DuPont (NYSE:DD) is making a string of investments in the food and agriculture business which could be a potential game changer for the company. Dupont’s increased investments in food and agriculture is backed by a belief that rising incomes in developing markets combined with healthy population growth will lead to a significant increase in food consumption. Earlier this month, the company bought a 28% stake in Solae LLC, and now it has announced its plan to expand its seeds production business in Ethiopia.  DuPont will spend as much as $10 billion on research and development of solutions dedicated to agriculture and nutrient market by 2020.
We have a $57 price estimate for DuPont’s stock, which is around 20% above the current market price.
Addressing Worldwide Food Security
Recently, DuPont paid $440 million to Bunge Ltd. (BG) to acquire full ownership of Solae LLC. Previously, it owned 72% of the venture while Bunge owned the remaining 28%. Solae LLC is their soy-based ingredients joint venture. 
We estimate agriculture and nutrition-based products contribute around 27% to DuPont’s stock price. For the first three months of 2012, revenues for the division rose 16% to $4.1 billion helped by a 8% volume growth. Moreover, the division enjoys healthy margins.
DuPont has also announced its plan to invest more than $3 million in Ethiopia over the next three years, out of which $2 million is for expanding seed production and storage facilities in the country. The company says it will work with small-scale farmers to help them achieve food security.  The economy of Ethiopia grew by 7.5% in 2011 and is emerging as an attractive destination for foreign companies to invest.
The company is also developing a new facility in China for its Pioneer seed business. Earlier in the year, it signed a multi-year lease agreement with Beijing International Flower Port to build a state-of-the-art hub scheduled to open later this year. In April, it also opened a $40 million research center in Johnston, Iowa, to focus on plant breeding and developing new transgenic products.Notes: