* Investors should look at chicken, pork in Brazil
* Investment in grain storage may be good bet
By Pratima Desai
LONDON, Oct 5 Investors looking to gain from
China's phenomenal growth should look further at grains and
livestock as food demand in the country will outstrip the
country's ability to produce it, a conference heard on Tuesday.
Demand for agricultural commodities has raced ahead in China
partly due to changing diets, with rising incomes leading to
more consumption of meat.
"China will become an increasingly important importer of
food, especially animal feeds such as soy and corn," said Larry
Brainard, chief economist at research firm Trusted Sources at
the World Commodities conference organised by Terrapinn.
"Support prices have been raised to spur production, but the
supply response lags urban demand."
Maize (corn) is the most important crop for animal feed and
China, the world's number two producer, has moved from a net
exporter to net importer in the last couple of years.
A move to cities, higher wages -- in the region of 20 to 25
percent increases over the next five years, according to one
speaker -- and lack of land reform in China mean higher demand
for grains, used to feed livestock. [ID:nLDE6941KI]
Demand for a more protein-rich diet because of growing
affluence in China means investors should also look at livestock
companies in countries with large agricultural sectors.
The growth in consumption in China has contributed to record
global demand for grain-fed meat while stocks are at the lowest
levels in almost 30 years, according to figures issued by the
U.S. Department of Agriculture.
Jack Dzierwa, a portfolio manager at U.S. Global Advisors
said companies specialising in chicken and pork in Brazil,
Uruguay or Argentina are good bets.
China has been building up strategic reserves of
"In the last 50 years the planet's population has doubled,
but stocks haven't changed," Greg Smith, chief executive at
Australia-based fund firm Global Commodities said.
"You should have fabric in your portfolio."
Reluctance by China's government to reform land laws is part
of the problem.
"Ideological barriers are blocking reform of land tenure and
labour mobility ... Brazil will be a major beneficiary of rising
global demand for agricultural products," Brainard said.
Brainard recommends investors look at grain storage. "There
will have to be massive new investment in grain storage."
(Additional reporting by Nigel Hunt in London)
(Editing by Veronica Brown)