By Oliver Balch in Buenos Aires Published: November 23 2009

Equestrian breeding centres line up one after another along the highway into Pilar, a smart satellite town an hour from Buenos Aires. In polo circles, the stretch is simply known as the Golden Mile. All but a few of the world’s best players have farms here. The UK-based Enigma polo team is the latest newcomer on the block.

Built over 18 hectares of perfect polo-playing terrain, its new state-of-the-art complex boasts 40 stables, a 320-metre exercise track, a private gym and two immaculate pitches. EDITOR’S CHOICE Lex: Argentine fantasy – Oct-26Argentina signals return to credit markets – Oct-23 Editorial: In a tango of debt – Oct-14Argentine protesters suspend bridge blockade – Oct-14 Argentina to resume debt talks with Paris Club – Sep-28 Argentina hopes to settle debts – Sep-22“Our idea is to provide a first class centre where people can come and play polo and where we can also showcase our horses”, explains Malcolm Borwick, an England international player and the principal developer of the facility. Borwick and his French-born patron form part of a growing number of foreign investors moving into Argentina’s profitable polo industry. Australian media mogul James Packer, for example, sponsor of the crack Argentine team Ellerstina, has a ranch on the neighbouring plot. Others to have established breeding centres nearby include Italian businessman Alfio Marchini, UAE tycoon Ali Albwardy and Simon Tomlinson, owner of the Beaufort Polo Club and father of two of Borwick’s England team-mates. As the finals of the Palermo Open on December 5 close the international polo season, it is clear that this exclusive sport has weathered the global recession well, although growth at the lower end of the game has slowed as less well-off club members tighten their belts. “But the very rich aren’t affected much by the crisis,” observes Thomas Hume, manager of La Aguada, one of Argentina’s best teams. The news is welcome in Argentina. Death and bankruptcy are the only reasons to quit polo, according to an adage in the sport. As long as the country’s mega-rich patrons remain healthy and wealthy, its polo industry should as well. Argentina’s ability to turn a profit from the King’s Game, a costly hobby everywhere else, owes much to the world-class quality of its bloodlines. With its historic gaucho culture, this horse-obsessed nation has been breeding pedigree horses for generations. Today, the country’s 550 registered breeders rear around 7,000 polo ponies per year, many of which are destined for export. The best of these can fetch $50,000 or more. Enigma’s breeding programme currently counts 50 ponies, all of which will be destined for sale to foreign players once they are match ready. “It’s much more expensive to breed in Europe or the US. So it makes much more sense to breed ponies here and then export them later,” says Guillermo Buchanan, a member of the Argentine Association of Polo Pony Breeder’s executive committee. Argentina’s low cost base owes largely to its plentiful and inexpensive prairies, coupled with cheap rates for expert labour. The home of polo has also carved out a niche for itself in embryo transfer, a form of genetic engineering that is banned in racehorse breeding but legal for polo ponies. Again, economics plays a role in Argentina’s success. At around $2,500 per transfer, the cost is about a sixth of what it would be in the UK, points out Eduardo Padilla, a breeder from Buenos Aires province. “After more than a century breeding horses specifically for polo, the Polo Argentina pedigree breed has the best genetic profile for the sport,” he adds. La Irenita embryo clinic, one of the largest in the country, sells more than 1,000 embryos per year. Around 70 per cent are inseminated into a receptor mare and then sent overseas. A second major factor in Argentina’s ability to turn polo into a lucrative business is its crop of exceptional players. Of the 12 best-ranked players in the world, 11 are Argentine.

