sales of seeds had been dominated by BASF, Monsanto, DowDuPont Agri, Syngenta/ChemChina and Limagrain.
Terra Capital launched a new investment, Terra New Horizons Fund, which capitalised on such opportunities in the niche food sector.
The fund had generated a 26.2 per cent return since its inception eight months ago, according to Money Management’s Investment Centre.
The fund held an interest in Abundant Produce Limited, which positioned its products as high quality, and non-genetically modified (GM) and that would benefit both consumers and growers, he said. Abundant Produce was also expected to enter into long-term global sales and distribution agreements for it loyalty payments, Bond said.
To compare the fund to the index and its peers, click here: http://investmentcentre.moneymanagement.com.au/factsheets/mi-mzftt/terra-capital-new-horizons
