Company Profiles
A New Agricultural Revolution? Talking Farming And Food With Milltrust
Farming, food and how the journey of food to the table fits with ideas around sustainability is an important issue. Global supply chains have been disrupted by the pandemic. Modern technology is opening up new avenues. We talk to an investment house with an Asian and European footprint about developments.
Before the Industrial Revolution in the West, there was an
Agricultural Revolution – building a launch-pad for what
followed. Fast-forward to the early 21st Century and worries
about global warming, resource pressures, and farming is a hot
area again.
Processes such as cultivated meat, hydroponics (growing plants
without soil), converting forms of waste into energy and food,
and using drones to track soil states are just some of the forces
at work. And in many cases they’re helping tackle fears over
excess carbon emissions and soil loss. That, at least, is the
hope.
Step forward Simon Hopkins, chief executive of Milltrust
International Group – a firm with offices in Singapore and
London. He is also chairman of Milltrust Agricultural Investments
Ltd and CEO of Milltrust Ventures Pte Ltd (Singapore). An
investment industry figure for several decades, Hopkins, now
based in Singapore, comes from the UK’s Midlands where he was
raised on a farm, giving him a hands-on insight into what food
production is all about. Milltrust’s three main areas of
investment and work are agri-science, healthcare, and climate
impact. Milltrust was founded in 2010.
After some difficult times for emerging markets and commodities,
for example, agriculture and related sectors are holding a big
promise, he told this news service in a recent interview.
“To survive and thrive in this business you have to be deeply
differentiated. We have got a bit of a lead as we have been in
this space for more than 10 years,” he said. Milltrust's clients
come mainly from the family offices and high net worth individual
cohort.
At a time when everyone seems to be throwing the word
“sustainability” into conversations like confetti, Hopkins argues
that his business' track record and focus on specific areas
carries credibility. The group manages $500 million in emerging
markets equities and about $100 million in venture.
(This news service has a new programme, its Wealth For Good
Awards, designed to highlight the work wealth managers are doing
to drive change around the environment, society and governance.
To find out more about the awards,
click on this link. Submissions close on 4 February. Winners,
finalists and commended entries will be celebrated in May this
year.)
The Milltrust cluster of businesses come in various forms. For
example, there is the Milltrust Global Wealth Solutions arm,
which was started in July 2012. Since then it has delivered
steady risk-adjusted annualised returns, Hopkins said. These
annualised returns vary depending on the client’s risk appetite
against three portfolio targets of between 3 to 8 per cent, 8 to
15 per cent and 15 per cent and more.
Super-cycles
When Milltrust was launched a decade ago, and Hopkins had moved
himself and his family to Singapore, he looked for niche areas
where he could make a difference with a focus on sustainability.
For instance, he launched the firm’s emerging market funds. “We
had a screening process [for ESG] that was unusual at the time.
We were also scoping out opportunities to deploy capital into the
commodity super-cycle,” he said.
“I had been looking to invest in agriculture for some time,”
Hopkins continued.
After the global financial crisis of 2008, it seemed that the
agriculture sector was due to fare well, although progress for a
few years was not easy.
“We got a local pension fund that put $100 million into
investments into agriculture in New Zealand and Australia,”
Hopkins said. The approach of this agriculture investment was
using leases of land to farmers to generate a regular stream of
income of the sort that pension funds liked.
“Unfortunately, the backdrop for agriculture markets became
dismal….the commodity cycle changed and emerging markets had a
bad time,” Hopkins said. The strong US dollar was an issue, he
said. However, rising price growth recently suggests that
difficult days are ending. Farmland prices have risen
“massively,” he said. “All my assets have repriced.”
Prices have certainly risen in some farmland markets. A report in
2020 by Savills found that in domestic currency terms, Australia
and New Zealand witnessed the largest appreciation in farmland
value growth of 14 per cent and 13 per cent in 2019,
respectively. Over the 20 years to 2019, the global picture is
mixed, but broadly showing a rise in most regions of the
world.
“We have just sold our farmland mandates in Australia and New
Zealand. A recent significant uplift in agricultural land prices
plus a return to the commodity super cycle and La Niña [Pacific
ocean current system] are driving prices inexorably upwards
meaning that farmers are having a bumper year. We remain
committed to invest in agriculture but principally with a focus
on agri-science and technological advances in food chain
security,” Hopkins said.
Down on the farm
Milltrust works with the UK-based Roslin Technologies group,
renowned for developments such as genetic modification, as in
“Dolly” the sheep. Hopkins enthused about the growth of
cultivated meats and how important this is at a time when demand
for animal meat in Asia is skyrocketing. Another example he gave
of Roslin’s work was in sustainable food practices was from
Singapore, where insect grubs stemming from the waste of palm oil
are bred for fishmeal – a healthy alternative to soy beans which
have been used as fishmeal.
“A lot of science is coming out of the UK; we have a wonderful
relationship with Southeast Asia. We are helping the circular
economy,” he said.
As far as animal husbandry is concerned, Milltrust has created a
vertically integrated business in New Zealand, taking a different
approach to rearing cattle so that instead of slaughtering a
number of young males because dairy is preferred, more are raised
as beef cattle.
Hopkins argued that one driver of agricultural innovation is that
China needs to decarbonise its economy.
“Milltrust has been an early pioneer in impact and sustainable
investing, with a key focus on the UN Sustainable Development
Goals. Milltrust seeks to maximise its contribution to these
goals by identifying and investing in highly impactful companies
to ensure we leave a better planet for future generations,”
Hopkins said. He said that his business was instrumental in
drafting the Animal Welfare section of the OECD Farmland
Investment Guidelines and has been an active participant in the
International Sustainability Unit (ISU), formally an initiative
of HRH Prince of Wales.
The organisation runs a number of funds: Climate Impact Asia
Fund, Global Emerging Markets Fund, and British Innovation Fund.
For example, the climate fund is a long-only direct public equity
impact investment strategy investing in Asia-listed companies
which enable the adaptation to, or mitigation of, climate change,
and the transition to the low carbon economy. Milltrust said this
strategy has produced annualised returns of more than 24 per cent
since its inception in January 2020. The fund also donates up to
40 per cent of its fees to WWF’s conservation programmes in
Asia.
In the case of the Global Emerging Markets Fund, it is a public
equity portfolio of high conviction ESG investments hand-picked
by country-specialist investment teams. That strategy has chalked
up annualised gains of more than 10 per cent since its inception
in July 2012, beating the MSCI Emerging Markets Index. As for the
British Innovation Fund, backed by UK local authority pension
funds, it targets an internal rate of return of 20 per cent.
Examples of investments include Vaccitech, a platform licenced
from Oxford University’s Jenner Institute for vaccine research.
The company was valued at $68 million at the time of Milltrust’s
first investment and its valuation grew by 8.6 times at peak
shortly after listing on NASDAQ in April 2021, Milltrust said.