The odd one out is from neighbouring Uruguay. Wealthy polo aficionados pay handsomely to take the field with the top players on the planet, explains Diana Butler, spokesperson for the Guards Polo Club, a favourite with the royal family. “Argentina’s stars fly to the UK every summer to play with their regular patrons. That’s what attracts these guys to the sport. It’s not like Roman Abromovich, who sits on the sidelines,” she adds. Argentine polo ace Adolfo Cambiaso, for example, is contracted for an undisclosed amount by UAE businessman Albwardy to wear the colours of Dubai, his private team. In recent years, tourism has also emerged as a healthy sideline for Argentina’s polo industry. From October to December, thousands of international polo aficionados descend on Buenos Aires to watch the Triple Crown, the sport’s three main championships. “More and more people are now going for polo holidays too. You stay in a lovely estancia and have a relaxing time, but you also get to play with some first class players”, explains Ms Butler. La Aguada is typical of the trend. Ten days at its “polo clinic” costs around $4,500. The price shoots up to as much as $30,000 if visitors want to play alongside a squad member in one of the club’s private tournaments. Commercial sponsorship, on the other hand, remains relatively underdeveloped. Big name sponsors such as the jeweller Cartier are few and far between. The decision by US sports channel ESPN to provide live coverage of this season’s Argentine Open championships, however, could well attract more advertisers. Copyright The Financial Times Limited 2009.

By Sean Brodrick, Uncommon Wisdom November 13, 2009 I’m still on my trip to South America. This time, it’s onward to Argentina, a country blessed with rich natural resources, a well-educated population and an economy focused on exports — agricultural goods, as well as lead, zinc, tin, copper, iron ore, manganese, petroleum, uranium. It also has gold and silver, and I’m checking out some of those resources right now. I’ll give you the details on my trip in another issue. For now, I’m just going to show you why Argentina is one of the best places in South America you can invest. From Doom … Argentina achieved notoriety with its economic crisis that upended the country economically, socially and politically from 1999 to 2002. Significant economic problems, compounded by huge debts, led to a currency and debt crisis that toppled the government. If you think that sounds familiar, you’re not alone; plenty of people draw comparisons between Argentina’s financial crisis and the troubles that America finds itself pickled in today. Now for the bad news: By 2002, Argentina had defaulted on its debt, its GDP swooned, unemployment reached 25% and the peso had depreciated 70%. To Boom … Steel-pipe manufacturer Tenaris (TS) is an Argentinian stock that trades here in the United States. But there is good news — if the United States goes down the path of Argentina, then there could be a happy ending. In the most recent (third) quarter, Argentina’s economy grew 8.7% compared with a year earlier. In fact, Argentina’s $328 billion economy is on track to record its fifth-straight year of annual growth above 8%, thanks largely to strong private spending, agricultural exports and industrial production. Also, mining exports have increased 500% in the last decade. Even better for investors and travelers, Argentina has always been a country open to immigration, and the Argentineans have a well-deserved reputation for hospitality. It welcomes foreigners, and investment of foreign money. It’s not perfect — violent crime makes plenty of headlines, and the middle and lower classes are still suffering the effects of the financial crisis. How You Can Invest in Argentina But you don’t have to go to Argentina to invest there. There are Argentine stocks that also trade in U.S. markets.

Some examples …

Cresud (CRESY) is an agricultural company with interests in crop production, beef cattle raising and milk production. Cresud owns 19 farms. The 5-year average annual earnings growth is 57%, the P/E ratio is 22.5 and the price-to-earnings growth ratio is just 0.59 — anything less than 1 is attractive. Since agricultural products are some of Argentina’s top exports, Cresud looks like a “buy” on pullbacks.

Tenaris (TS) is a steel pipe product manufacturer based in Argentina with global reach. Tenaris’ customers include oil and gas companies. Its products include casing, tubing, line pipe, and mechanical and structural pipes. The company’s earnings plunged in the most recent quarter, but steel pipes for global energy exploration is a cyclical business, and a cycle that appears to be on the upswing. The stock trades at 22 times earnings.

