Bonnefield WAIC Presentation

 Bonnefield Financial The Case for Inves<ng in Canadian Agriculture FARMLAND for FARMING TM WAIC London September 30, 2010 V1.0 1 canada’s first na<onal farmland investment manager & property management company serving ins<tu<onal and high-­‐net-­‐worth farmland owners farmland for farming 2 what we do provide land lease financing to successful, growth-­‐oriented Canadian farm operators (through Bonnefield Canadian Farmland LP I) provide private equity financing to Canadian Agri-­‐businesses (through Colonnade Investments, an affiliated company) what we’ve done formed Bonnefield Canadian Farmland LP I on April 8, 2010 to date have acquired and leased proper<es in Saskatchewan, Manitoba and Ontario addi<onal financings planned and farmland acquisi<ons pending across Canada farmland for farming 3 Colonnade Investments investment strategy Real Estate Opera<ons Colonnade Development commercial real estate development Site Cast Construc<on <lt up commercial construc<on specialists Colonnade Management Agricultural Opera<ons & Investments Bonnefield farmland investment management and property management Ag Private Equity Manderley Turf Bonnefield Canadian Farmland LP I Canada’s largest turf farming and distribu<on company 3 – 4 New Investments commercial property management farmland for farming 4 farmland for farming source: Agriculture and Agri-­‐Food Canada source: Agriculture and Agri-­‐Food Canada The World Resized According to Net Cereal Exports source: University of Sheffield, Worldmapper Territory size shows the proporBon of worldwide net exports of meat (in US$) that come from there. Net exports are exports minus imports. When imports are larger than exports the territory is not shown The World Resized According to Net Meat Exports source: University of Sheffield, Worldmapper Territory size shows the proporBon of worldwide net exports of meat (in US$) that come from there. Net exports are exports minus imports. When imports are larger than exports the territory is not shown *!!"
average farm size )!!"
(acres) (!!"
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canadian farmland (million ha) '!!"
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12,345"
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number of farms (thousands) $!!"
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source: StaBsBcs Canada, Census of Agriculture 3,000 to 10,000+ typical acreage of emerging farms in western canada 1,500 to 3,000+ typical acreage of emerging farms in central/eastern canada /9"
10 farmland for farming 160%+ $&"#
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92%+ farm capital assets !&"#
farm revenue from opera<ons !%"#
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Indexed data – 1988 = 100 data sources -­‐ StaBsBcs Canada and Farm Financial Survey, Canadian totals -­‐ capital assets = machinery + land + input inventories -­‐ revenue from operaBons = receipts from crops and livestock !*"#
agriculture, forestry, hun<ng avg growth = 4.7% per year !)"#
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canadian economy total avg growth = 1.2% per year !!"#
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Source: Statscan CANSIM Table 383-­‐0012 $""(#
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13 56 27% average age of farm operator in Canada % of Canadian farmland es<mated to be owned by farmers aged >59 25% $53 billion % of farmers < 35 years in 2006 down from 35% in 2001 es<mated value of farmland owned by farmers aged >59 sources : StaBsBcs Canada, 2006 Census of Agriculture, and Bonnefield esBmates farmland for farming 14 Consensus GDP Growth 20101 )"!!#$
Unemployment1 )%"!!#$
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Deficit as % of GDP 20101 /1'
23,-45'
6537,-8'
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Total Sectoral Debt as % GDP 20091 9:;<3,=>,'
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sources : 1 – Economist magazine August 7, 2010 2 – McKinsey & Co., Debt & Deleveraging, January 2010 Households %!!"#
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farmland for farming 15 source: Transparency InternaBonal, 2009 farmland for farming 16 source: www.radicalcartography.net farmland for farming 17 9% % of the world’s renewable freshwater located in Canada3 $*"#
0.5% $&"#
% of the world’s popula<on living in Canada % of Arable Land that is Irrigated1 ()"#
% of Total Fresh Water *!"#
Withdrawals Used *("# *%"#
