Duxton’s Agri Bits and Pieces – Vol. 347
Posted on: August 25th, 2017


This week’s quote of the week comes from Ngaire Woods, dean of the Blavatnik School of Government and founder of the Global Economic Governance Programme at the University of Oxford, in regards to reforming British agriculture after Brexit.

The United Kingdom’s withdrawal from the European Union no doubt carries many risks. But, if British politicians and business leaders are right, it also creates an important opportunity: the possibility of building a safer, greener, more efficient, and more innovative farming sector. If the UK manages to seize this opportunity, the EU, the United States and other economies with highly protected agricultural sectors might follow suit”


In its August Agribusiness Monthly report, Rabobank said Australian wheat prices had hit $317 a tonne in mid-July but had followed a decline in Chicago Board of Trade prices since then.

CBOT prices fell further last week after the US Department of Agriculture released its World Agricultural Supply and Demand Estimates report on August 10, which forecast a 5.3 million tonne rise in the global wheat crop to 743.2 million tonnes.

Rabobank said Australian prices were “more firmly supported than those offshore” based on dry conditions affected the domestic harvest.

Rabobank has forecast a 22 million tonne Australian wheat harvest this year — 12 per cent below the five-year average.

Former AWB Limited board member Xavier Martin, who farms at Mullaley, near Gunnedah in NSW, said he did not expect forecasts of a 23 million tonne crop to eventuate.

Rabobank said if conditions were dryer and warmer than average for the balance of the growing season, grain production was likely to fall lower than its current forecast.

Victoria and southern NSW are two of the few bright spots in national grain belt, with widespread rain in the past few days boosting soil moisture.

Rabobank said the high Australian dollar was also impacting on local prices of rural commodities.

As late as two months ago, some banks were forecasting the Australian dollar to fall to 73 US cents in the current quarter and end up at 70 US cents by the end of December.

But the dollar surged to 80 US cents in late July and has remained at above 78 US cents since then.

Rabobank said it was not expecting the Australian dollar to soften to 73 US cents until August next year.


An Indian startup called EM3 AgriServices is helping rural farmers literally get their hands on specialist (and expensive) equipment and machines that would ordinarily be out of their reach. The goal is to help them earn their livelihood with cutting-edge tech without breaking the bank.

The concept is actually quite straightforward. EM3 works with farmers who own equipment like tractors, harvesters and other mechanical implements by allowing them to ‘rent’ out their assets to help pay off the purchase or generate additional revenue. Farmers, typically those in remote regional with small holdings and limited capital, then get access to quality implements and machines on a pay-as-you-use basis on either an hourly or acreage pricing.

“The average Indian farm holding is just one percent of what you’d find in U.S., so farmers aren’t able to afford technology, even basic mechanization, because the capital load is too high,” EM3 founder and managing director Rohtash Mal told TechCrunch in an interview.

“In the farm equipment business one thing became clear, we did everything we could to help customers buy our products, but the fact is that the small farm could not afford the rate of technology,” Mal senior said.

“We’re inspired by what happens in tech world, but this hasn’t been done in agriculture before. The need wasn’t there in a lot of markets, such as the U.S., which were the foundation heads of technology, but the need is here in India,” he added.

The company calls its business farming-as-a-service — or Faas.

Unlike Uber, which has pioneered an online business model, EM3 is ‘tech-enabled’ rather than ‘tech.’ That’s to say that while it uses common on-demand tech to manage supply-demand, customer data and more, the majority of its business is offline. That’s because, quite simply, its customer base remains disconnected from the internet.

“The majority of farmers are not on smartphones,” Mal junior said. “The smartphone penetration is increasing but it isn’t at critical mass yet so we have a physical on the ground presence.”

So where there are apps for those ahead of the curve, EM3 operates call centres for handling requests from farmers — both inventory owners and prospective renters — and it deploys local representatives in the villages that it serves. But even the select farmers who are online and own smartphones find something comforting and secure about talking to a person on the other end of the phone when it comes to business matters that impact their life, the EM3 execs said.

To date, EM3 has focused on central parts of India where it claims to have worked with 8,000 farms through its 10 service centres. Mal senior explained that its platform covers machinery and services that span all seasons, but customer activity levels do vary during different parts of the farming calendar and based on location, crop type, etc.



This week’s chart of the week comes from Bloomberg’s Not Even Wheat is Safe From the Bears of the Agricultural Markets, demonstrating the slump in wheat prices following the early July highs.






This newsletter has been prepared by Duxton for circulation to its clients, who are accredited or institutional investors as defined in the Securities and Futures Act, Chapter 289 of Singapore and the Securities and Futures (Prescribed Specific Classes of Investors) Regulations (”Permitted Investors”), and is not intended for use by retail investors. The fund management industry in Singapore is regulated by the Monetary Authority of Singapore (”MAS”), and no person can act as a fund manager unless they are the holder of a capital markets services licence for fund management or are operating as a registered fund management company. Duxton Asset Management Pte Ltd holds a Capital Markets Services Licence to conduct the regulated activity of fund management for accredited and/or institutional investors.

This newsletter is for distribution only under such circumstances as may be permitted by applicable law. Nothing in this newsletter constitutes financial, investment, tax, legal or any other form of advice, recommendation or a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient’s individual circumstances, or otherwise constitutes a personal recommendation. In particular, nothing in this newsletter is intended to constitute financial advice under the Financial Advisers Act, Chapter 110 of Singapore. Duxton, its employees or its affiliates may from time to time hold, either directly or through the portfolios that it manages, an interest in some or all of the stocks or companies discussed in this newsletter. Where stock or company names are mentioned, it should not be construed that these are recommendations to buy or sell those stocks or companies. If you require investment advice please contact a regulated financial adviser.

This newsletter is published solely for general information purposes, does not constitute an advertisement and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction. No representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, nor is it intended to be a complete statement or summary of the markets or developments referred to in the newsletter.

This newsletter is not the basis for any contract to deal in any security or instrument, or for Duxton or their affiliates to enter into or arrange any type of transaction as a consequence of any information contained. Information from this newsletter must not be issued in any jurisdiction where prohibited by law and must not be used in any way that would be contrary to local law or regulation. Specifically, this newsletter is not directed at US persons.

To the fullest extent permitted by law, neither Duxton nor any of its affiliates, nor any of Duxton’s or any of its affiliates’ directors, employees or agents, accepts any liability for any loss or damage arising out of the use of all or any part of this newsletter.

Duxton specifically prohibits the redistribution of this material in whole or in part without the written permission of Duxton and Duxton accepts no liability whatsoever for the actions of third parties in this respect.

All third party data (such as Bloomberg) are copyrighted by and proprietary to the provider.