From seed to stomach, the food movement is capturing the world. There are celebrity chefs, cooking shows, organic markets, new farming techniques, urban farms, genetically modified seeds that increase yields and an entire activist movement that spans the globe speaking out on everything from product labeling to leftovers.
The world’s richest man, Bill Gates, is devoting the lion’s share of his fortune to agricultural innovations. Jim Rogers, the famed global investor, proclaims that if you want to make money—become a farmer.
With such a mind-boggling supermarket of disruptive players, agents and opportunities—the $7.6 trillion agribusiness market is the world’s biggest industry—where on earth do you or should you invest to create the most impact, both financially and socially?
To identify both the obstacles and opportunities in this industry, Private Wealth interviewed those putting their money where their mouths are:
Richard Lackey, founder,
The Global Food Exchange
The GFE is the world’s first exchange for critical relief supplies. When disasters strike, governments and relief agencies need to be able to service affected areas with a ready supply of food and water. This is where the GFE steps in. With “Relief Vaults” on hand, supplies can be shipped more quickly to meet an urgent need. Investors can play their part by participating in a food-price arbitrage.
“We’ve been able to create a management strategy for investments directly in food,” says Lackey. He notes that the majority of traditional food investments are commodities-driven. And those investments are bets on short-term movements. The GFE has upended the traditional system by revolutionizing inefficiencies in the production and distribution of food and related supplies.
“As long-term food investors, we’re able to buy for the opposite end of the spectrum. We can buy when certain products are in oversupply,” Lackey says. “Then we can sell at traditional market price or at a slight premium.”
Funds target a 10% to 12% annual return. And with a global focus, GFE can source production in the developing world to provide economic benefits and sell to governments and relief agencies in the developed world.
As natural disasters continue to rise (in the last 10 years, 7,594 disasters have killed more than 1.8 million people and affected more than 2.8 billion others, at a cost of more than $1.365 trillion), the emergency supply and food sector is likely to rise, too.
GFE targets high-net-worth investors, family offices and institutional investors who buy in via partnership interests. It’s a unique fund strategy and one worth checking out: www.globalfoodexchange.org
Duane Dahl, founder, Agrilicious
Agrilicious is all about local farming and the benefits that accrue from buying locally: the health benefits, energy benefits, economic benefits and community benefits.
Dahl, a serial entrepreneur and investor, launched agrilicious.org with the mission to expand the family-farmer connection while celebrating the food experience. The site is a hub that connects local farmers with markets and consumers.
Dahl, who has created and sold numerous Internet properties, says, “Our food system is at a unique point of inflection in time. The food shift, top to bottom, is upon us,” he says. “Our school systems are embracing change—Internet entrepreneurs are focused on contributing through socially beneficial technologies—and even Walmart now sources $4 billion from over 1 million small and medium-sized farmers nationwide. These are exciting times.”
Indeed, Walmart describes the dynamic this way: “By forming direct connections between farmers, markets and training, we are strengthening local economies, providing access to affordable food and establishing supply chain transparency.”
There is a good business reason for the big retailer to strike relationships with local farmers: Small and medium-sized farmers in emerging markets will be counted on to meet half the increased global demand for food and clothing through 2050.
In today’s flat world, investing local may, in fact, be a global play.
More information is available at agrilicious.com.
Larry Kopald, co-founder,
The Carbon Underground
In addition to focusing on local farms, farming technique is a growing space of investment interest.
“If I were looking to make money and make a difference, I would look straight down, for that’s where the big money is about to be found,” says Kopald, echoing comments by international investor Jim Rogers, the chairman of Rogers Holdings, that agriculture is the new “new thing.”
Fertile soil, it turns out, is a diminishing asset, and as a result food prices can do nothing but rise—even without the addition of another two billion mouths to feed by 2050.
“Topsoil is disappearing, yields are threatened due to over-chemicalization of that soil, and the new research connecting industrial agriculture to climate change means change is imperative,” says Kopald. “The good news is that this change is also very lucrative. Here are the facts: Industrial agriculture contributes more man-made CO2 to the atmosphere than the burning of fossil fuels, yet—despite industry claims—does not lead to greater yields or food security.”