INTERVIEW-Cargill's Black River targets food, land deals

Fri May 7, 2010 7:31pm BST

* Sees opportunity in Asia in dairy operations

* Investing in fish farming in South America

* New food fund closing this summer

By Carey Gillam

NEW YORK, May 7 (Reuters) - Agribusiness giant Cargill's $6 billion Black River arm is making its next big bet on changing eating habits in major developing nations, buying into dairy farms in Asia and breeding fish in Latin America.

Black River Asset Management, which mostly manages third-party capital, plans to close a private equity fund this summer that will target food production, processing and distribution with a focus on dairy and aquaculture segments, said Rich Gammill, managing director and senior portfolio manager for Black River.

The "sweet spot" for the fund is $300 million to $400 million, and will be similar in size to a sister fund that closed earlier this year and is focused on agricultural land investing.

"We're looking for growth equity opportunities," Gammill told Reuters in an interview on the sidelines of an investment conference in New York.

Black River is among a growing number of investment groups establishing positions in global farmland and food production amid concerns about a growing world population and supply and demand imbalances for food, water and energy.

Gammill said the fund is aiming for returns of more than 25 percent a year by investing in new western-style dairy farms in developing parts of Asia. The new farms could require initial investments estimated at $35 million each and will operate with 5,000 to 8,000 cows in areas that have relied largely on small peasant farmers for dairy production, he said.

In Central America and South America, the focus will be on expanding efficiencies in aquaculture amid growing demand for farmed fish, Gammill said.

(Reporting by Carey Gillam; Editing by David Gregorio)

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