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By Abraham Bailin | 04-05-2011 01:10 AM

A Small-Cap Way to Play Agriculture

IndexIQ's Kevin DiSano discusses some of the drivers behind the small-cap agribusiness sector covered by the firm's new CROP ETF.

Abraham Bailin: Playing the ags with equity-based commodity focused ETFs.

I am Abraham Bailin here with Kevin DiSano from IndexIQ, National Sales Manager. You guys just launched CROP, your Small Cap Agribusiness ETF, the 22nd of last month; it's done fairly well, and we wanted to glean a couple insights about the broader space and the small-cap agribusiness space specifically.

So, thanks for being with me.

Kevin DiSano: Well, thank you very much for having me here. It's been an exciting couple of weeks of the initial launch for CROP, so we're happy to be here.

Bailin: Sure, absolutely.

So, to get started here, I really wanted to get more of a bird's eye macro level picture of the space. Can you just touch on, for our viewer's, some of the macro level drivers that we've seen?

DiSano: The global agribusiness space and agricultural commodity space in general is being driven by really I think two key things.

First, you have the significant demographic trends that are happening around the world, right? Projections are that you're going to see upwards of 1 billion people over the next 10 to 15 years just in India and China alone moving into the middle class. Obviously that drives significant demand for different dietary needs and things like that.

You also have a second driver which is the biofuels area. So, both of those two things combined create a significant amount of demand, and then obviously the challenge then is to provide supply to meet that demand, and that's really where this stuff fits perfectly.

Bailin: All right, if you wouldn't mind, for those of our viewers that have dabbled in this space a little bit know that really the two big names here might be MOO and DBA, right, and that becomes a bit of an equity-based versus futures-based paradigm. Can you touch on that?

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