Bobby Fisher Inc. | Mississippi Farmland Investments

Market Conditions

Crop Production
The crops produced by acre along with the average yields and prices for 2008 are as follows: 720,000 acres of corn planted with a 140 bushel per acre average yield and $4.60 dols/bu average price. 365,000 acres of cotton planted with a 920 lbs per acre average yield and $.604 dols/lb average price. 85,000 acres of grain sorghum planted with a 71 bushel per acre average yield and $6.00 dols/cwt average price. 230,000 acres of rice planted with a 6,850 lbs per acre average yield and $16.50 dols/cwt average price. 2,000,000 acres of soybeans planted with a 40 bushel per acre average yield and $8.75 dols/bu average price. 520,000 acres of wheat planted with a 62 bushel per acre average yield and $5.55 dols/bu average price.

Commodity Demand
The global agriculture industry is rapidly changing. Higher demand for food combined with changing dietary patterns in the emerging economies will require greater deployment of agricultural resources to feed a growing and wealthier consumer base. With the added component of demand for biofuels, more acreage of key agricultural commodities will be required. The demand for grains and other crops is expected to surpass supply gains which have been achieved through increases in productivity.

In recent years, there has been a significant deterioration in the levels of global commodity stockpiles while, at the same time, steady food consumption growth is expected to increase at a faster pace than crop yields while the availability of farmland per capita is limited or declining. As a result of this increased demand, combined with limited farmland availability per capita and increased conversion pressure from expanding cities (farmland to residential and commercial uses), the agricultural industry faces the challenge of expanding production. Highly improved farms will continue to increase in value in response to the challenge of producing more with less. More efficiently utilizing the cropland and methods of irrigation will increase in importance. These new demands that agriculture will be expected to meet over the coming years are creating opportunities for increased investment in farmland.

Biofuel Initiatives
Biofuel initiatives around the world have added an "f" to the factors of demand, namely food, feed, fiber and now fuel. The current "f" factors of demand will remain strong in the future resulting in a further appreciation of farmland. The US government's corn-based ethanol policy has changed the structure of the US grains market and impacted the global market, with nearly 25 percent of US corn production being used for ethanol production in 2007 and 30 percent in 2008. It is expected that this amount will need to increase to around 40 percent within five years in order to meet government mandated targets. In late 2007, these targets were increased under the US Energy Independence and Security Act which calls for a renewable fuel standard of 36 billion gallons by 2022. This legislation will increase longer-term demand for corn in the US.

In addition to the biofuel factor, the US produces 43 percent of global corn supply and accounts for two-thirds of global exports. For soybeans, the US supplies one-third of global volumes and accounts for 37 percent of exports. The increased US demand for ethanol and biodiesel may prove to have an even more marked impact on available export volumes of corn and soybeans in the coming years - leading to a tightened trade situation supporting higher prices.

China
With over one-fifth of today's consumers, China is having a major impact on the world of agriculture. Over the next two decades, food will continue to account for the largest share of consumer spending in China. Strong food and feed demand in China is likely to result in a trade deficit in the coming years. China already imports nearly half of the world's soybeans. In addition, rice is a main staple where it is consumed at breakfast, lunch and dinner. With future food production expected to increase by only 1 percent annually as a result of increased productivity, the future demands on agriculture as well as farmland and water resources will be profound.

Organic Production
As organic food production becomes increasingly important, the Mississippi Delta region provides some unsurpassed opportunities. One of our current target investments is a 4,000 +/- plantation which has vast untapped potential in organic production. It is well drained, silty loam soil. Natural barriers and roadways isolate its vast open fields from other producers which would serve to avoid costly outside contamination.
Sources: USDA National Agricultural Statistics Services; and Rabobank, The Boom Beyond Commodities - A New Era Shaping Global Food and Agribusiness, 2008