Grupo Financiero Galicia (GGAL) is one of Argentina’s biggest private banks. It provides credit cards, insurance, and consumer finance services throughout Argentina. That’s not a bad business to be in when an economy is growing at over 8%. The stock trades at 12.25 times earnings. There is no exchange-traded fund (ETF) to track Argentina’s benchmark Merval Index (yet), but iShares is considering one. The Merval has NEARLY DOUBLED in value since the start of the year, so you might want to wait for a pullback before diving in. Then again, if the central banks of the world keep throwing piles of money at problems, resource-rich Argentina, with its commodity-export focused economy, should continue to reap a whirlwind of gains. Yours for trading profits, Sean

This investment news is brought to you by Uncommon Wisdom. Uncommon Wisdom is a free daily investment newsletter from Weiss Research analysts offering the latest investing news and financial insights for the stock market, precious metals, natural resources, Asian and South American markets. From time to time, the authors of Uncommon Wisdom also cover other topics they feel can contribute to making you healthy, wealthy and wise. To view archives or subscribe, visit http://www.uncommonwisdomdaily.com.

Por Mariano Tomatis
Para LA NACION

Sábado 17 de octubre de 2009

Estamos asistiendo a una de las mayores transformaciones a nivel demográfico en la historia de la humanidad: millones de personas están abandonando la vida rural y se están concentrando en las grandes ciudades para incorporarse como mano de obra en la creciente plataforma industrial que se ha constituido en China.

Los especialistas anticipan que este ciclo migratorio hacia las grandes ciudades que se ha venido produciendo en estos últimos años en China, India y en la mayoría de los países del sudeste asiático continuará profundizándose y probablemente en África se produzca un fenómeno de naturaleza similar.

Esto significa que habrá una mayor demanda global de alimentos en el futuro a raíz del crecimiento esperado de la población mundial y, esencialmente, a partir de la mejora en la calidad de la alimentación por parte de vastos sectores de la población mundial, que se están incorporando al mercado de consumo.

Son numerosos los estudios internacionales de organismos especializados que anticipan que la Argentina está entre aquellos países que deberán inexorablemente incrementar su producción para satisfacer la mayor demanda de proteína vegetal y animal para alimentar a un mundo que requerirá cada vez de mayor cantidad de alimentos.

El mundo espera que nuestro país asuma este desafío.

Tenemos un lugar de privilegio entonces para abastecer esta mayor demanda global a partir de las inocultables ventajas competitivas que tiene el sector agropecuario argentino a partir de una tierra, que sin dudas ha sido bendecida por Dios, pero que también ha recibido el trabajo abnegado de distintas generaciones de productores agropecuarios que han sabido innovar, adoptar nuevas tecnologías y ser pioneros en el desarrollo de una verdadera cultura del “conocimiento compartido”.

Las ventajas comparativas existen y subsistirán a la actual administración:

- Condiciones climáticas favorables (temperatura adecuada y buen nivel de precipitaciones en ciclos normales), que permiten una “doble cosecha” en las zonas mas productivas del país.

- Muy buena calidad de suelos que requieren un uso menos intensivo de fertilizantes.

- Concentración de la producción agropecuaria en cercanía de los puertos.

- Ríos navegables de aguas profundas que permiten una rápida salida al mar de buques de gran calado.

La creciente demanda global por alimentos es una tendencia de largo plazo y no hay elementos a la vista que permitan prever que pudiera revertirse en el horizonte cercano.

Tampoco parece factible la aparición de nuevos “proveedores globales de alimentos”, dada la ya conocida escasez de tierra disponible para la incorporación de nuevas tierras cultivables en el mundo.

Por lo tanto, es indispensable que nuestro país asuma el rol protagónico que le cabe en la producción mundial de alimentos. Sería importante que nuestros líderes compartan esta visión y comprendan que si sabemos capitalizar esta oportunidad no solo se beneficiarán los productores agropecuarios sino todo el conjunto de la sociedad.

En el logro de este objetivo deberemos medir el éxito de la política agropecuaria.

© LA NACION

El autor es socio líder de la práctica de Agribusiness de PricewaterhouseCoopers

2009-10-22 – En el marco de la visita de la embajadora de Nueva Zelanda, Anna Louise Duncan, el ministro de la Producción Juan José Bertero acordó con funcionarios de ese país realizar un Plan de Cooperación para brindar un nuevo apoyo a la cadena de valor Láctea.
Esta acción complementaría las medidas tomadas por el Gobierno de la provincia de Santa Fe en la materia, el que a partir del Decreto N° 1532 fijó la denominada “leche de referencia”, la constitución y registro de productores, la organización de una red de laboratorios externos a las industrias y, la obligatoriedad de que la industria publique los precios al momento de recibir la leche de los productores.

