The agriculture sector is a global industry but it remains dominated by small-scale, family-owned producers. Other institutions’ sector research is confined mostly to the commodity divisions of large institutions or trading houses while equity research is usually carried out by country analysts predominantly with regional stockbrokers. Futures markets have been around for decades but the idea of equity investment in industrial farms is a relatively recent one. Meanwhile, investment managers seek to minimise risk with quarterly earnings predictability while the companies themselves remain relatively illiquid and agriculture sector output is driven by factors including the weather which deliver anything but predictable outcomes.
Combine all these factors, throw politics, economic distortions and structural change into the mix and a complex picture emerges. We interpret these issues and provide our clients with independent advice and useful information that allows them to develop their businesses in this dynamic environment.
Our research group seeks to promote a wider understanding of the sector for a restricted number of clients in the investment community. How should one value these complex enterprises? How does an investor deal with short-term earnings volatility which conflicts almost entirely with the need for quarterly earnings stability? What will the industry landscape look like a decade hence? Which sub-sectors will emerge as winners and losers in the years ahead?
We don’t do “solutions” or provide “mission statements”, we try to avoid the horrors of management-speak and we prefer not to plague our clients with overworked powerpoint presentations. We do challenge conventional wisdom and avoid throughput in favour of independent advice. We seek to dispel the many myths that inevitably build up in a business undergoing structural change. Above all, we give advice that is in clients’ long-term interests and not based on short-term fees.
