If I was writing this post 10 years ago I would have no doubt started by highlighting some speculative resource stocks. Exploration companies which have made a lot of people really rich. But if you are like me you will acknowledge that the hopes of investing in the next big Iron Ore Company are past us, and we will need to be a little cleverer with how we invest to find those big gains.
I have seen the headlines, and I am sure you have too. “The resource boom is over”. I don’t buy that, in reality the resource boom isn’t over, but it’s shifted. Blessed to live in a country rich in resources like natural gas, minerals and other resources, we have been quick to forget about the abundant supply of farm quality land. This is the new resource, and by all projections it is about to boom.
It is estimated that by 2050, over 50% of the population will be in Asia, that’s right, on our door step. This growth will have a significant impact on the availability of land to produce food, and see a dramatic increase in the demand for food. Conservative estimates show that over the next 38 years world agricultural output will need to increase by between 70%-100%. Further still, the middle class population of the world is expected to increase from 1.8bn to 4.9bn in the same time period. On current trends the cost of food could increase by 200% in just 10 years.
While the above is scary in some respect, Australian enterprise has a real opportunity to capitalise.
And this is when I introduce to you Beston Global Food Company (Unfortunately, we could not get stock quote ASX:BFC this time.). Recently listed on the ASX represents huge future growth potential. At the time of writing you can buy in at $0.35 a share.
What attracts me to BFC is the broad portfolio of investments in the agricultural sector, and the vertical integration strategy. BFC owns a stake in a number of companies, and owns some outright. While some are concerned about the sporadic nature of the investments, and the lack of control BFC will be able to exert over some companies, I consider this to be the greatest strength. The broad portfolio mitigates the risk usually associated with agricultural companies with weather and scandal, and the vertical integration means that investors get to stamp the ticket at each stage of the process.
The strategy is fairly straight forward, the below is from the IPO;
“BFC will own the underlying land, buildings and improvements of each of the farms purchased, but in the main will not directly operate the farms or raw material producing assets.”
My 2 cents? With the gap between global food supply and global demand projected to surge in the imminent future, this is a good long term option.