Thought for the day
Thought for the day
Sometimes controversial, sometimes quirky but always thought-provoking.
Michael Baxter, freelance journalist, provides his personal insights on current economic
and business issues - essential reading for investors interested in fuel for the mind.
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17/05/2012 - Is it time for investors to get into pigs?
Put all your money in farms and agricultural businesses was the inference of recent comments by George Soros's former business partner Jim Rogers. But it seems that in the UK a particular opportunity is emerging: pigs. But you might be surprised to learn what that implies.
Jim Rogers recently said: "Agriculture is going to be the big thing in the next 20 years. The best thing you can do is to become a farmer; that is where the money is going to be made. It has been a disaster for the last 20 years, but farmers are going to be driving the Lamborghinis in the next 20 years, stock brokers are going to be driving taxis. The smart ones will learn how to drive tractors so they can work for the smart farmers. Anything to do with agriculture â€" seeds, tractors, fertilizer, water â€" is going to be extremely profitable over the next 20 years."
But actually the big agricultural related opportunities lie in genetics. Semen is a good thing to get into as well.
The UK's agriculture minister Jim Paice is off to China, and he is in a bullish mood. For the Chinese love their pork, in fact China accounts for around half of the world's entire pork consumption - according to the OECD. And the Brits it seems are rather good at rearing pigs.
Perhaps the most prophetic of investment tips came in that TV series of the 1970s the fall and rise of Reginald Perrin. You may recall that after faking his suicide, Reggie tried a stint working on a pig farm, when his boss informed him that pigs were the future. Well it seems this was right.
Of late pig farmers have been having a torrid time. The supermarkets are not exactly known for being soft and cuddly when dealing with suppliers. But it appears the austerity imposed on them by the retailers has led to innovation, and the UK's pig genetics in particular lead the world. And British pigs' semen is among the best, too.
Back to the minister; Mr Paice was quoted in the 'FT' as saying: "I'm almost certain that during my visit we will be able to tie up the final loose ends and British pork can be on its way to China... We estimate that we can easily sell £50 million of pig almost at the drop of a hat."
The good news is that China represents a market for all pig bits that don't normally get used, so that's tails, ears and all those pig parts that would normally churn the stomach with a mere mention.
So far, however, not so good. As Mr Paice concedes, the UK pig industry exports more to Belgium than all the BRICs put together. More seriously, the UK pig industry has halved in size over the last decade.
But in turns out that the average British sow produces twice as many piglets in a year than the Chinese equivalent. According to an 'FT' article, British pigs can be fattened up for a kill in just three months, whereas it takes a year in China. So that means British pigs require less feed.
Actually, what China really wants is not so much our pork, but our expertise. Pig semen is reckoned to be a big export opportunity, too.
Right now, opportunities for investors do seem limited. But that won't last. It is only a matter of time, before we start seeing IPOs in the field of pig genetics. And watch it very closely.
And just be grateful that for once it is pigs and not the PIIGS that are making the news.
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