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for Farming2 (&"#
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sources: 1 CIA factbook, 2009; 2 Pacific InsBtute – World’s Freshwater Resources 3 Natural Resources Canada farmland for farming 18 The World Resized According % Water Resources used in Agriculture source: Sheffield University, Worldmapper Territory size shows the proporBon of all water used for agricultural purposes that was used there, 1987 to 2003. farmland for farming 19 Projected Rainfall due to Climate Change2 Canada +40% US Midwest/
Southwest -­‐30% DefiniBons 1 •  Lidle or no -­‐ <25% water withdrawn from rivers •  Physical scarcity -­‐ >75% drawn from rivers •  Approaching scarcity-­‐ >60% of river flows withdrawn, expect physical scarcity in near future •  Economic scarcity – limited access to water on an economic viable basis sources: 1 -­‐ InternaBonal Water Management Inst, Feb-­‐07; 2 -­‐ Dry Spring, Chris Wood, 2009 farmland for farming 20 53soildegradation1.pdf 2008-01-03 15:36:02
1x New York City !"#$%&'()*&*+#",
amount of land lost to degrada<on worldwide each week 1 C
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•  popula<on Y
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•  deforesta<on •  pollu<on ,1%252%
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•  deser<fica<on •  erosion •  over farming •  irriga<on !"#$%&'()*+,-(./0&$/102"/13(!"23(4&5&$&/%&(1/6(./5"$7102"/(8&/0$&(9.!4.8:-(;"$36(<031=("5(>&=&$0252%102"/-(?@@AB
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1 – Land CommodiBes, June 2009 farmland for farming 21 The World Resized According % Water Resources used in Agriculture source: Maplecroj, 2009 Territory size reflects average annual economic loss due to natural disasters 1980-­‐2008. farmland for farming 22 farmland for farming 23 M<80/2:!
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Notes:
All figures in US $ assuming CDN$1 = US$0.90
Canadian values – Bonnefield estimates
USA values – USDA, August 2009
International values – Knight Frank, June 2009
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farmland for farming 24 &%"!#$
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Data 1951 – 2009 except as noted:
Canadian Stocks: S&P/TSX Composite
U.S. Stocks: Ibbotson Associates
Canadian Long-Term Bonds: TSX DEX LT Bond Index
Canadian 91 Day T-Bills: TSX Dex Canadian Treasury Bill 91 Day Index
Canadian Farmland Returns: Statistics Canada captial appreciation + 3% lease income assumption
US Farmland: NCREIF US Farmland total returns (1992 – 2009)
farmland for farming Annual Returns (Land Appreciation + Net Lease
Income)
25%
-5%
1951
1952
1953
1954
1955
1956
1957
1958
1959
1960
1961
1962
1963
1964
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
!"#"$%&'()
40%
10000
35%
30%
,$'-$+&*%).$+
20%
!""#$%&'()*+
1000
15%
10%
0%
Indexed Cumulative Returns
(Log Scale)
25 26311
5%
100
-10%
data source : capital appreciaBon – FCC & StaBsBcs Canada, 3% net lease income -­‐ Bonnefield farmland for farming 26 Farmland Funds Under Management $12 billion B+0+C+#&()**#
funds managed by respondents to OECD survey "<#&D7'6@**#
$20 -­‐ $25 billion es<mate of total worldwide farmland investments to date 9/+:5;#$#<21-=#
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41,,5+#&67886**#
source: Bonnefield; and OECD, May 2010 – Developments in Land Markets: Survey of Global Developments in Provate Sector Investment in Farmland and Agricultural Infrastructure farmland for farming source: Agriculture and Agri-­‐Food Canada 28 AVERAGE ANNUAL APPRECIATION OF FARMLAND 1950 – 2009* '%!!!"
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0#1"*23%
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Farmland Capital Apprecia<on 1950 = 100 '$!!!"
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ONT avg = 8.1% '!!!!"
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CDN avg = 7.2% %!!!"
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SASK avg = 6.2% #!!!"
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farmland for farming 29 canadian farmland equity-­‐like returns low vola<lity infla<on/defal<on hedge non-­‐correlated with financial assets superior risk-­‐adjusted returns large, progressive, highly produc<ve agricultural sector strong respect for property rights and rule of law plen<ful water resources and with rela<vely benign prospects for climate change easy access to world markets stable economy with prosperous outlook farmland for farming