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Securing food supply in an uncertain world

London, 8 March 2012

A new survey of food and agri-businesses by international legal practice Norton Rose Group, Securing Supply in an Uncertain World, reveals that the global agri-industry is set to receive increased investment over the next year. Two-thirds (67 per cent) of respondents are planning to increase investment in the sector over the next 12 months as increased consumption in emerging markets continues to transform the global agri-industry.

The survey also reveals that 60 per cent of respondents intend to undertake strategic acquisitions or fund raisings in the next 12 months and 51 per cent expect further consolidation in the industry over the next three years.

Almost half (42 per cent) of respondents are or are considering investing in transport and other infrastructure as the agri-industry looks to bring its infrastructure and transport needs in house to manage logistics more efficiently.

This increased investment in agri-business comes as rising consumption in emerging markets transforms the global agri-industry. Almost all respondents (91 per cent) believe that the BRIC markets will have a very significant impact on the agribusiness sector, with Brazil identified as the single most important country for increasing food production in the short term.

Highlights

• 67 per cent of international respondents from the food and agri-industry intend to increase investment in agri-business over the next 12 months

• 60 per cent intend to undertake strategic acquisitions or fund raisings in the next year

• 51 per cent see further consolidation in the industry in the next three years

• 42 per cent will or are considering investing in transport and other infrastructure to support food production

• Sovereign wealth funds and private equity are expected to have a significant role in providing finance to the agri-industry

• 91 per cent believe that the BRIC economies will have a very significant impact on the future of the agri-industry as both producers and consumers, and that Africa will have an important role in the longer term

While respondents believe that traditional forms of finance, such as trade and commodity debt financing will continue to play an important role in financing the agri-industry, finance provided by sovereign wealth funds and private equity will play an increasingly important role as the industry develops.

Martin McCann, group head of Infrastructure, Mining and Commodities at Norton Rose Group, commented: “Increasing global demand for food and agricultural products, driven principally by emerging markets, is creating substantial opportunities for producers, investors and global traders. Increased investment and consolidation will create businesses with the scale and resources necessary to increase production and meet growing global demand.”

“My view is that Africa will become as important as Brazil over the next 10 years.”

Glenn Hall, partner, Norton Rose LLP, said: “Consolidation and the need to secure more diversified sources of finance via sovereign wealth funds and private equity will be a major trend for the global agri-industry in the coming years.”

“Although there are significant challenges in the short term, our survey highlights the enormous potential of Africa in particular as a source of food and agricultural products in the longer term.”

Ends --


The results of the survey are contained in a report entitled Securing Supply in an Uncertain World, which is available at www.nortonrose.com