Archive for July, 2008

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Illinois agriculture & biotech going global presentation

Thursday 31 July, 2008

I attended this event @ the World Trade Center Illinois Agriculture: Going Global and Realizing Biotech’s Potential presented by John Power, President of LSC Intl Here are a few highlights:

Poor harvests & population growth (to 9B by 2050) are impacting world agriculture. Expanding middle classes in developing countries are straining the system. Land & water shortages are indicators of global agricultural infrastructure problems. Because of increasing yields/acre, the % of income spent on food has maintained @ 10% in the US, but continues to be 32% in South Korea, 34% in Russia, & 56% in Bangladesh. Renewable fuel targets will outstrip conventional ethanol by 2020. US ethanol fuel production is up, but suffers from short term challenges-there is an excess now which keeps prices weak. Biodiesel is still a small factor. In Europe, the common agricultural policy is becoming more like welfare, simply making farmers stewards of the countryside. US R&D policy is more effective than Europe’s directorates. Canada plays an important role specifically in wheat.

Ironically, the midwest is not well-positioned with a limited number of clusters in biotech, with Illinois ranking only 21st by the Milken Inst. Traits to consider are herbicide tolerance, insect resistance, & a combination of the 2. In this area, the private sector spends more than the public sector, which might be an indication of the problem. Research leading to new startups is weak. The challenges are we have no leaders here, no successful startups, & no focus. We need a few Boeings in this area to succeed. More regionalization & public-private partnerships would help.

I requested that John send me his presentation (based on information provided by Robert Ludwig of the Hale Group & Clive James of International Service for the Acquisition of Agri-biotech Applications) for me to put up here, but haven’t heard back from him.

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sinking global funds

Tuesday 29 July, 2008

I read this article by Gail MarksJarvis of the Tribune Global funds no longer make world go round

Apparently the local economies of the world are linked after all. It has been speculated recently that the rest of the world had been decoupled from the American economy so that the rest of the world would continue to grow while Americans suffer from the aftereffects of the real estate financing fiasco. This article indicates that we are dragging the rest of the world down with us. In a sense the escalation in world oil prices affect US consumers more than anyplace else because gasoline is taxed less than anywhere else in the world, & thus our retail price reflects the fluctuations in the market more than elsewhere, i.e. we notice more of a difference when the price goes from $3 to $4/gallon (33% increase) than when a more highly taxed European sees petroleum go from $8 to $9/gallon (12 1/2% increase).

The role of foreign investors participating in the global stock markets has increased as well. My impression is newcomers saw these markets as ever increasing, without recognizing that they’re roller coasters. It looks like investors are retreating to supposed safe havens in this time of uncertainty & those markets which are benefiting from demand for raw materials.

I think in many ways, inflation is a greater risk in countries where it’s been commonly accepted, such as Latin America. It will be a real test to keep inflation under control in countries like those. Inflation in staples like food can be political hot potatoes. Talk of a commodity bubble is worrisome. It’s safe to say a lot of the internet bubble money went into real estate. Now that that bubble has burst, I’m wondering where it will go. Has it gone into commodities to fuel emerging economies growth? I question whether most investors have been that sophisticated.

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international real estate musings

Monday 28 July, 2008

I caught this article by Lew Sichelman in the Tribune Buying abroad is picking up a US accent After acknowledging that currency-rich foreign buyers are buying up American real estate, he jumps into how Americans are buying abroad. The assumption is this is focused on residential real estate-foreigners have been buying into commercial-industrial real estate for many years. I’m disappointed there wasn’t more detail on who’s buying what & where. I question “No one knows who is buying what or how much.” I would bet someone @ the National Assn. of Realtors or consultant has a pretty good idea.

I attended a conference on Latin American residential real estate opportunities earlier this year Latin American Investment summit. I’ve also had a friend or 2 look into investing in property in Latin America & backed off after looking at the potential risks. I actually earned my realtor’s license in the mid-1990’s in the delusional hope of getting involved in real estate in the then-reunifying Germany. I never earned anything from it, but it was a valuable learning experience. I got to know another guy who worked in it more seriously, & he learned how much of an insider it helps to be to do these kinds of deals. Fiabci-the international real estate federation was a big help. I even worked for a short time for Deutsche Bank, which is providing financing for cross-border deals. I do find it interesting that Deutsche Bank is triangulating the process-a German bank Americanizing the lending process in Latin America. Just because Deutsche Bank is promoting this doesn’t mean there isn’t any risk. These deals are still governed by local laws administered/enforced by local officials, so someone will get burned. It’s just a matter of when & how badly.

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restaurants going international

Wednesday 9 July, 2008

I came across this article in the Chicago Tribune Restaurant chains feasting in markets outside U.S. The world has to eat & loves to eat American fast food. This can be a blessing & a curse for American companies. It’s a blessing because international markets contribute proportionately well to profitability, but denigrate our reputation as purveyors of unhealthy food lacking in freshness & quality. I find it odd when I run into some American restaurants in unexpected places/countries, but hey, if they’re successful in those places, more power to ’em. I remember when living/working in Germany being impressed by McDonald’s offering beer on the menu. When I was working in Poland in 1994-95, I remember KFC/PizzaHut/Taco Bells were everywhere while McDonalds were slow to build a market presence. I think a big part of their success lies in the fact that corporate hq’s partner with strong local business people who are able to balance the global brand with local tastes. They do a good job of maintaining control by enforcing adherence to brand standards. /I’m surprised Burger King is supposedly just entering Poland. If I remember correctly, I believe they were alrady there. I heard Tom Monahan, founder of Pizza Hut, speak in a class when I attended the University of Michigan, & he didn’t discuss international expansion much then, 27+ years ago.