En este sentido, la provincia de Santa Fe tomó la iniciativa y marcó un rumbo en la producción láctea esperando que la misma contribuya a un proceso similar a nivel nacional.
Este nuevo escenario permite posicionar la producción láctea de Santa Fe, de cara a acuerdos con Nueva Zelanda.

La propuesta de trabajo fue analizada y concitó la adhesión de las contrapartes neozelandesas presentes; entre ellos, funcionarios de Nueva Zelanda y directivos de la Empresa Fonterra y de Trade & Enterprise.

El plan propuesto por el ministro Bertero tendría una duración de dos años a partir de su firma y avanzaría sobre el objetivo de aumentar la complementación comercial en un 10% sobre los indicadores actuales.

ACCIONES

Actualización de conocimientos: taller técnico comparativo entre el sistema de producción santafesino y neozelandes (participación de industrias y gobiernos); plan de becas de estudiantes; intercambio de profesionales; intercambio de información.

Misiones Comerciales: dos misiones de delegación santafesina a Nueva Zelanda; dos misiones de delegación de Nueva Zelanda a Santa Fe Desarrollo de Mercado: abordaje conjunto del mercado asiático.
Inversiones: desarrollo de un plan de inversiones en Santa Fe.

ACTORES

Fonterra Cooperative Group Ltd es una compañía neozelandesa multinacional, líder mundial de productos lácteos y el mayor exportador de lácteos del mundo. Organizados en un sistema cooperativo de pequeños empresarios, estos se agrupan en comités o “boards”.

En el 2001, el Nueva Zelanda Dairy Board se fusionó con las dos más grandes cooperativas lecheras para formar Fonterra Co-operative Group, el cuarto productor más grande de leche del mundo. Más de 12.000 granjeros son dueños de la multinacional Fonterra, que aún es operada como una cooperativa, continuando con una tradición de 100 años. Exporta el 95% de su producción.

Trade & Enterprise es la agencia oficial de desarrollo de negocios del gobierno de Nueva Zelanda. La Agencia presta asesoramiento a empresas neozelandesas interesadas en entablar relaciones comerciales en el exterior.

Fuente: La Opinión de Rafaela

On October 5, 2009, in the case “Owners Consortium Libertad 1031/33/35 vs. Teryazos, Michael William on Actions of section 15 of Law 13,512” National Civil First Instance Court, resolved that the implementation of temporary leases on a property should be considered as a commercial activity, and therefore contrary to the provisions of the joint ownership regulation. In the case, the judge established that the execution of temporary lease agreements on a building as usual activity is a commercial activity and is therefore in contradiction with the exclusive destination for home use provided by the rules of joint ownership and building management. In this case, the owner of the property in question hired the services of the real estate agency ApartmentsBA SRL (hereinafter “ApartmentsBA”), acting as an intermediary firm, offered the property to tourists for short term lease, offering various additional services, which was essential to distinguish the activity of the temporary lease permitted by the law of urban leases. From the evidence produced, the Court was convinced that ApartmentsBA allowed the reservation of units per night and offered the property along with a number of additional services to hire temporary, similar to an accommodation contract. These services were offered on ApartmentsBA’s website. Additionally, the contracts were written in English, including atypical clauses that gave travelers the use of furnished and equipped apartments for short term, including the provision of various additional services during the stay, such as housekeeping service, provision of mobile phones, IP phone with itemized billing and other concierge services. With these features, the court concluded that the case was not a temporary lease, but it was the development of a commercial activity, that were explicitly and clearly forbidden by the rules of joint ownership and building management of the apartment. Given that ApartmentsBA is a company with business, and that contracts were executed by ApartmentsBA without demonstrating any representation, management or the owner’s mandate, the court concluded that “although the figure of the lease constitutes a civil act, to be linked to a strictly commercial activity, the agreements executed should be considered commercial acts per connection-being-thus subject to the commercial law”. Finally, based on the reasoning outlined above, the court ruling ordered the immediate cessation of the activities in the property, under warning of receiving a daily fine in case of default. This ruling is consistent with what has been resolved earlier this year in the case “Owners’ Consortium Callao 626 vs. Palacio, Cora Maria”, which banned the temporary lease by a procedure similar to ApartmentsBA’s, in view of the inconvenience to the other joint owners of the building in question. The ruling has been appealed to the National Civil Chamber of Appeals.

