“Someone is sitting in the shade today because someone planted a tree a long time ago” – Warren Buffett
By 2050, another 2.3 billion people will call the world home. They’ll demand 60% to 70% more food than is currently available. Between now and 2060, beef and dairy consumption will jump 120% and 100%, respectively, and consumers more generally will demand higher quality ethically-produced products.
Finally, globalisation and environmental change will bring deep shocks and adverse conditions for primary producers, according to recent research from the CSIRO.
Australian farmers — and investors — stand as frontrunners for the expected surge in demand for high-quality foods.
Here are five ASX-listed companies I think you should add to your ‘long-term’ watchlist.
- Rural Funds Group (ASX: RFF) is a property trust that owns a diversified portfolio of quality agricultural products including property, infrastructure, water rights, plants and livestock. It’s a risk-averse alternative for long-term investors seeking exposure to agriculture.
- Ruralco Holdings Ltd (ASX: RHL) is a diversified agricultural services business with 500 retail outlets across Australia. From property sales to water solutions and grains and wool, Ruralco is — arguably – another defensive agriculture stock worth watching very closely. Like Rural Funds, it too pays a decent dividend.
- Ridley Corporation Ltd (ASX: RIC) is Australia’s largest commercial provider of high-performance animal nutrition solutions. It also has strategic investments in property via Ridley Land.
- A2 MILK FPO NZ (ASX: A2M) is dual-listed on the ASX and New Zealand stock exchange. The company specialises in producing milk with just the A2 protein, which is proven to avoid stomach discomfort.
- Bega Cheese Ltd (ASX: BGA) would be familiar to many Australians. Its range of quality cheeses and related products have dominated supermarket shelves for over 40 years. With dairy prices lower, now could be an opportune time for savvy investors to wade into the stock.
Make no mistake, investing in agriculture is a high-risk proposition because many outside influences will ultimately determine profitability year-in-year-out. However, if Australian farmers are indeed set to encounter an El Niño period in coming years, savvy long-term investors may use it as an ideal opportunity to swoop in on cheap quality agricultural stocks to hold over the long term.
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Motley Fool contributor Owen Raskiewicz has no position in any stocks mentioned.
Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.