This story was initially published in March 2018.
It’s common to hear of high-flying professionals deciding to make a career change. What’s not as common is to go from managing $40 billion in assets to running your own farms across 2,300 acres in the English countryside.
But that’s what Graham Birch did, swapping a leadership role at investment behemoth BlackRock in London for a life as a farmer. He went from poring over price data in commodity markets to analyzing satellite images of cropland — and now sells milk, oats and other foodstuffs produced at his farms in the southwest England county of Dorset.
The leap from fund manager to farmer is a big one, but one thread runs along Birch’s path: his affinity for commodities. The Londoner ran funds that invested in gold and other metals while working as head of BlackRock’s natural-resources investment team. He purchased his first farm along with his wife, Margaret, in 2007.
“I did start to develop some interest in agriculture while at BlackRock. It became a small obsession of mine,” Birch, 57, said in an interview with MarketWatch. “I became involved in looking at the science of farming. And that’s what we apply on our farms,” said Birch, who left BlackRock in 2010.
Today, his farms Field Barn and Hedge End supply milk to U.K. retail heavyweight Marks & Spencer PLC
and provide oats for Jordans cereals and Ryvita crackerbreads, widely seen on U.K. grocery shelves. Those last two brands are under the umbrella of Associated British Foods PLC
, which is listed on the top-flight FTSE 100 equity index
, as is M&S.
Birch, who also has non-executive roles at both ETF Securities and Hochschild Mining PLC
, spoke to MarketWatch about how his job measures up to the world of commodities. The interview has been edited for clarity and length.
MarketWatch: Was there a particular commodity that drove your interest into farming? My understanding is that you co-managed BlackRock’s agriculture hedge fund.
Birch: Yes, I launched the BlackRock Agriculture Fund. The reason for doing this was simple: The long-term demographic trends favor agricultural commodity prices.
Population increases coupled with urbanization and rising living standards have led to increasing demand for food. This has been met by a combination of agricultural productivity gains and land clearance.
However, the “low-hanging fruit” has been plucked, and demand growth from here on is likely to be rationed by rising real crop prices.
MarketWatch: Why farming? Did your family have farms?
Birch: I didn’t have a family background in farming, so I could simply approach it as I would any other business — and that works for me.
MarketWatch: What are the parallels between being a fund manager and being a farmer?
Birch: The natural resources industry — whether it’s gold or oil or mining or agriculture — share certain characteristics, and one of them is you are basically getting something out of the ground. It’s a very primary industry.
The second thing is that you have only got very limited control over the price of the product you are selling. No gold-mining company can control the price of gold, no farmer can control the price of wheat. So you are at the mercy of global markets.
MarketWatch: Do you do any trading of commodities today? If so, which ones?
Birch: Yes, I hold about 10% of my investment portfolio in gold and silver. I tactically buy agricultural commodities if i see an opportunity. On the whole, I use ETFs to implement the strategies.
MarketWatch: With the farm, how do you deal with commodity pricing, which at times can be volatile?
Birch: When we are trying to look at who are customers are, we try and focus on customers that can pay us premium prices, so that we can escape a little bit from the international commodity markets.
But there’s a limit to how far you can escape from that. So the focus for us is controlling our costs, maximizing our output, minimizing our use of scarce resources like fertilizer or power.
In many respects, farming is like any other business. You need to focus on costs of production and revenue enhancement. The main difference with farming is the uncontrollable risks such as weather.
MarketWatch: What does it take to get clients to buy your goods at premium prices?
Birch: Our farms are part of a stewardship scheme, which is called Higher Level Stewardship, which is a government program that gives us a significant amount of money for in exchange for creating certain habitats on the farm. Some of customers, like Jordans, pay us extra money because we farm with care for the environment.
Looking after the environment is not just because we like to see the birds and the animals. It’s because we actually get more money for doing it. That’s part of our long-term strategy.
MarketWatch: You mentioned that you use “precision farming” on your land. What is that approach?
Birch: Precision farming is about applying modern science to the farming process. We use things like satellite images to look at the crops growing in the field and use those images to dictate where we put the fertilizer and how much to use — based on the view from space, if you like.
Every single one of our tractors is GPS-equipped. I can load up a smartphone app that allows me to look at any one of our tractors and see how it’s being driven and what the field consumption is.
Of course, that technology wasn’t invented for agriculture, but it’s obviously something that is incredibly useful. The mining industry has used this sort of thing for decades, but it’s taken a little bit longer to get out into the farm.
MarketWatch: Do you have any investing ideas for 2018 in either commodities or farming?
Birch: It’s not my job to advise other people on investment any more. However, with my own money I have been backing companies involved in the electric car revolution — such as the major lithium miners, amongst others. The electric car theme is here to stay and the sector is worth a look.
I quite like the look of gold mining equities at the moment, although these are very volatile and won’t suit everybody. They are more a tactical investment than a long-term investment.