Emerging market demand for superfoods has caused a surge in blueberry prices, and investors are finding new ways of accessing the market. Annabelle Williams reports.
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“The primary concern for many of our investors is that the performance of equities is driven almost entirely by sentiment rather than the traditional fundamentals of how a company is run,” he added.
Garner is launching a plc vehicle which will allow UK investors to put cash into developing two blueberry farms in the US, and take a share of the profits from growth of the business.
Traditionally, Asian countries have responded to demand from the West. Now the tables may be beginning to turn.
Blueberries are often sold in the UK at around £20 a kilo, far more expensive than a fruit such as apples, which will be priced at under £3 per kilo. Although the farm gate price will be lower than £20, blueberries still command a comparatively high price level for growers, and the number of farmers keen to switch production over to blueberries is rising.
However, this is not as easy as simply planting the new crop, and many farmers lack the necessary financial resources to make their land right for blueberries.
“You have to clear the land, alter the soil nutrient levels, put in an irrigation system – those things take time,” Garner explained. “Blueberries are a phenomenal growth crop, but not many farmers are planting them because of the high initial investment.”
“We are seeing a lack of financing, a plethora of good quality assets with great development potential and some really experienced quality operators that cannot access traditional finance,” he said.
Modern farming practices help increase the yield of fruit per acre, and the US is leading the way in this kind of technology.
Blueberry yields have increased nearly 80% since 1992, so farmers with the right methods can produce a whopping 5,940lbs of blueberries per acre, compared to around 3,300lbs an acre in the early 1990s.
Garner has earmarked Oregon as the site of investment, as the state has a long pedigree of blueberry growers. The local university is also home to a world specialist in the academic study of the crop, Dr Bernadine Strik, so knowledge of the best way to grow blueberries among regional farmers is high.
Two separate sites of a combined 300 acres in Portland, Oregon, will be developed in partnership with a local farmer who already operates commercially and is hoping to expand his business.
“Oregon has the perfect climate and they have been growing blueberries for 30-50 years so they have the labour force, the distributors and the specialists,” Garner said.
Growing the crop close to manufacturing and distribution sites is crucial, as much of the new demand from Asia and Latin America is not actually for fresh blueberries.
Manufacturers are importing frozen blueberries for use in a range of healthcare items and foodstuffs, as 4,000 new products containing blueberries enter the global market each year. Blueberry cake, for example, is becoming a traditional dessert at Christmas in China.
Garner expects it will take three-to-six months to develop the land and begin operations, and hopes the farm will be commercially viable in three years. The internal rate of return has been set at 45% and investors would be able to exit the vehicle from seven to ten years after investment.
The other superfoods surging on Asian demand