Received two separate notices of agribusiness research studies late last week. I found them particularly intriguing, as I'm doing some genealogical research right now and have recently discovered a whole bunch of Canadian farmers in my background.
But that's not the only reason. Frankly speaking, my instincts tell me that there is real investment opportunity in agricultural businesses of all sorts, ones that marry a love of the land with advanced knowledge of chemistry and biotechnology. I know this sort of thinking contributed to the biotech bubble a few years back, but there is real policy momentum and investment behind this movement now that hasn't been there in the past.
The reports I discovered last week help confirm some of my gut feelings about this. The first provides a view into the investment picture associated with agricultural businesses, including those meant to support biofuel production. The second looks more deeply into the case for sustainable and organic farming methods, using a long-term research study in Europe for specific evidence.
Here's a little synopsis of what you can expect to learn in each report, as well as links to where you can find them:
- "Investing in Agriculture: Far-Reaching Challenge, Significant Opportunity: An Asset Management Perspective." This report was written by the DB Climate Change Advisors (which is part of Deutsche Asset Management) in conjunction with The Nelson Institute's Center for Sustainability and the Global Environment at the University of Wisconsin-Madison. It estimates the demand for various crops based not only on changing populations but on the increased use of biofuels. It maps this growth to existing production capacity and suggests how this will affect land use (not just for existing farmland but for land that could be reclaimed for farming purposes) as well as production technology. The use of biotech crops is also discussed. All of this is mapped against investment opportunities across the agribusiness landscape: fertilizers, biofuels, irrigation equipment, management and infrastructure development.
- The second study is published in the June 2009 AMBIO: A Journal of the Human Environment. It is called "The Value of Producing Food, Energy and Ecosystem Services within an Agro-Ecosystem." The motivation for the research is the worldwide decline in ecosystem services; the report seeks to illustrate that organic and sustainable farming practices can reclaim some of this value. It uses a program at an experimental farm in Denmark, where both food crops and biofuels are produced, as evidence. The study reaches back into 1995 for its data. It suggest reallocating existing agricultural real estate in similar ways to reclaim value, not just for personal gain but for the global good.