The ASX certainly hosts a group of interesting food exporters. But for various reasons, not all are investment-grade at present.

Australian Agricultural Company Limited (AAC)

This is one stock often cited as potentially an outstanding food export exposure. Australia’s largest cattle and beef producer, running 561,000 head of cattle on more than 6.5 million hectares of land, AustAg boasts high-quality beef, traceable product “from paddock to plate,” under strong proprietary brands, with secure supply channels located next door to the growing markets in Asia.

The only problem is that AustAg has been a disappointing performer on the share market. With drought, low cattle prices and political interference (the government’s decision to shut down temporarily the live cattle trade to Indonesia in 2011), AustAg has lost investors 2% a year over the last five years in total return, and almost 6% a year over three years. For the last 12 months it is in the red again, down 2.8%.

The company recently moved its year-end to March 31, from December 31. It reported a net loss of $46.5 million for the three months to March 31, after a loss of $8.4 million in the year to December 31, 2012. AustAg recently raised $219 million from a share issue as part of its strategy of focusing on building a global, vertically-integrated red meat supply chain, with particular focus on Asian markets, servicing the rising demand for red meat protein. Its Darwin Abattoir, set to begin operations in 2015, will be a major part of this strategy.

The company could well deliver a very robust investment proposition based on this business: but it is not that at the moment, except for very patient contrarian investors. The lack of dividend makes an investment in AustAg a big call for a self-managed super fund (SMSF).

Webster Limited (WBA)

This Tasmania-based company is a successful Australian food business, with a healthy niche, supplying counter-seasonal food to supply to northern hemisphere markets.

Through its two operating divisions, Walnuts Australia and Field Fresh Tasmania, Webster is the southern hemisphere’s largest producer of walnuts, and Australia’s largest onion grower and exporter. Webster exports its onions to 16 countries worldwide, and its walnuts to eight countries. Walnuts – of which 95% of production is exported – have grown to be the major contributor to profit.

For the year to June 30, 2013, Webster reported revenue of $61.77 million, up 28%, and net profit of $6.97 million, up 74%. The company paid total dividends of 2.5 cents a share, up from 1.5 cents in FY2012.

Webster has run strongly since Switzer Super Report wrote about the stock in May (you can read that story here), from 63 cents to $1.09. Broker CCZ Statton expects Webster to pay a dividend of 3.3 cents in FY14, fully franked. At $1.09, that translates to a yield of 3.03%, or 3.68% for an SMSF in accumulation mode and 4.32% for a fund in pension phase.

Select Harvests Limited (SHV)

Australia’s largest almond grower and processor, and the third largest grower worldwide, is arguably the most investment-ready of the food exposures. Select is also geared around counter-seasonal supply to the northern hemisphere. The business is divided into two divisions: an almond business, which owns and manages orchards in Victoria, New South Wales and Western Australia and South Australia, and a food business, which processes and markets a range of nut and fruit-based products to retailers, distributors and food manufacturers, under the Lucky, Sunsol, Nu-Vit, Meriram and Soland brands.

Select has had a few problems in recent years, mainly drought and pest issues, but has bounced back strongly. In recent months, it has spent $25 million buying almond orchards in South Australia’s Riverland region, Victoria’s Mallee and the NSW’s Riverina, as global demand for the nuts increases faster than supply. Broker RBS Morgans says Select’s “maturing almond orchard profile is well-placed to take advantage of positive industry fundamentals.” Globally, the broker says, demand for almonds is growing at 8% a year, while supply is growing at only 4% because of production constraints; most notably, a drought in the US, the source of 80% of the world’s crop. That is good news for Select.

For the year to June 30, 2013, Select reported revenue of $190.9 million, down 23%, but rebounded into profit, making $2.87 million after a loss of $4.47 million the year before. RBS Morgans is looking for profit to surge to $34 million this year – a rise of 48.5% on the $22.9 million underlying net profit after tax for FY13 – with the dividend rising to 21 cents from 12 cents in FY13. At $4.68, that would place Select Harvests on a fully franked yield of 4.49%, which equates to a yield of 5.45% for an SMSF in accumulation mode and 6.41% for a fund in pension phase.

Capilano Honey Limited (CZZ)

Lastly, there is a great little story in Australia’s only listed honey producer. Capilano exports to 33 countries, and is actually one of the most widely distributed Australian food brands internationally: it won its first Export Award in 1971.

Capilano is one of the largest honey packers in the world, with a capacity to process and pack over 45,000 tonnes of honey a year. Capilano collects honey from the beehives of more than 500 Australian beekeepers, who run commercial beekeeping operations in New South Wales, Queensland, Victoria, South Australia and Tasmania. The beekeepers own about 40% of Capilano, which listed on the ASX in July 2012.

At present, just over 20% of revenue comes from overseas, but Capilano is working to increase this steadily, building on the reputation of Australia’s honey, which has quite a different taste profile compared to honeys from other parts of the world. This is mainly due to the fact that most of Australian honey comes from eucalyptus trees – red gum, blue gum, yellow box and ironbark.

The respect in which Australian honey is held is helped by the fact that the country generally has a good reputation as a clean and green food producer, and specifically, because bee disease in Australia is not yet as pervasive a problem as it is in other parts of the world, there is far less antibiotic use in Australian hives.

For the 2012-13 financial year, Capilano lifted revenue by 6.5% to $72.16 million, and reported a net profit of $3.45 million, up 35%. Export revenue improved by 8% to $15.24 million, accounting for just over 21.1% of revenue. The total fully franked dividend of 15 cents a share for the year was the same as that in FY12. At the share price of $4.19, that represents a yield of 3.58%, which represents a yield of 4.35% for an SMSF in accumulation mode and 5.11% for a fund in pension phase.

In short, Capilano is an excellent company, well-managed, financially strong and with a globally-recognised brand, and it is well-positioned to capitalise on Australia’s high reputation for quality food exports. It is a tiny company – capitalised at just $35.7 million – but it is doing a lot of things right.

Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.