First State Global Agribusiness fund
Sheridan Admans, investment research manager at The Share Centre, explains the benefits of investing in agribusiness and highlights the strengths of the First State Global Agribusiness fund.
"The theme of Agribusiness looks to benefit from population growth, rising living standards and the increased use of biofuels driving demand for agriculture products. The sector is showing signs of benefiting from long term, demand-driven trends.
"Investors willing to accept the higher level of risk associated with sector specific funds, the First State Global Agribusiness fund provides exposure to a good global coverage of companies that are involved in the agricultural industry.
"According to the US Census Bureau, the world population is expected to rise from 7.02 billion on 6 June 2012 to 8.2 billion in 2030. Population expansion should promote the need for more efficient use of technology to meet demand and quality of produce, replenishment of raw materials and the distribution and efficient use of the globe's most precious commodity, fresh water.
"In addition, there is the higher impact of urbanisation in many emerging economies. This should lead to higher wages, better living standards and a movement away from low energy produced food staples to a demand for meat and dairy produce.
"It's not just the emerging economies dietary changes which are having an impact. In the West in the last decade or so we have experienced increased demand for organic produce. Land producing organic produce yields 50% less than a fertilised field and requires considerably more water. (Source: Agarbericht 2007).
"The fund has a relatively short history as it was only launched in May 2010, however the management team have a wealth of experience managing natural resources.
"The benefit of investing in the companies or a fund that specialises in this sector is that, regardless of weather patterns, disease and drought, these companies seek to enhance yields, stream line production, replenish raw materials and reduce water wastage. This should add value to the business in which the fund manager invests without being exposed to less controllable elements such as weather."