Gertjan van der Geer, manager of the Pictet Agriculture fund, said tractor builder CNH Global NV (CNH:US) and fertilizer maker Yara International ASA (YAR) are among those that will benefit from expanding demand for food.
Raising agricultural production globally will need more farming equipment and fertilizers, Van der Geer said at a meeting with reporters in Paris today. The fund manages 120 million euros ($148 million), with 24 percent invested in fertilizer companies, fund documents show. The biggest holdings include Mosaic Co., Yara and K&S AG (MOS:US).
“Nitrogen fertilizer is highly undervalued, that’s why we have such a big stake in Yara,” Van der Geer said.
Food production will have to expand by 70 percent in the next four decades as the global population grows to 9.1 billion people and rising incomes boost meat consumption, according to the United Nations’ Food and Agriculture Organization.
Mosaic, the world’s largest maker of phosphate fertilizer, accounts for 4.4 percent of the fund’s assets, followed by Yara, the largest publicly traded maker of nitrogen nutrients, with 4.2 percent. K+S, Europe’s largest potash producer, accounts for 3.8 percent of the fund’s investments.
K&S “is as leveraged to a recovery in potash as others but much cheaper,” according to Van der Geer. “They sell their production in dollars, K&S will profit from a lower euro.”
Pictet Agriculture (PFLAGRI), which returned 9 percent this year, has stakes in farm-equipment companies Deere & Co. (DE:US) and CNH Global, which makes New Holland combines.
The fund also bought a stake in meatpacker Tyson Foods Inc. (TSN:US) to benefit from rising meat prices, Van der Geer said. In pesticides, Pictet Agriculture holds a stake in Syngenta AG (SYNN), the world’s biggest maker of farm chemicals.
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