Wednesday, July 30, 2008

Speculative Food Chain Consolidation

Data points on the consolidating operations of the ancient absolute capitalistic hierarchial food powered make work enterprise - where it's absolutely obvious that food is gold.
Huge investment funds have already poured hundreds of billions of dollars into booming financial markets for commodities like wheat, corn and soybeans.

But a few big private investors are starting to make bolder and longer-term bets that the world’s need for food will greatly increase — by buying farmland, fertilizer, grain elevators and shipping equipment.

One has bought several ethanol plants, Canadian farmland and enough storage space in the Midwest to hold millions of bushels of grain.

Another is buying more than five dozen grain elevators, nearly that many fertilizer distribution outlets and a fleet of barges and ships.

And three institutional investors, including the giant BlackRock fund group in New York, are separately planning to invest hundreds of millions of dollars in agriculture, chiefly farmland, from sub-Saharan Africa to the English countryside.

“It’s going on big time,” said Brad Cole, president of Cole Partners Asset Management in Chicago, which runs a fund of hedge funds focused on natural resources. “There is considerable interest in what we call ‘owning structure’ — like United States farmland, Argentine farmland, English farmland — wherever the profit picture is improving.”
and this;
This is not a passing craze, according to Christopher Wyke, commodities product manager at Schroders. “We are in the early stages of an extended bull market [for agricultural commodities].”

He expects it to last 15 to 20 years, after the preceding 25-year bear market, during which affluent Europeans and Americans learnt to take food for granted. “The problem is that it is difficult to invest in agriculture. There are very few agricultural producers that are quoted.”
Remember, if you can lock down production and stockpile supply – you can control price. That's the endgame, checkmate.