Baring Asset Management has announced plans to launch the Baring Global Agriculture Fund, subject to regulatory approval.

The fund will be domiciled in the UK and will aim to provide long-term capital growth by investing in companies where the majority of earnings are derived from activities relating to agriculture or that have the potential to benefit from this theme.

Jonathan Blake, who will manage the fund, says, ‘With the world’s population growing at around 80 million per year and meat consumption rising sharply as a consequence of rising incomes, particularly in India and China, pressure on food prices is immense.

‘In addition to these factors, interest in biofuels is further increasing demand for soft commodities. Limited resources and bottlenecks mean that supply is struggling to keep pace with demand, while global warming is likely to create additional pressure on supply in the years to come. We therefore believe that agricultural investment is emerging as an attractive long-term investment theme that should have a place in all well-diversified investment portfolios.’

Agribusiness opportunities range from the production of the commodity right through to the end consumer by investing in companies such as suppliers of fertilisers and agrichemicals to increase yields, through farming and the logistical infrastructure needed for delivery, to distributors, processors and retailers.

Barings believes that there are many investment opportunities across this universe. For example, as food prices rise and production becomes more profitable, the resulting rise in farming incomes means greater affordability for machinery and systems. This therefore benefits the agricultural machinery producers along with grain handlers and transporting companies.

Blake adds, ‘While there are plenty of agricultural investment opportunities in the developed Western markets, we believe many of the most attractive ideas can be found in emerging markets around the world, where they are often overlooked.

‘Latin America is one of the areas where we see considerable potential to benefit from these trends. Brazil and Argentina have two of the most efficient agrarian sectors in the world thanks to natural rainfall and fertile soils, and the importance of agribusiness to their economies reflects this.’

For more information visit www.baring-asset.com