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The Canadian Integrated Agriculture Fund

The Canadian Integrated Agriculture Fund

The Fund aims to secure agricultural assets such as farm land, grain farms and related industries which may include feed mills and grain processing operations; also, animal production systems and related agricultural businesses which may include hatcheries, primary breeding companies and other grass roots ventures so long as they are agriculture based. The goal is to have a diversified relationship between assets to maximize return and minimize risk. Denominated in $CAN with a target return of 14% – 16% p.a. after all charges over 5 years.

The strategy is to purchase grain land which we believe has the biggest potential to gain in appreciated value (undervalued at this time October 2008) and from that to move into the other related agricultural businesses.  One of those identified is a hatchery business which produces day old baby chicks as this venture will allow us to link with the regulated marketing sector and be a logical next step in our chain of implementation.

The next step to look at will be purchasing animal production systems which produce the protein products.  From this platform we can then start to move into some of the further processing links such as commodity wholesale (selling specialized grain seeds), oil production (canola seed crushing), Feed grain production (producing the finished feeds for the livestock), and / or further processing (taking the live product and packaging for retail markets). This sounds fairly simple but the process will need to be an evolving one that is managed and worked at as the initial parts come together i.e. land purchase and production facilities.

 

Stable yields will also arise from the farming operations. The fund through its management expertise and joint ventures will seek to purchase and control operations in the production of agricultural commodities. The initial focus will be on the grain farming opportunities with a view to taking advantage of other value added processes such as feed milling or further processing of grain and oil seeds. Canadian agriculture has a world renowned stability factor in its farming sector and provides many opportunities to align agricultural business activities. The fund will seek to combine grain and animal production which will help to minimize future risk of volatility in pricing and production. This approach will have benefits of reducing costs and maximising profits. The management team have extensive experience in the Canadian farming industry and will establish sustainable and long term investment rewards.

Returns are sought through land appreciation. Currently Canadian agricultural land in certain parts of the country is undervalued relative to land prices in US. The fund will use the expertise and experience of a select management team to help purchase (and sell) optimal farmland to maximise return and support other activities related to associated agricultural assets. Technological advances and economies of scale can have a positive effect on the profitability of farming operations; whereas smaller operations cannot exploit these to the full. There is now considerable opportunity in Canada to buy and consolidate smaller operations.

Further returns are expected to be generated from the market price of the grown soft commodities. Worldwide demand is increasing and prices set to rise further. Land is limited and consumption in developing countries is exceeding their production capacities. The fund provides the opportunity to benefit directly from commodity production that is feeding a rapidly growing market. Together with land ownership and commodity production the investor has a transparent and direct relationship to the wealth generating aspects of the ‘cash’ commodity market.


 

 

 


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