A nation with more than a billion mouths to feed would excite any agricultural company, but growing affluence is leading many urban Chinese to eat more protein, sugar and processed foods than their parents ever did. That changing diet makes agribusiness—the conversion of traditional agriculture into modern, efficient food production—an enormous opportunity not just in China but throughout the Pacific Basin, where food exporters stand to gain. The Pacific Wealth Portfolio contains four agribusiness companies, one in the Conservative Portfolio and three in the Aggressive Portfolio. They should prove excellent investments, as I shall explain.

According to the International Monetary Fund’s (IMF) latest forecasts, emerging and developing Asia should grow well over 6% per year in 2015 and 2016—the fastest growth in the world, with China, the Philippines and Vietnam leading it. On the other side of the Pacific, the western Latin American countries of Mexico, Colombia, Peru and Chile are all expected to grow at healthy rates of 3% or more, even though declining commodity and energy prices slowed Latin American growth, with Brazil and Venezuela both in recession.

Commodity prices are also down in Asia. Standard & Poor’s Asia Commodity Producers Agribusiness Index dropped 3.6% over the last year. Lower oil and metals prices left commodities producers out of fashion, making now an attractive time to buy Asian agribusiness shares.

For rich countries, economic growth doesn’t do much for agribusiness. Populations grow slowly, and as we Americans have shown, although rich populations may expand their waistlines, agribusiness output doesn’t necessarily expand with them. Instead, production becomes more efficient because of labor, faster-growing crops and better fertilizers.

The prospects for agribusiness are different for China, where a population of 1.4 billion people is growing at only 0.5% annually but getting richer at 6% annually, according to IMF estimates for 2015 and 2016. China imported $165 billion of agricultural products in 2013 and exported $70 billion based on World Trade Organization figures. Imports more than doubled over the previous four years, growing 21% annually, more than twice as fast as China’s GDP.

Gains from Two Directions

One of our holdings, Wilmar International (OTC: WLMIY), stands to gain from this trend.

Singapore-based Wilmar is not only Asia’s largest agribusiness company, but it also leads the world in producing palm and laurics oils. With more than 450 manufacturing plants in 18 countries, the company is one of the largest palm plantation owners in Indonesia and Malaysia. Wilmar is also the largest oilseed crusher, edible oils refiner and specialty fats and oleo-chemicals manufacturer in China, as well as one of its largest flour and rice millers. So the company benefits both from Indonesia’s growing agribusiness exports and China’s growing agricultural imports.

Wilmar is also Australia’s largest raw sugar producer and refiner, and has substantial, rapidly growing operations in India and Africa. Its 2014 revenues were $43 billion and its 2015 first-quarter profit after taxes grew 23% to $263 million. With a historic price-to-earnings ratio of 12.8 times and a prospective 2016 P/E of 10.7 times on 4-Traders estimated earnings, Wilmar should be a core holding of your Pacific Wealth portfolio.

Strong Indonesian Demand

Agricultural powerhouse Indonesia has a population of 256 million that is growing more rapidly than China’s, by 1% per year, and the IMF estimates Indonesia’s 2015–2016 per-capita growth rate will average 4.3%. Consequently, the country’s demand for modern agriculture is strong, with ag exports also rising rapidly, up from $25 billion in 2009 to $43 billion in 2013, a 14% annual increase.

Headquartered in Jakarta, PT Indofood Sukses Makmur Tbk. (OTC: PIFMY) has agribusiness opportunities inside and outside Indonesia. The company makes consumer brand foods, along with milling flour and processing vegetables, mostly for the Indonesian market. But it also has additional agribusiness operations (primarily edible oils with some sugar and rubber) in Indonesia, Brazil and the Philippines.

Majority-owned subsidiaries handle most of those operations. One of those subsidiaries, PT Indofood Agri Resources Ltd., is listed on the Singapore stock exchange with thinly traded ADRs. The company made $4.75 billion from sales last year and generated $290 million in net income for shareholders at its parent company. Although sales flattened in the first quarter of 2015, operating income increased 9.5% while net income declined 37%, a result of unrealized foreign exchange losses. Based on the 4-Traders estimate, the company trades at 18 times historic earnings but only 12.5 times forecast 2016 earnings; it yields 2.4%.

Labor Edge

While some agricultural commodities depend heavily on machinery, others are labor-intensive, giving poor countries with cheap labor a massive competitive edge selling commodities, such as chicken, to rich countries.

Industrias Bachoco S.A.B. de C.V. (NYSE: IBA) falls into this camp. This Mexican poultry producer leverages relatively low-cost Mexican labor and the North American Free Trade Agreement’s (NAFTA) provisions to compete with Tyson Foods and other U.S. poultry producers in the giant U.S. market. In fact, 20% of Industrias’s sales in 2014 came from the United States, with the remainder in Mexico. The company owns more than 1,000 farms and has 25,000 employees. In 2014, sales were $2.8 billion and net income $266 million, up 95% from the previous year. In the first quarter of 2015, sales jumped 18% compared with the previous year, with U.S. sales, which now represent 24.5% of the total, especially strong. As a result, net income soared 92% in the same quarter. The company trades at 9.2 times 2014 earnings and at 11 times the 4-Traders estimate of 2016 earnings, with a 1% dividend yield.

NAFTA isn’t the only treaty working in the company’s favor. Mexico is one of 11 countries participating in the Trans-Pacific Partnership. The deal suffered a setback recently when Congress struck down a portion of the bill, but the trade agreement is expected to be signed this year. Part of the treaty’s rationale was to open up the Japanese market for U.S. agricultural companies. Despite high domestic food prices, little fertile farmland and expensive labor, Japan imported only $10.8 billion of U.S. agricultural products in 2013. But the United States will hardly be the treaty’s only winner because other participating countries also stand to gain from its provisions, with agricultural exports from Mexico, Singapore, Malaysia and Vietnam enjoying the biggest boost initially.

Asia’s Go-To Trading House

The Pacific Basin’s rapid growth in agribusiness requires traders, processers, storage facilities and arbitrageurs of commodities markets. Based in Singapore, Olam International (OTC: OLMIY) is Asia’s largest agricultural commodities trading house, operating in 65 countries. It is now competitive in size with the U.S.’s Bunge, Cargill and Archer Daniels Midland, but with the advantage of operating in the Asia-Pacific region.

Olam specializes in cocoa, coffee, cashews, rice and cotton, and has 23,000 employees. Growing operations are carried out in Africa, Indonesia and Argentina, among other countries.

In 2014, sales totaled $14.3 billion with net income of $239 million. In the first quarter of 2015, net income was $95 million, up 25% from the previous year, although sales dropped 11% as the company exited lower-margin businesses. The company trades at 27 times historic earnings but at only 9.9 times the 4-Traders estimate of 2016 earnings with a dividend yield of 2.6%.