It's been noted many times over the past few years.
The demand for food products, from raw produce through to value-added manufactured goods is expected to soar in Asia and particularly China and other developing Asian nations.
Considering just 8 Asian countries represent close to half the world's population, and you can see why experts and analysts alike, expect demand for foodstuffs to soar. China, India, Indonesia, Bangladesh, Japan, Vietnam, Philippines and Thailand have a combined population of close to 3.5 billion. The world's population is estimated at more than 7.2 billion.
As average incomes in those nations rise, food is expected to be the next big thing in Australian exports, according to Tyndall Asset Management head of Australian equities Brad Potter. Expectations of Australia becoming the 'food bowl' of Asia have been mooted frequently, but more often than not, Australian investors appear to have overlooked the value in our listed agricultural assets.
Offshore investors on the other hand, have been only too willing to be offered those same assets, given the recent takeovers of Warrnambool Cheese & Butter Factory Co, and Goodman Fielder Ltd, the attempted takeover of Graincorp Ltd (ASX: GNC) and historical takeovers of ABB Grain, Australian Wheat Board (AWB) and National Foods.
So here are some of my tips for you in the food sector…
Select Harvests Ltd (ASX: SHV)
A grower and producer of almonds, Select Harvests has several tailwinds behind it, including rising consumer understanding of healthy eating, demand outstripping supply, and trading on a prospective P/E ratio of 10 times.
Tassal Group Limited (ASX: TGR)
Growing and selling salmon products within Australia and also exporting some product, Tassal appears to have overcome some of the initial setbacks it had in past years, and recently reported a 25% rise in operating profit.
Clean Seas Tuna Limited (ASX: CSS)
Like Tassal, Clean Seas also grows fish – only the company is focused not on tuna or salmon, but on Yellowtail Kingfish. Having had a few hard years, Clean Seas expects to return to profitability this financial year, 12 months ahead of schedule. It too may have finally turned the corner.
