FSC / Press Release
Is Food Inflation Greater than Indicated by CPI?
Calgary, Alberta CANADA, November 02, 2009 /FSC/ - Agcapita Farmland Investment Partnership (AFIP - 0),
The food price data series published by the Food and Agriculture Organisation of the United Nations ("FAO") tells an interesting story about the nature of price trends in the agriculture sector. Official CPI statistics apparently show that food price inflation had been subdued for the past decade. At the same time the FAO data series indicates that dairy, cereals and edible oils have all increased in price significantly in real (inflation adjusted) terms over that same period. Annual real price increases have been:
* Dairy - 5.8% per year
* Cereals - 6.7% per year
* Edible Oils - 7.9% per year
Stephen Johnston, partner at Agcapita Partners LP, commented that "Food price inflation was always a key driver of our investment premise when we launched our third fund, a Canadian farmland fund in 2007. Farmland returns are ultimately tied to commodity prices, which are strongly affected by both overall monetary inflation and supply and demand factors." He further added that "Over and above the supply and demand issues driving agricultural commodity prices we are in the midst of Keynesian spending programs on a global scale. If history is any guide these large scale government deficits will be inflationary."
Agcapita is a Calgary based agriculture focused private equity firm which manages RRSP and TFSA eligible farmland investment funds and is part of a family of funds with almost $100 million in assets under management. Agcapita's investment team has over 50 years of investment and finance experience and its field team has over 150 years of direct farming experience.
DISCLAIMER: The opinions, estimates, projections and other information which is contained herein and derived from or attributable to persons other than AGCAPITA is neither endorsed nor adopted by AGCAPITA - it is presented for informational purposes only. Further, the opinions, estimates, projections and other information contained herein are not intended and are not to be construed as an offer to sell, or a solicitation to buy, any securities including those of AGCAPITA and its affiliates, nor shall such opinions, estimates, projections and other information be considered as investment advice or as a recommendation to enter into any transaction. There shall not be any sale of AGCAPITA securities outside of Canada or in any province of Canada in which such offer, solicitation or sale would be unlawful, and any such sale may only be made to prospective investors who meet certain eligibility criteria and who first receive any applicable offering documentation.
AGCAPITA securities have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the "US Securities Act") or the securities laws of any state, and may not be offered, sold or delivered within the United States or to, or for the account or benefit of, US persons (as defined by Regulation S under the US Securities Act). This document is not for distribution on U.S. wire services or dissemination in the United States.
FORWARD-LOOKING INFORMATION: This news release may contain certain information that is forward looking and, by its nature, such forward-looking information is subject to important risks and uncertainties. The words "anticipate", "expect", "may", "should", "estimate", "project", "outlook", "forecast" or other similar words are used to identify such forward looking information. Those forward-looking statements herein made by AGCAPITA, if any, reflect AGCAPITA's beliefs and assumptions based on information available at the time the statements were made (including, without limitation, that (i) the demand for agricultural commodities will continue to grow at a pace that is unlikely to be matched by growth in agricultural productivity, and (ii) investment demand for tangible assets such as agricultural commodities and farmland will continue to increase for the foreseeable future). Actual results or events may differ from those anticipated or predicted in these forward-looking statements, and the differences may be material. Factors which could cause actual results or events to differ materially from current expectations include, among other things: risks associated with the ownership and operation of farmland, including fluctuations in interest rates, rental rates and vacancy rates; general economic conditions; local real estate markets; supply and demand for farmland; competition for available farmland; weather; crop diseases; the price of grain and other agricultural commodities; changes in legislation and the regulatory environment; and international trade and global political conditions. Readers are cautioned not to place undue reliance on any forward-looking information contained in this news release (if any), which is given as of the date it is expressed herein. AGCAPITA undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise.
For further information please contact:
Stephen Johnston - Partner
Agcapita Partners LP
400, 2424 - 4th Street SW
Calgary, Alberta T2S 2T4
Tel: +1.403.218.6506
Fax: +1.403.266.1541
Email: sjohnston@agcapita.com
Web: www.agcapita.com
Source: Agcapita Farmland Investment Partnership - http://www.agcapita.com
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