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Home Kuo’s Smart Take Smart Take Of The Week: Leftovers

Smart Take Of The Week: Leftovers

There were two stories in The Business Times that caught my attention this week. They were kind of related but not quite. It’s what we might call: same, same, but different.

The first was about the growth in demand for food in Asia. According to a report by PwC, Rabobank and Temasek, Asians will fork out more than US$8 trillion on food in a decade’s time. That’s more than double the amount that we currently spend….

…. The gist of the article was that investing in food producers, given the increasing demand, could be lucrative for those who pick the right investments.

The second story was about the quantity of food that Singaporeans threw out last year. It was a jaw-dropping 636,900 tonnes. That’s just in Singapore. Imagine how much food is being wasted in the whole of Asia.

This reminds me of an observation my mother made many years ago. She said Mr Coleman, the founder of Coleman’s mustard, made his money not from the yellow condiment that people ate with their steaks, but from what people left on their plates.

Growth industry

It is undeniable that demand for food is rising. It’s not because we eat more, or waste more. They might still be true. But it’s because there are just more people around….

…. Currently, there are 7.7 billion people on the planet. It is increasing at a rate of 82 million people a year.

Around 20 years ago, the world’s population was around six billion. At the time, I ran my slide rule over food producer Unilever (LSE: ULVR). A colleague mocked that the company was a slow-growing, old-economy business with, at best, only pedestrian prospects.

In 2000, Unilever shares were changing hands at a dividend-adjusted, split-adjusted price of S$13.50. Today, the shares are worth around S$80. That equates to an annualised total return of around 9%….

…. But if the dividends had not been reinvested, the return would have been just 5%.

In a sense, my friend was right. Share-price growth has not been spectacular. But that would only be true if the dividends had been wasted.

So, don’t discarded those dividends. We should invest them and put them back to work as soon as we can.

And let’s not waste food, too. Remember, today’s leftovers could be our lunch tomorrow.

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None of the information in this article can be constituted as financial, investment, or other professional advice. It is only intended to provide education. Speak with a professional before making important decisions about your money, your professional life, or even your personal life. Disclosure: David Kuo owns shares in Unilever.