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Croft Leominster President Kent Croft explains how investors can benefit from growth in agriculture.
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Is on the panel this week all right well forget about the gold rush it's still food -- investors should be talking about those global demand for food is on the rise.
That's a one -- find out how can you make sure your portfolio is ready to cash in as well -- we break down the fundamentals with.
-- -- -- -- value fund portfolio manager and can thank you so much for joining us.
He's safe food is the new oil land is the new gold.
So what's driving the to -- for crops.
-- I think agriculture.
Is an area where we see sort of tail winds fur many years to come.
I'll preface everything by saying is that we are very much long term low turnover tax efficient type investors so we're looking for areas.
Where we can buy.
Good companies and hold them for for many years and this area.
Is been driven by a lot of demand pressures.
Currently and looking out in the future from population growth.
Are emerging markets.
Becoming getting more protein in their diets.
And also demand competition with fuel from the demand side and on the supply side.
There's a lot of issues as far as some increasing yield per acre.
Higher -- land we've used a lot of -- the low hanging fruit and efficiencies.
Have been taken away.
So what we've done over the last fifty years which is increase.
Yields by a 150%.
Per acre.
We have not a lot left on the plate.
You could argue that ethanol -- is a cutting back a little bit on corn.
Right it's yet imminent.
Does say here about -- -- 20% 128% of the corn crop is used for ethanol.
But.
In the US and IA but that's also it's a big importantly it's a big issue globally and not in same Brazil -- -- a lot of sugar cane for ethanol and use a lot of -- transportation and even more.
And that's size so it's just more competition down the road for fruit for food.
-- case let you mentioned emerging emerging markets was seen tremendous boom in population have you exactly play that annual fund.
Right -- there's a number of companies and they're all US based companies really but op operate globally.
The most obvious one is to buy a you know is we have John Deere no great best in class type company that trades about ten times earnings.
And you know they operates.
Very efficiently around the world that you know and it -- you know more advanced you know tracker technology -- that type of thing.
Other companies include -- mind.
Which is leader in center pivot irrigation.
Water fresh water usage.
-- agriculture uses about 70% of available fresh water so.
Anything you can do to save on no water make that more efficient.
Because those are issues also cross across the globe bomb and they -- -- international is well.
All right see you say that basically you'll focus then based on these suggestions -- US space -- -- -- this global reach especially in developing in the developing world.
Right I think it's did oil it's it's very much an issue in in the developed world as well but -- the biggest bang for your buck over the longer term is going to be from the developing world correctly but we should point out something you said right at the top can't that this is full long term investors.
Right.
True true we think -- You know way you know when you have market pullbacks like you do now I think -- opportunity get in some these you know good companies for the long term.
But.
You know they can't go up and down by that we think that you have sort of this positive bias.
With these growth factors for high and decent visibility of growth for awhile another company as senior notes that I can that's -- -- it's Trimble Navigation this is GPS for farmers how does that work.
Right come basically they take you know advanced GPS technologies and -- court systems.
And enable farmers to utilize they're they're -- land to the -- nth degree in other words.
Put their -- where they should be.
Position there equipment most efficiently and anything they can do again this is all about you know getting more yield per acre.
And finally Monsanto Italy and genetically engineered seeds -- you like that flight.
Yeah again yield per -- I'll go back to it you know having corn -- -- drought -- different drought tolerant corn.
Which can benefit you know -- emerging market especially.
You know areas like Africa and the Middle East.
What you're -- challenged.
And you know other parts of the world they -- an added advantage over many other seed companies and and and nine their technologies.
Fascinating stuff food the new oil thank you so much Ken Crawford Crawford -- -- the president and croft value fund portfolio manager thanks for joining us today.
Thanks for having me.
