The diary: Barings’ James Govan

James Govan is manager of the Baring Global Agriculture fund. His diary runs from 12-18 May.

James Govan 700

Sunday I pack a suitcase and fly from London to O’Hare International Airport in Chicago. Although O’Hare is one of the world’s busiest airports – serving one of largest cities in the US – I spend little time in the urban sprawl as the purpose of the trip is to visit the famous US Corn Belt as part of a research trip for the Baring Global Agriculture fund.

My trip starts with a dinner with agricultural fertiliser company Rentech in South Barrington, a small village in Cook County, Illinois. After a pleasant meal, I head to bed to catch-up on some much-needed sleep, aware that I have a busy week ahead of me, packed with a number of company visits and meetings.

Monday This is a great time to visit the Corn Belt, right in the middle of the planting season, and I see a number of farmers at work as I pass through the Illinois countryside. Monday is spent visiting three farms across the state, where I get the chance to speak to farmers and find out their plans in terms of seed and fertiliser usage and machinery purchases.

These meetings support the consensus view that there will be a significant rebound in US corn and soybean production this year, following the drought of last year. Although this will lead to soft commodity prices easing, my visit confirms that farming economics remain generally strong. Farmers still have a strong incentive to maximise production and this should support industries such as fertilisers and farming machinery, as well as seed and crop protection.  

Tuesday and Wednesday I catch an early flight to New York and I spend the next two days at BMO Capital Markets’ 2013 Farm to Market conference. The conference provides an in-depth look at each area of the agribusiness sector and assesses the challenges and opportunities different types of firms are facing in the current operating environment. Between the presentations, I am pleased to get the chance to directly interact with companies and other industry experts.

Thursday Thursday sees me make a quick dash back from New York to Illinois in order to visit the headquarters of farming equipment manufacturer John Deere in Moline. John Deere is a key holding for the Baring Global Agriculture fund and it has capitalised on the strong investment we have seen from farmers in agricultural machinery in recent years. I meet the CFO and he tells me that the company has actually sold out of combine harvesters for the remainder of the year, while high horsepower tractors are sold out until early autumn. I then undertake a five hour drive across the US Midwest to visit Monsanto’s research facility in St Louis, Missouri.

Friday The main part of the day is a meeting with processing and distribution company Archer Daniels Midland at the firm’s headquarters in Decatur. At one million square feet, Archer Daniels Midland has the largest corn processing facility in the US – an impressive sight first-hand – and it is therefore a key beneficiary of a rebound in the corn crop as it is a major corn exporter.

I spend the afternoon meeting the Illinois Farm Bureau in order to get further information over planting conditions in the state. After this, I visit fertiliser manufacturing and distribution company CF Industries. The firm operates nitrogen and phosphate plants and provides an interesting insight as to the future direction of farmer investment in these areas.