To give an idea of how lucrative the agriculture commodity can and will be, you need look no further than Sunny Verghese, who runs his own commodity investment company out of Singapore: Olam International.
As Verghese said in a recent interview, talking of his 50 percent increase in profits during these economic hard times: "Even in a recession, people have to eat." They do. And he has profited from that.
When Verghese started the company about 20 years ago, his only goal was to become the largest exporter of cashews out of Nigeria. Olam has become all of that and more, with sales of $6.2 billion in the first six months of 2009 alone. Net profits soared to $181 million during that same period.
Now one of the largest and most successful commodity firms in the world, Olam sells, along with its cashews, soft commodites such as grains, spices, sugar, coffee and beans, along with various other edible kernals to food giants.
The company has also entered the packaged food business, running a number of processing factories across a number of countries, producing a large number of good products.
In the latest report from the company, they stated they will invest in plantations nad value-added processing to expand in the long term.
The key to the success of Olam in its agricultural commodity strategy was to source agricutural raw products from countries that had proven hard to work with, and then figuring out ways to deliver the agricultural products to companies on a timely and consistent basis.
Helping the agricultural commodity company thrive during the economic crisis has been access to hard to find capital and the discipline in maintaining its costs at a low level.
Olam recently bought an Australian almond plantation for $114 million, keeping in line with their agricultural commodity strategy to expand into plantations and other areas of agriculture.
No comments:
Post a Comment