Javier Canosa

Canosa Abogados

http://www.cansoa.com.ar     PH 54 11 5252 2462

$2.0 billion

Best known for his heavy involvement in the growth of the dairy industry in Southland and Central Otago since the early 1990s, this Irish Kiwi is more enamoured of horses these days.

Based in Malta and running his global agribusiness empire without a corporate office, Eamon Cleary is investing in a big 485ha state-of the-art thoroughbred and polo pony stud near Buenos Aires in Argentina, where he also has property interests, including a shopping mall development.

But his biggest thrill was earlier this year at the Karaka sales, when he paid $300,000 for a chestnut filly. Not just any filly but one with a direct line back to a mare that sold for $US14.5 million at the Lexington, Kentucky, sales last November.

The filly is destined to become what is known as a Blue Hen – a brood mare that produces high-quality foals regardless of the sire’s pedigree. Cleary spotted the filly’s classic breeding lines because he was at the Lexington sale. The filly was owned by fellow Rich Listers Peter and Phillip Vela and was out of Ireland’s Silver and Roses from the Australian sire Pins.

“Both sides of the filly’s family have the genetics that go to create a Blue Hen mare,” Mr Cleary says.

He now makes less frequent trips to New Zealand, usually coinciding with the peak of the racing season to see some of his runners, but keeps a close eye on his dairy farms and commercial property portfolio.

He funds a chair in Irish studies at the University of Otago.

The chair was officially launched in 2007 during the visit of Irish President Mary McAleese, who also received an honorary doctorate of laws from the university.

Cleary’s idiosyncratic approach to business enables him to run a global business without a corporate structure, headquarters or executive management team. All this slightly built and softly spoken man needs is a phone and secretaries to do his typing and a range of support staff on a per-project basis as and when necessary.

Cleary’s can-do approach to development brought him into conflict with some locals in the Central Lakes area, not to mention the Resource Management Act. He sold some historic cottages in Arrowtown to the council and last year lost a Court of Appeal case involving his Big River Paradise housing development at Wanaka. The High Court had effectively prevented the Cleary property, which is on the north bank of the Clutha River, from being divided into more than three allotments with one house on each. Cleary turned to Plan B, renamed his property Pork Paradise Farm and started a pig farm.

Rains across Argentina in the past two months will boost profit at Cresud  the country’s largest agricultural company by market value, as soybean output recovers from drought, Raymond James Financial Inc said. “The good weather conditions will have a very positive impact on annual earnings,” Francisco Schumacher, 28, a natural resources analyst at the firm in Buenos Aires who rates the stock “buy,” wrote in e-mailed comments to Bloomberg News on Nov. 5. “Bad weather significantly affected yields last year.” Recent precipitation across Argentina’s main agricultural zones has improved the prospects for higher soybean yields at Cresud, the country’s biggest farmland owner with an area the size of Delaware. Argentina, the world’s third-biggest grower of the oilseed, may produce a record 53 million metric tons this year, according to Acsoja, the nation’s producers association. Dry weather reduced the previous crop to 32 million tons.

