With growing demand to keep its population fed, China is on the lookout for assets around the world as they seek to cash in on Asia's booming food demand and secure sufficient supplies for the future.

China's eyes are currently on Australia, with the Wall Street Journal reporting that China Investment Corp (CIC) a, Chinese sovereign wealth fund, is among three large funds vying to take a stake in Australian dairy producer Van Dieman's Land Co (VDL).

VDL is seeking up to $180 million to expand its milk production, with $110 million coming from equity, and the remainder in debt.

The Wall Street Journal in November reported that CIC had held talks with the world's largest dairy exporter, New Zealand's Fonterra (ASX: FSF) about investing in the group's newly created shareholder fund. Fonterra's farms put out nearly 22 million tonnes of milk products in 2011, and the company exports roughly half the world's supply of milk powder.

Investors are restricted from holding more than 15% of the total shares of the Fonterra fund, which would give CIC only a small piece of the action.

A deal with VDL, which supplies Fonterra, would allow CIC to take a more significant slice in the business, and is expected to be finalised by the middle of the year.

We could see more interest in Australia's farm industry in future. We already have US agricultural firm Archer Daniels looking to pick up Graincorp Limited (ASX: GNC), following takeovers of ABB Grain and AWB (Australian Wheat Board) in recent years.

Next on the platter might be Australian dairy and cheese producers, Warrnambool Cheese And Butter Factory Company (ASX: WCB) and Bega Cheese Limited (ASX: BGA), or we could see some interest in Tassal Group (ASX: TGR), which farms Atlantic salmon.

Foolish takeaway

No matter which way you look at it, the world's expanding population is going to need food – a lot of it. A growing middle class in developing nations with a demand for more Western-style and higher quality food is also playing its part. We could well see more 'investments' as well as mergers and acquisitions with our agricultural sector.

If you only invest in one company this year, make it our "Top Stock for 2012-13." Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post China eyes Australia's dairy sector appeared first on The Motley Fool Australia.

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Given the similarities of ADM's operations to those of Graincorp, this is definitely a strategic move by ADM to expand operations within the Asia Pacific region. ADM also owns a stake in Singapore-listed Wilmar International, which in turn owns 10% of baker Goodman Fielder (ASX: GFF).

With both AWB and ABB now under foreign control, a takeover of Graincorp will remove the last of the listed grain businesses from the ASX. (Investors can still indirectly purchase ABB via the depositary interests of Viterra Inc (ASX: VTA), but perhaps not for much longer given Glencore has made an approach to Viterra.)

With the rise of living standards in Asia, Australia is in an exciting position to reap the rewards of our competitive advantage in food production. While the market action to date has been in the grain sector, there are a number of other listed food producers that could appeal to foreigners. These include:

• Beef producer Australian Agricultural Company (ASX: AAC), which has a strategic asset in the form of its significant rural land and water holdings.
• Salmon farmer Tassal Group (ASX: TGR), which owns and manages fish hatcheries in Tasmania and has invested heavily in technologies to improve the efficient and lower the cost base of its operations.
• Bega Cheese (ASX: BGA), a major processor of dairy for both wholesale and retail markets with a growing export business into Asia.
• Warrnambool Cheese and Butter Factory (ASX: WCB), which, like Bega, is a major processor of dairy products to customers both domestically and internationally.

Foolish takeaway

Identifying a long-term theme is one way to search out potential investments. Three themes that could potentially provide investors with opportunities are: the aging population both here in Australia and globally, the continual shift to online services, and the increasing demand in Asia for foods high in protein.

If you only invest in one company this year, make it our "Top Stock for 2012-13." Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

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Motley Fool contributor Tim McArthur owns shares in Goodman Fielder and Tassal. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post U.S. multinational snaps up 10% of Graincorp: what's next? appeared first on The Motley Fool Australia.

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Goodman Fielder Limited (ASX: GFF) could be on the takeover target list, according to Deutsche Bank, if the company manages to sell its fats and oils business, Integro.

The company announced yesterday that plans to sell Integro as well as its NZ milling business are well underway and discussions are ongoing with a number of parties. The company expects to provide an update on the divestment of both businesses by the end of August 2012.

Deutsche expects that Wilmar International, a Singaporean company specialising in oils, rice, flour and grain production and owner of 10.1% of Goodman Fielder, may make a bid for the remainder of the company it doesn't already hold.

Goodman Fielder has been under increased competitive pressure including price reductions for supermarket private label bread and the resulting pricing pressure on its proprietary branded bread.

SPC Ardmona, owned by Coca-Cola Amatil (ASX: CCL) is also likely to be facing similar pricing pressure on the products it sells to the big supermarkets, while daily product suppliers Bega Cheese Limited (ASX: BGA) and Warrnambool Cheese And Butter Factory Company Holdings Limited (ASX: WCB) are in the same basket (sorry!).

Warrnambool warned at the beginning of June 2012, that its full year net profit before tax was likely to be 20-30% below the previous year's result, mostly thanks to lower market prices, although 50% of its products are sold internationally.

Bega Cheese advised the market in June that milk pricing was down 7.5%, and in April announced that it was supplying Coles – owned by Wesfarmers Limited (ASX: WES), with cheese for its private label brands.

The big supermarkets are increasing the percentage of sales from private label brands, and squeezing proprietary brands off the shelf, or extracting price cuts from manufacturers and suppliers.

What is interesting about private label sales is that during stable economic times, private label sales tend to decline, while sales by cafes, restaurants and takeaways rise. During tough economic times, private label sales rise, while cafe, restaurant and takeaway sales fall (according to a Bega Cheese Presentation). The major retailers may be hoping for the tough times to continue for a bit longer, to drive their private label sales higher.

Back to Goodman Fielder. The company has seen its share price fall by more than 50% since July 2011, as Goodman Fielder undergoes a major restructure of its business, with the company forecast to report a more than $100m loss for the 2012 financial year due to one-off expenses and impairment charges. Whether the company returns to profit in 2013 remains to be seen.

The Foolish bottom line

Shareholders may be hoping to see a white knight appear, if and when the company sells its fats and oils business.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Goodman Fielder: Takeover target? appeared first on The Motley Fool Australia.

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• Why I'd put $2,000 into CBA and these blue-chip ASX shares this month
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