Consider the following statistics:
- There are now 80 million new mouths to feed every year.
- By 2030, the United Nations estimates that demand for agricultural products will be about 60% higher than today.
- Developing markets are seeing an increase in annual protein intake of 11% to 15%
- We now have about half the arable land per person that we had 40 years ago.
- In 2030, China's meat consumption will be more than double the 1997 levels of 41kg.
The DWS Global Agribusiness Fund is basically a play on the fact that it is expected to be increasingly difficult to feed the world with the resources we have. Unless something really catastrophic occurs to wipe out much of the human population on Earth, the global population will definitely continue its exponential growth. This growth will encroach onto arable land and eventually reduce the ratio of arable land per person.
The Fund therefore invests into the most basic of the Maslow's hierachy of needs, food. However, it goes one step further to invest along all parts of the agribusiness chain to broaden the opportunities available to be tapped.
The DWS Global Agribusiness Fund presently has a significant exposure to agricultural products and those sectors that deal most directly with its production. This positions the Fund well to reap solid gains from its core theme of "feeding the world". However, it must also be noted that agriculture had traditionally been one of the most volatile industries, exposed to Mother Nature's capricious ways. A pure equity fund, inherently volatile, coupled with the highly volatile nature of the underlying businesses, this Fund potentially belongs amongst the riskier of the choice of equities funds.
I like the theme of this Fund. While it is a risky bet, the fact that it is going to be increasingly difficult to feed the world cannot be denied. It becomes most appreciable to those who live in areas that are lacking in arable land and have to import most of the food required for subsistence. However, this Fund definitely should be held only as part of a well diversified portfolio and the duration of hold should be long term so that the ups and downs can be well ridden out.