Peak Fish and Other Insights from Agriculture 2.0

Agriculture 2.0 San Francisco was a great event.  So much knowledge, so many smart people…

Here are the points that stuck with me most on the State of Ag Investing:

1.  The big stat that was most consistently repeated:  The global population will be 9 billion by 2050.

2.  There was a bit of a disconnect here, the sustainable farming faction bumping up against the fact that if the world went to all-organic farming overnight, half of humanity would starve to death immediately.

3.  There are some amazing startups working on things like bio-pesticides (naturally-occurring agents to fight pests instead of chemicals) and nutrient imput technology (not all areas of a field require the same amounts of fertilizers, 2/3rds of all used fertilizer is wasted).

4.  The water guys were here, they view water as the most unappreciated and undervalued ag commodity of all.  They look at water as the software of agriculture, the land being the hardware.  They point to the fact that Bill Gates couldn’t convince IBM of the importance of software – water investors and owners view themselves as being overlooked in much the same way – for now.

5.  Everyone speaks to being aware of geopolitical risk when making international farmland investments, but there are no real concrete solutions.  The guy from TIAA-Cref, a huge farmland investor, acknowledged that there is a real risk of land being confiscated in a true geopolitical crisis scenario.  At least the ag guys acknowledge worst-case scenario risks.

6.  Emily French is a Rockstar.  She trades both ag property and agricultural commodities and makes many appearances on CNBC.  She also dropped a few curse words on stage before I had the chance to, so that helps.  You’ll have to watch for her, she knows her stuff.

7.  It is very early, farmland-wise.  Less than 1% of US farmland is held by investing institutions.  Most importantly, there is almost no leverage in the system…so far.

8.  The threat of China becoming a big importer of corn is very real – they’re expected to buy 1.6 million tons this year and there are estimates of up to 15 million tons being imported into China by 2015.  This against the backdrop of 15 year supply lows.

9.  Aquaculture could get hot.  There is a real thing called Peak Fish – the amount of ocean-caught fish is flat over the last decade.  Peak Fish, who knew?

10.  This is most important: There is an Agriculture Put according to many of the hedge fund guys here.  This means that yes, ag commodities will be susceptible to a rise in interest rates in the short-term – but they must be bought furiously if and when they come down because nothing the Fed does can change the demographics and population realities.  Ultimately, the improving and increasingly diverse diets of 7 billion people will trump the end of QE2 and there is one direction for consumption to go.

I’m glad I came out here to be a part of the conference, the most important thing I learned is how much more I still have to learn about ag, it is relentlessly fascinating and essential to understand.

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