Berry nice assets
Move over blockchain, agriculturerelated investments are shaping up as the next frontier for investors.
Last month the largest fund manager in the world, BlackRock, launched the iShares Emergent Food and AgTech Multisector ETF (NASDAQ: IVEG), an exchange traded fund that tracks companies that benefit from food innovation and agricultural technologies.
New technologies around food production will help solve climate change issues.
“The world’s climate initiatives won’t succeed without addressing agriculture in some material way,” says Ammar James, co-manager of VanEck Future of Food ETF (YUMY), in a Morningstar article.
While IVEG tracks the Morningstar Global Food Innovation index and YUMY is an actively managed ETF, both have a holding in Corteva, a listed agriscience company that posted double-digit sales in the first quarter of 2022.
Taking a different approach, homegrown fund manager Warakirri Asset Management runs the Warakirri Diversified Agriculture Fund. The fund invests directly in higher value sub-sectors such as horticulture (nuts and fruits), viticulture (wine and table grapes) and, more recently, the berry sector.
“The Australian berry sector in recent years has moved from being a net importer to being a net exporter, with high demand from the Americas, China and South Africa,” says Steve Jarrott, portfolio manager at Warakirri.
Although the impacts of inflation on income yield in agriculture can vary, there is a clear trend that in periods of high inflation, values of farmland assets do increase at their highest rates.
“The median price per hectare of Australian farmland increased by more than 18% in 2021,” says Jarrott.
In the US, local investors can also invest in farmland assets through a new online real estate platform called AcreTrader. Launched in 2018, the platform is open to high net worth investors only and requires them to hold their investments in the platform for three to eight years. The platform made its first international farmland purchase in November last year when it bought a farm for mandarin oranges in Queensland.