Brazil and China will be Large Wheat Importers in 2009 - Canadian Producers to Benefit
Calgary, Alberta CANADA, February 11, 2009 /FSC/ - Agcapita Farmland Investment Partnership (AFIP - 0),
The United States Department of Agriculture ("USDA") predicts that 2009 will present large opportunities to sell wheat to Brazil and China.
Brazil is one of the world's largest wheat buyers, importing 5 to 8 million tons a year. Argentina usually supplies close to 90 percent of Brazil's needs, but last year Brazil was forced to look to elsewhere due to the agricultural export restrictions imposed by the Argentine government in an effort to suppress domestic food prices. Argentine exports will be reduced further in 2009 due to drought. Brazil will therefore need to source other supplies in 2009 to meet its needs.
China is also facing a drought and will be a significant wheat importer in 2009. China's Ministry of Agriculture reports indicate that 33% of the 24 million hectares China has planted this season are being adversely affected by drought. According to research by Dundee Securities, if yields in the region are reduced by 50%, China's wheat "stocks-to-use" ratio (a measure of wheat inventory levels) will fall below 30% for the first time since 1971. Such a reduction will cause China to be a net importer of 12 million mt of wheat. By way of comparison, Canada's entire annual wheat exports average around 15 million mt.
The United States and Canada will be the likely beneficiaries of Argentina and China's droughts. Both countries have large exportable surpluses (Canada and the US effectively act like the world's wheat swing producers much like Saudi Arabia in the oil markets).
Research by Agcapita shows that the global macro drivers for higher agricultural commodity and farmland prices are still in place: * A decreasing amount of arable land worldwide, proportionate to an increasing population - each year 25 million acres of arable land lost while there are 120 million more people to feed; * An increasing demand for meat calories (as development occurs and standards of living increase) which need more farmland for production than grain calories - each person who makes the transition from an emerging market diet to a developed world diet effectively doubles the amount of crops he consumes due to the multiplier effect of feeding livestock; and * A commitment by many countries (including Canada) to increase the use of biofuels, which will need farmland for production - current mandates alone may require as much as 11% of the world's arable land be devoted to fuel production.
Agcapita is a Calgary based private equity firm that allows investors to gain direct exposure to Canadian farmland via the only RRSP eligible farmland fund in Canada. Farmland is a key part of the agriculture commodity bull market story.
Agcapita's investment team has over 40 years private equity and fund management experience and over $1 billion in total career transactions and previously managed a group of emerging market funds with almost C$500 million in assets for one of the largest banks in Europe. The field team has over 150 years of direct farming experience.
Agcapita's advisory Board is composed of accomplished agriculture entrepreneurs and academics, high profile political figures and investment experts including the former UK Chancellor of the Exchequer, Rt. Hon. Ken Clarke and Jim Rogers, co-founder of Quantum Fund. Our members bring a deep knowledge of the factors driving agriculture and farmland values - including rapidly growing emerging economy food demand and inflation.
For more information:
Stephen Johnston - Partner Agcapita Partners LP 400, 2424 - 4th Street SW Calgary, Alberta T2S 2T4 Toll Free: +1.866.532.8530 Tel: +1.403.218.6506 Fax: +1.403.266.1541 Email: [email protected]
Source: Agcapita Farmland Investment Partnership - http://www.agcapita.com Maximum News Dissemination by Filing Services Canada Inc. * www.usetdas.com
