Farmland and Agriculture equities

[Shane]

I've had an interest in working on creating some analytical reports on farmland companies and Agrochemical stocks.  My background is in soil chemistry / Plant sciences / Environmental sciences and I am interested in applying that background knowledge to investing.  I've been compiling a list of companies which I think are worth analysis and it is quickly growing, I'd love to read what experts think of various companies as I might get insight I did not already know.  Does anyone know of a blog / source of commentary by experts on agriculture investments?

 

I have 2 main goals:

1. I'd LOVE to get farmland as it involves very few assumptions, but I've been unable to find much (CRESY, AGRO, BWEL.PK)

2. Find the lowest cost producer, of any size, of Potash or unique firms creating Nitrogen based fertilizers.  Nitrogen is worrisome because it is created, using fossil fuels.  There is not as much of a barrier to entry there as other firms could create new plants, I'd love to find someone with a patented process here or with a unique method which would be hard to duplicate (UAN for example).

 

Hopefully someone else here is interested and knows of some resources!

[oec2000]

I've had an interest in working on creating some analytical reports on farmland companies and Agrochemical stocks.  My background is in soil chemistry / Plant sciences / Environmental sciences and I am interested in applying that background knowledge to investing.  I've been compiling a list of companies which I think are worth analysis and it is quickly growing, I'd love to read what experts think of various companies as I might get insight I did not already know.  Does anyone know of a blog / source of commentary by experts on agriculture investments?

 

I have 2 main goals:

1. I'd LOVE to get farmland as it involves very few assumptions, but I've been unable to find much (CRESY, AGRO, BWEL.PK)

2. Find the lowest cost producer, of any size, of Potash or unique firms creating Nitrogen based fertilizers.  Nitrogen is worrisome because it is created, using fossil fuels.  There is not as much of a barrier to entry there as other firms could create new plants, I'd love to find someone with a patented process here or with a unique method which would be hard to duplicate (UAN for example).

 

Hopefully someone else here is interested and knows of some resources!

 

Have you looked at SCP.TO (Sprott Resource Corp? They are not completely agri but their other businesses provide diversification and are promising ones anyway.

 

Slightly early days in their farm buildout but they are close to critical mass now. They have an interesting vision of building out the largest farm in North America and want to try and change the traditional farming model by "branding" their products and selling retail (i.e. direct to customers who want assurances of quality and stability of supply). Best part is that you can still get this at a discount to NAV (about 40% of which is effectively cash).

 

You'll find more on their website.

[Ballinvarosig Investors]

1. I'd LOVE to get farmland as it involves very few assumptions, but I've been unable to find much (CRESY, AGRO, BWEL.PK)

Have a look at Limoneira, Maui Land and Pineapple too, and Keweenaw Land Association too. Returns on equity have gnerally been pretty rubbish, I'm not really too sure why you would go near the sector to be honest though.

[Gopinath]

Almost all the agri business have very low return on capital.. We have owned few agriculture land itself not having a management(costs)..even then its pretty low return on investment because of the high price of the land(fertile) itself.. add all the management costs, not very appealing. Not sure if they change in anyway in the future..Prices of the products/productivity per acre due to fertilizers.. Interesting development to watch though!

 

[Packer16]

There is Alico in Florida but the corp govenrance is questionable.

 

Packer

[rogermunibond]

Also BLERF Black Earth Farming.

 

I like the large commodity traders/processors.  Bunge, ADM, Noble, Wilmar, and Louis Dreyfus.  For commodities like cocoa, there are also specialty traders like B Callebaut.  It's an interesting murky world.

[tradevestor]

There was a thread on this, a few months back

http://cornerofberkshireandfairfax.ca/forum/index.php?topic=2895.0

[Guest Hester]

Anyone who has looked at land companies has probably has heard of Tejon Ranch, TRC. The stock has moved up quite a bit recently, and isn't selling too cheaply on a land value basis.

 

However, Michael Price recently did an interview with Bloomberg (the videos since been deleted, so sorry no link) in which he talked about TRC. He thinks there could be oil under TRC's land. Oxidental Petroleum has a large drilling project literally right next to TRC's land, and they've found oil.

 

SO TRC is closed to fairly priced based on their land holdings, but a possible oil find could be a huge free call option.

 

I'm waiting for the stock to get cheaper before I investigate, but if you want a land/agriculture play TRC could be interesting.

[rogermunibond]

Price is referencing the Monterey Shale find that OXY and Venoco (VQ) have made in Kern County.  TRC already receives royalties for oil/gas production on their land.  Do you know if they own the mineral rights to the deeper Monterey Shale or whether they have licensed all mineral rights on their land.  That would help determine if the option even exists.

 

OXY and VQ's Kern land is northwest of TRC land and is centered in Elk Hills field and areas north and west of that.

[Shane]

I apologize for my delayed response.

 

oec2000 - I have added them to my watch list, thanks!

 

Ballinvarosig - I am considering trying to get into the industry as an agricultural analyst - My undergraduate background is in the plant/soil sciences.  I have looked at those firms and was not very impressed.  I am really looking for a company interesting enough to analyze so I can send out my work to various funds to get my foot in the door for an interview.  I've noticed its much easier to get the call back when you do this.

 

Gopinath - I've been looking at fertilizer firms for this reason, I just can't find attractive publicly traded operations.

 

Packer 16 - I am aware of them, they are a day drive away from me!

 

Roger & Hester - Commodity traders are something I know next to nothing about, looks interesting but probably over my head!