Chaoda Modern Agriculture: A Green Giant for the Price of a Dwarf? :

Increasing concerns about food security, declining arable land and increasing population have brought new agricultural investments in the spotlight. Worldwide, investments in agriculture are needed to increase production and productivity. This includes the production of fertilizers and agrochemicals, agricultural machinery and high-yield seeds (for the breeding of genetic engineering) but also the farming operations themselves.

For the investor who wants to become a co-owner of a farm, the choice was quite limited. While diversified investments in agriculture are possible through exchange-traded funds as CRBA, MOO, PAGG, DBA, RJI and RJA, covering a wide range of large public companies related to agriculture or raw materials, Most of these do not contain agricultural operations.

The IPO of the last Adecoagro (AGRO) has invested in farmland in South America to access, it was also possible before through ADRs Cresud (CRESY). Other farms are listed on U.S. exchanges include the secret JG Boswell (BWEL.PK), which has a market capitalization of nearly $ 1 billion, but is well held and thinly traded.

The last decade saw a lot of industrial property offices of the operations of European agriculture, with only mixed success. Companies like Firstfarms, Black Earth Farming (BLERF.PK) and Landkom (LKNTF.PK) has been released but above all not to reward its shareholders. Very high valuations at which those shares were issued and the financial crisis that hit shortly undoubtedly played its part in this sorry state of affairs, although company executives have no doubt its share of the blame. Recently, Ivolga (supposedly the largest farm in the world with 1.5 million hectares) was coerced and is negotiating with RBS to avoid bankruptcy and foreclosure.

As with any other company, not just the business area that makes a successful business, but the people behind it. I would like to take this opportunity to highlight a company in China with the ongoing success, Chaoda Modern Agriculture (CMGHF.PK). Its success is based on operational excellence and financial discipline, and I think the market is not giving enough credit to his excellent career.

A successful vegetable farm

The probability is high that American readers are very familiar with the Green Giant brand of vehicles owned by General Mills (GIS). I hope that only a minority of you have heard of Chaoda before, although it is a true giant of vegetables in their own right. And I'm not just talking about the name of the company (Chaoda 超 is written with Chinese characters and representing 大 "super" or "superior" and "large", thus giving the meaning of "super-size" or " Giant "). Chaoda operation is very impressive in the context of a fragmented agricultural base in China. In June 2010, there was a production base of 664,225 mu (Chinese unit of area equal to 1/15th of a hectare or 0.1647 acres), equivalent to an area of ​​443 km ². About 75% of the area used for growing vegetables, the rest fruit trees, tea plantations or farming land.

Chaoda has continuously expanded its production area in the last decade. The total area has increased about six times from 8000 ha in 2002 to over 44,000 hectares today. Chaoda aims to increase the total area of ​​production further in the coming years. 714,933 Mu addition to the production area in late 2010, the company has another 300,000 Mu of the total reserve of land for crop agriculture (about 45% of the basis of current production), and the company plans expand the production base area at a rate of 25-30% per year over the next three years. Just look at the chart below to see the impressive growth in the land, an increase that can be projected into the future as the land reserve of the company's expansion plans.
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