The drought, which lasted two years in parts of Argentina, caused Cresud’s agriculture and livestock businesses to lose 62 million pesos ($16.5 million) in the fiscal year ended June 30, compared with a 43.6 million peso gain in the previous period, the company said Sept. 9. Schumacher said it’s too early in the crop cycle to estimate earnings for the current year. More than 100 millimeters (3.9 inches) of rain fell in parts of the soy belt from Sept. 1 to Oct. 31, according to Agriculture Ministry statistics. In farms around Rafaela, a town in Santa Fe province, precipitation was 80 millimeters in September and 52 millimeters in October, the data show. Soybean futures for January delivery dropped 17 cents, or 1.7 percent, to $9.55 a bushel Nov. 6 on the Chicago Board of Trade. The drop capped a weekly decline of 2.2 percent, while prices have fallen about 2.6 percent this year. Improvement in Yields “The improvement in yields and the lower costs of leases and fertilizers should allow for a significant improvement,” in profits from grains, Schumacher said. “The grains division is what tilts the scale — it did it for worse last year and will do it for the better this year.” Cresud’s shares, which are traded in Argentina and in the U.S., closed at 5.05 pesos on Nov. 5.

 The Buenos Aires Stock Exchange was closed for a bank holiday on Nov. 6. The company’s shares have gained 64 percent this year, compared with a more than doubling of the benchmark Merval Index. Farm companies provide an opportunity for investors who believe that global demand for food will rise in coming years, pushing up commodity and farmland values, Societe Generale analyst Dylan Grice wrote in an Oct. 15 note to clients. “Agricultural companies are the safest way for investors to gain exposure,” wrote Grice, who is based in London. Argentine Exports Argentina exports 95 percent of its soy production in the form of beans, edible oils, animal food and bio-fuel. Cresud’s farms produced 237,031 tons of grains and oilseeds from 110,875 hectares last year, compared with 198,146 tons from 58,706 hectares in the previous period. Soybean planting in Argentina began last month and continues until January. Cresud’s fiscal first quarter earnings, which are due to be announced on Nov. 12, will probably come too early to reflect the improvement in weather, Schumacher said.

 Buenos Aires-based Cresud reported net income of 124.6 million for the fiscal year ended June 30. The company plans to acquire more land to add to the 484,000 hectares (1.2 million acres) it owns and the 90,410 hectares it leases in Argentina, Brazil, Paraguay and Bolivia, said Alejandro Bartolome, general manager of Cresud Argentina. Delaware is about 1.25 million acres, according to the U.S. Department of Agriculture. “Because we believe prospects for long-term agricultural production and development businesses are favorable, we will maintain our plans of expanding in Latin America,” said Bartolome, who declined to comment on earnings prospects.

Well actually it is a Chile farm Show. 

info@gtsa-chile.com

www.gatewaytosouthamerica.com

Investors from Argentina, Brazil, Spain’s Basque province and China are looking for opportunities in Uruguayan assets given the excellent political stability record of the country and proven reliability of its Judicial branch.

The trend which has been steadily increasing for several years now is proving impervious to the general election at the end of the month, even when opinion polls are forecasting a very tight race. Analysts anticipate that not much will change whoever wins, since the three main political forces of Uruguay have rotated in office, in clean elections, and all have been very careful in their support of orthodox economics and the fostering of foreign investment, a consensus that has prevailed since the country returned to democracy a quarter of a century ago. Precisely at the end of last month Marfrig from Brazil and one of the world’s leading food processing groups, announced the acquisition of a majority stock (51%) in the Uruguayan Tannery Zenda which works mostly overseas with upholstery for some of the most prestigious German car brands. Almost simultaneously Jose Luis Pereira spokesperson for Uruguay’s Autoparts Chamber announced that three overseas companies were interested in establishing themselves in Uruguay to supply foreign manufacturers.

 Argentina has also become an endless supplier of investors for Uruguay. They have crossed to Uruguay looking for investment opportunities not only in the more traditional agriculture and real estate sectors but also in manufacturing and services.  Some of the most advanced Argentine farmers who have settled in Uruguay helping to promote a truly technological “revolutionary” transformation of Uruguay’s agriculture, which historically has been more traditional and adverse to risk.

