Tuesday 2 August 2011

Basic survival - Why Agri investments makes sense

I am not the greatest investment fundi, but I have read enough books and studied enough financial/investment theory, to have developed some sort of a opinion on investments in general.

I am a avid believer and follower of buffetology - hence I would rather spend time on analysing a business or industry's core competitive advantage and strategy, than spend weeks on end trying to establish whether a share is undervalued (in order to make speculative short term trades) - hence this post.

I really truly believe in the importance and future of African agri-business.Yes, South African agriculture offers great opportunities but also risks - especially with regard to the land redustribution and certain "ruling party youth league intellectuals" and their calls for "grabbing" farm land. But the reality is this, all business opportunities has underlying risks - and more than often, if not allways, the most successful investors/entrepreneurs are those taking the risks everyone else seem to deem too risky.

Why African agri-business? Well two simple reasons - first, the world's population is growing (people need to eat and allready shortages exist - basic supply and demand) and secondly, Africa has a agricultural potential so immense and untapped that the only logical consclusion would be to get stuck in - before the rest.

Obviously not many people have the financial or technical means to go and buy a grain or cattle farm and get their hands dirty, but surely this is not your only option. An extremely attractive alternative that I believe offers great potential is a JSE listed company called ZEDER investments. The company is the brainchild of PSG boss jannie Mouton who is widely considered as one of SA top businessmen and entrepreneurs and is backed by a highly regarded directorate. It is well diversified into several of the different "agri value chains" through shareholding in listed entities such as Kaap Agri, Distell, Capespan and Pioneer foods, to name but a few. This is defenitely a long term investment opportunity not to be missed.

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