The Handbook of Global Agricultural Markets: The Business and Finance of Land, Water, and Soft Commodities

603 Pages·2014·4.93 MB·English

by  Luc Nijs (auth.)

The Handbook of Global Agricultural Markets
Also by Luc Nijs
MEZZANINE FINANCING: Tools, Applications and Total Return
SHAPING TOMORROW’S MARKETPLACE: Investment Philosophies for Emerging Markets
and a Semi-Globalized World
The Handbook of Global
Agricultural Markets
The Business and Finance of Land, Water, and
Soft Commodities
Luc Nijs
palgrave
macmillan
© Luc Nijs 2014
Softcover reprint of the hardcover 1st edition 2014 978-1-137-30233-5
All rights reserved. No reproduction, copy or transmission of this
publication may be made without written permission.
No portion of this publication may be reproduced, copied or transmitted
save with written permission or in accordance with the provisions of the
Copyright, Designs and Patents Act 1988, or under the terms of any licence
permitting limited copying issued by the Copyright Licensing Agency,
Saffron House, 6–10 Kirby Street, London EC1N 8TS.
Any person who does any unauthorized act in relation to this publication
may be liable to criminal prosecution and civil claims for damages.
The author has asserted his right to be identified as the author of this work
in accordance with the Copyright, Designs and Patents Act 1988.
First published 2014 by
PALGRAVE MACMILLAN
Palgrave Macmillan in the UK is an imprint of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills, Basingstoke,
Hampshire RG21 6XS.
Palgrave Macmillan in the US is a division of St Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Palgrave Macmillan is the global academic imprint of the above companies
and has companies and representatives throughout the world.
Palgrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries.
ISBN 978-1-349-45383-2 ISBN 978-1-137-30234-2 (eBook)
DOI 10.1057/9781137302342
This book is printed on paper suitable for recycling and made from fully
managed and sustained forest sources. Logging, pulping and manufacturing
processes are expected to conform to the environmental regulations of the
country of origin.
A catalogue record for this book is available from the British Library.
A catalog record for this book is available from the Library of Congress.
To Simon – my best friend for all times
That you may walk through life blessed with joy, equanimity,
wisdom, dignity, (com)passion and will do so in good health
This page intentionally left blank
Contents
List of Figures viii
List of Tables ix
Preface xi
List of Abbreviations xvi
1 I ntroduction 1
2 T he Investible Agricultural Space 43
3 C limate Change and Agriculture 63
4 A gricultural Risk Management and (Crop) Insurance 91
5 B iofuels and Agriculture 142
6 B iofuels and the Sustainability Conundrum 149
7 F inancing the Agricultural Firm 172
8 F armland I: An Investible Asset Class? 195
9 F armland II: Capita Selecta 233
10 F armland III: Land-Expectation Value and Timberland Valuation 245
11 A dvanced Technologies and Agriculture: Genomics,
Nanotechnology, and Beyond 274
12 C hallenges in Agricultural Production and Natural-Resources
Management 289
13 S ustainability of Agricultural Productivity Growth 303
14 C ommodities I: Derivative Markets 315
15 C ommodities II: Trading Agricultural Commodities 334
16 C ommodities III: Speculation on (Agricultural) Commodity
Derivatives and Financialization of Commodity-Price Formation 401
17 T he Global Water Challenge 443
18 F uture Agricultural Dynamics 469
Notes 485
Index 583
vii
List of Figures
1.1 D istribution of waste across the agricultural value chain 7
8.1 E volution of farmland prices per continent 204
10.1 F orest-valuation components including and excluding
carbon pricing 2 72
16.1 C ommodity-price evolution 1960–2011 418
16.2 B alance-sheet evolution of the FED until September 2013 418
17.1 E volution of global water use 446
viii
List of Tables
1.1 F ood loss per continent 8
1.2 C ommon tools in agri-environmental policy 10
1.3 A gricultural value chain 12
1.4 I nformation-intensive technologies in precision agriculture 22
2.1 T he agricultural investible space 46
2.2 D emand/supply balance in agriculture 49
3.1 A daptation triangulation in combating climate change 66
3.2 G HG reduction at producer level 75
3.3 I nvestment opportunities related to climate change 90
4.1 A gricultural supply-chain risks 94
4.2 R isk-allocation grid in agriculture 96
4.3 O ptions for bringing agricultural products to the market 98
4.4 T ypes of risk transfer and allocation 100
4.5 D ifferent risk layers 110
4.6 C omparison between cash-forward contract and
a futures hedge 137
7.1 F inancial analysis of an agricultural firm or project 174
7.2 O verview of the different types of financing needs of an
agricultural firm 177
7.3 O verview of agricultural financial product groups 178
7.4 T he five Cs of credit 184
7.5 C lient lending and investment risk breakdown 184
8.1 G lobal overview of erosion and degradation dynamics 199
8.2a Major types and causes of soil degradation 199
8.2b Evolution of arable land per capita 200
8.3 P ortfolio-development matrix 202
8.4 U K farmland performance 208
8.5 C omparison of agricultural and timberland space
and valuation 218
10.1 R evenues and costs of a typical forestry investment and
calculation of net future value 252
10.2 C alculation of the value of an immature even-aged
timber stand 255
11.1 A nchors facilitating change within the context of
the Green Revolution 288
12.1 A ssessment of upside potential of present and future land/yield 290
14.1 O verview of the most relevant agricultural commodity exchanges 319
ix