Last update : 28.10.2010
The boom beyond commodities: A new era shaping global food and agribusiness
Sidwell B., Rabobank
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The global food and agribusiness industry is set to undergo significant changes in the coming years. Increased demand for food and animal feed, as well as the growing use of crops of biofuels require greater deployment of scarce agricultural resources, and have shifted the industry’s value proposition upstream. As a result of this dynamics, new opportunities are been created in both developed as well as emerging economies, leading to tremendous growth potential that extends beyond the boom in the commodities market. While much interest in agriculture has emerged from financial and strategic investors alike in recent years, significant attention has been placed on the downstream segment of the food and agribusiness value chain, where business models are more easily understood by investors. Indeed opportunities continue to exist in the downstream. However, Rabobank believes that the fundamental driving the current boom in agricultural commodities have moved some of the best investment opportunities to the up- and mid-stream segment of the value chain. Thus, instead of focusing on the commodity themselves, the aim is to highlight opportunities emerging for food and agribusiness players who are best positioned to benefit from changing dynamics in the world market, especially agricultural producers, input and equipment players who support producers, as well as food industry players whose products are aligned with lifestyle changes which are taking place more rapidly in emerging markets, particularly in Asia. As is characteristic of commodities, particularly in agriculture, cycles bring peaks and troughs and, as history demonstrates, the drivers tell the story. In comparison with commodities booms of the past, one unique and substantial driver of the current commodity cycle has been the emergence of biofuel initiative around the world, which have added an “f” to the factors of demand, namely food, feed, fibres and, now, fuel.
Added on 19 May 2010
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