Every year the Australian Department of Foreign Affairs and Trade (DFAT) publishes a list of Australia's top 25 exports by $AU dollar value and measures the percentage growth over the past year and past five years.
It will be no surprise to many investors that iron ore ( largest), coal (second), natural gas (third) and gold (fifth) occupy dominant positions in our trade portfolio. But there's another export, boasting an average of 11.1% growth per annum over the last five years, which could well be the most important Australian product.
So, what is it?
Wheat. It's an important export because Australia has one of the world's best climates for producing grain, as well as ample space for farming. Furthermore, Australia's chief grain exporter, Graincorp Ltd (ASX: GNC) today announced its plans to take a 10% stake in leading Egyptian flour miller Five Star Flour Mills.
Why should I care?
Costing around $10 million and funded from existing cash reserves, the acquisition gives GrainCorp foreign currency exposure, an additional source of revenue, and an all-important voice in international markets.
Despite weak performance so far this year thanks to poor farming conditions, Graincorp is in the perfect position to serve a growing demand for food amid a growing Asia and the Middle East. Better yet, Graincorp's price is hovering around a three-year low, making it look appealing to an investor with an eye for the future.
What can I do?
Well if it tickles your fancy, buy Graincorp of course! Or at least add it to your watchlist, preferably alongside fellow farmer Australian Agricultural Company Ltd (ASX: AAC), a beef producer and exporter.
One of the key markers of an economy developing from 'third' to 'second' to 'first world' is an increase in meat consumption and demand for processed foods like bread. As a first world agriculture nation surrounded by emerging nations, Australia is in the perfect position to become the region's food basket over the next thirty years.
Investors need to remember that there are significant fluctuations associated with agriculture investments however (drought, political interference a la live export ban, trade agreements, etc), and take a more long-term view of their investment – five years, minimum.
Alternatively you could take a look at other, more conventional resource investments. One resource in particular has the benefit of booming domestic production, combined with shrinking global supply and a weaker Aussie dollar to make it that little bit more lucrative.
I'm talking about oil, of course, and as part of our commitment to helping Australians invest better, The Motley Fool has released a free special report into the black gold. It takes literally thirty seconds to access – simply click on the link below – and it is completely, absolutely, FREE!