 In Spain an official Uruguayan trade delegation, headed by Finance minister Alvaro García, met with Basque entrepreneurs who expressed a firm interest in Uruguay’s foreign investors’ legal framework and opportunities to invest in different sectors. A delegation of Basque businessmen is scheduled to visit Uruguay in the near future. Last September a delegation of Uruguayan entrepreneurs visited the International Investment and Trade Fair in China and also returned with good news. “Chinese businessmen expressed interest in knowing more and in depth about what is considered one of the most stable economies of the region and a reliable access to the South American trade area, Mercosur (Argentina, Brazil, Paraguay, Uruguay plus associate members, Chile and Bolivia). “Chinese investors showed a special interest in infrastructure projects, renewable energies, water treatment plants and port facilities” according to Roberto Villamil head of the Uruguayan delegation. China is one of Uruguay’s leading trade partners and since its opening to the capitalist system almost three decades ago, has been the main purchaser of the country’s wool clip and tops.

info@gtsa-uruguay.com

While most commodities prices have risen , agricultural commodities have lagged behind the rally. I think that’s going to change in a big way, thanks to a country with a billion hungry mouths and plenty of cash.

Why has agriculture lagged?  It comes down to a two main  points

Expectations of larger crops in the U.S. and other countries.
Fears that the global recession would weigh on demand for meat. Since it takes a lot of grain to feed pigs and cows, that in turn weighed on expectations of grain demand.
But now, with harvest season upon us, those two fears are fading. Bad weather is dragging down harvests in the U.S. and Australia. And signs of recovery in emerging markets like China are ramping up prospects of meat consumption again.

Another factor to consider is the Argentina and Brazil are the food bowl to the world. As the U.S. dollar slumps lower against other currencies, South American grain becomes more affordable for deep-pocketed foreigners. That lifts up grain sale and prices.

And who is going to buy a lot of their agriculture products? China!

Here are some facts on China that are bullish for the long-term trend in prices

• China is losing more and more farmland to desertification and urbanization. From 1950 to 1975, China lost an average of 600 square miles of arable land each year. By 2000, the loss of good farmland accelerated to nearly 1,400 square miles. Some of the best farmland has been plowed under to build skyscrapers, and only 28% of China’s remaining farm land is considered high-yielding.
• China suffers from low yields. For example, China’s corn yields are less than 80 bushels an acre, half the size of U.S. corn farmers’ yields. And China’s farm yields are only growing at 0.9% annually.
• China has to feed 7.3 times as many people per acre of arable land as the U.S., and three times as many as Europe. And the crisis is worsening because China has 22% of the world’s population and only 7% of its fresh water. What’s more, thanks to pollution, three-quarters of its river water are undrinkable or unfishable. Scientists say the aquifer under China’s northern plain — which produces half of the country’s wheat and a third of its corn — has been dangerously depleted by overpumping.
• China’s per capita grain demand is rising, especially in cities, and it will build a lot more cities. By 2025, China will have added 350 million urban residents to its population — about the size of the entire population of the U.S. today — and by 2030, should have 221 cities with more than 1 million residents.

The really interesting thing about this chart is that you can see the Chinese used to spend much more per capita on food. If that ramps up again, China’s food intake could soar.
Bottom line: According to a report from Societe Generale, if China follows the same path as South Korea, whose economy grew at an average rate of 6% between 1965 and 1989, China’s grain consumption would more than double to 812 million metric tonnes over the next 25 years.

Where will this grain come from? China’s grain stockpiles are near 30-year lows …
So that leaves global grain supplies. While two years of bumper harvests have boosted global stockpiles, as measured by months’ worth of inventory, they still are lower than at any time since World War II.
Speaking of the world, it’s not just China that’s hungry. According to a report from the U.N. Food and Agriculture Organization earlier this year, more than 1 billion people across the world are hungry — an increase of 100 million people in just the last year. The difference between China and most of the rest of the world’s hungry people is that China has cash — lots and lots of money that we ship them every day in return for cars, toys, and lead-saturated toothpaste.
What do you suppose China will do if it needs grain?
China’s Grain Demand Could Explode
Going forward, all it will take is one bad harvest to tip China over the edge from low stockpiles to no stockpiles. If that happens, South America’s grain prices and farm-related stocks could blast off.
So, China’s booming appetite should be good news for South American Commerial farm land

www.gatewaytosouthamerica.com