Ben Yearsley: Fund with an appetite for food and agriculture

The Analyst

Food, glorious food!
Hot sausage and mustard!
While we're in the mood...
Cold jelly and custard!

No, I'm not auditioning for the next Andrew Lloyd Webber musical, but you would be justified in asking why I am starting an article on investment in this way. Quite simply, I'd like to focus on food and agriculture this week as I believe that it is an excellent, long-term investment theme.

Globalisation, urbanisation and rising wealth in emerging markets is resulting in rapidly changing diets across the globe. The consumption of meat, processed foods and packaged foods is rising and subsistence foods are decreasing.

This has enormous consequences for the world economy. Not only is meat and processed food more resource-intensive to produce, but the global population is increasing. By 2050 it is predicted that there will be 9 billion mouths to feed, up from 7 billion today.

This is creating challenges, but also opportunities.

Henry Boucher, manager of the Sarasin AgriSar fund, looks for investment opportunities "from field to fork". In other words, he studies companies across the agricultural spectrum including those that own land; those providing inputs such as feed and fertiliser; machinery suppliers; transport and storage businesses; food processors; retailers; and the "lips and hips" businesses – those marketing products for tackling health issues.

He recently returned from a fact-finding trip to the Far East, and in his view the dynamics of the agriculture theme haven't changed. The demographic story is intact, and inhabitants of the developing world are leading increasingly Western lifestyles. They want more than just basic foodstuffs, and markets in China now supply cherry and vine tomatoes as well as more traditional beef tomatoes, for example.

Mr Boucher does not invest directly in agricultural commodities, such as corn and wheat, or take a bet on commodity prices.

He believes the theme is best played through food producers or supermarkets. Key holdings include Thai food producer Charoen Pokphand Foods and China Green, a Chinese vegetable supplier.

Shoprite in Africa is also catering to more sophisticated palates with its supermarkets targeting both high and low-end consumers.

There are few large companies in this space which can be a problem, but he is happy to put in the extra effort and discover attractive, smaller companies.

To grow increasing amounts of food, more fertiliser is required. This is big business and usage remains strong, especially in China.

With only a few fertiliser producers in the world, it is easier to increase sales and margins. One of the biggest is Potash Corp of Canada, and Mr Boucher views recent share price falls as a buying opportunity. He also owns a 2.5 per cent stake in Uralkali, a Russian potash producer.

Indonesia is another country he believes is full of opportunity. It is home to 240 million people and somewhat unbelievably 100 million of them have yet to taste a can of Coke! Indonesia is difficult to penetrate, partly because there are only 1,000 kilometres of tarmacked road, making distribution difficult.

One company he thinks is succeeding is Coca-Cola Amatil, an Australian business that bottles Coca-Cola and other beverages. It is experiencing steady growth of 4 per cent to 6 per cent per year, but in Indonesia growth is 25 per cent per year. He continues to watch the company, looking for an opportune time to invest.

It is fair to say this fund is a big play on emerging markets. There is approximately 30 per cent direct exposure to emerging markets in Asia and a further 20 per cent through companies quoted in developed markets but generating a large proportion of their sales in emerging markets. I don't see this as an issue, as over the long term this is where growth in world markets is likely to come from.

There will be ups and downs, but you have to accept some volatility in exchange for potentially higher long-term rewards. I believe Mr Boucher and the Sarasin team provide an excellent way of accessing this long-term theme.

Please sir, can I have some more?

Ben Yearsley is investment manager at Hargreaves Lansdown, the asset manager, financial adviser and stockbroker. For more details about the funds included in this column, visit

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

The sun rises over St Andrews golf course, but will it be a new dawn for the Royal and Ancient Golf Club?
sportAnd it's Yes to women (at the R&A)
Arts and Entertainment
Friends is celebrating its 20th anniversary this year
tvSeries celebrates 20th anniversary
Yaya Touré (left) and Bayern Munich’s Spanish defender Juan Bernat
footballToure's lack of defensive work is big problem for City
voicesApple continually kill off smaller app developers, and that's no good for anyone
Arts and Entertainment
Liam Neeson said he wouldn't

Liam Neeson's Downton dreams

Wembley Stadium
footballNews follows deal with Germany
Arts and Entertainment
A spell in the sun: Emma Stone and Colin Firth star in ‘Magic in the Moonlight’
filmReview: Magic In The Moonlight
A 'Sir Alex Feguson' tattoo

Arts and Entertainment
Ben Whishaw is replacing Colin Firth as the voice of Paddington Bear

Thriller is set in the secret world of British espionage

Life and Style

ScienceGallery: Otherwise known as 'the best damn photos of space you'll see till 2015'
Life and Style

Bomber jacket worn by Mary Berry sells out within an hour

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SQL Developer - Watford/NW London - £320 - £330 p/d - 6 months

    £320 - £330 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Head of Audit

    To £75,000 + Pension + Benefits + Bonus: Saxton Leigh: My client is looking f...

    Audit Manager Central Functions

    To £85,000 + banking benefits: Saxton Leigh: You will be expected to carry out...

    Credit Risk Audit Manager

    Up to £90,000 + benefits: Saxton Leigh: Credit Risk Audit Manager required to ...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week