food for thought

Robin Bromby
From: The Australian
May 13, 2013 12:00AM

Food for thought

YOU have to be careful these days with research reports, so many being "commissioned". We generally ignore what we prefer to call vanity reports, where the company concerned has paid for the work.

However, Aguia Resources (AGR) states that it has not paid Sydney-based Pulse Markets to research it, and it is not often an analyst lets loose with the word "fantastic" to describe an explorer. But analyst Erik Bergseng so describes the exposure AGR offers to the Brazilian fertiliser market.

Aguia is exploring for phosphate, of which the South American agricultural powerhouse still needs to import 50 per cent of its requirements. The Brazilian government has set a 2020 target for self-sufficiency.

But as Pulse points out, that demand will grow. Brazil cultivates less than one-seventh of the potential arable land -- and the balance accounts for 20 per cent of the world's unused arable land.

Brazil is now the world's largest producer of coffee, soybeans and sugar cane and is the largest beef exporter. But its soil is largely nutrient deficient and requires large fertiliser dressing. Aguia has a maiden JORC resource but, as we often caution, nothing is certain until the first day of production (and often not even then).

That said, the weakness in the potash and phosphate prices has put a damper on the sector's stocks. Aguia closed on Friday at a three-year low of 7.5c, having hit $1.56 just over two years ago.

But the world's need for more (and better) food is not going to go away.

http://www.theaustralian.com.au/business/opinion/saracen-to-suspend-expansion-slash-exploration-and-cut-director-fees/story-fnciihm9-1226640638300