Global AgInvesting News

In the past months, farmland prices have continued to creep downward, leaving behind the record prices of the past few years. The August 8th Land Values Report from the USDA National Agricultural Statistics Service shows farmland values dropped 0.3 percent nationwide in the past year. However, changes in farmland values vary from region to region within the U.S., with some areas such as Iowa seeing drastic declines and others seeing increases.

While the nationwide decline reported by the Land Values Report is small, it marks only the second time farmland values have dropped since the farmland crisis of the 1980s and the downward trend, along with constant media attention on declines, has prompted widespread concern.

But how, if at all, is this trend impacting farmland investors?

GAI News spoke with Paul Pittman, Chair and CEO of Farmland Partners, the largest farmland real estate investment trust (REIT) in the U.S., about declining farmland values and how it impacts investment strategy. According to Pittman, the asset values of farmland are holding up very well given the difficult operating environment that farmers face today and despite the negative headlines in the media. Because of this and because there is no real motivation for farmers to give up land en masse, he doesn’t expect a wholesale decline in farmland prices.

Strategically, Pittman explains that for farmland investors flat or declining farmland prices may present opportunities to buy. Moreover, the timing of farmland investments can provide another form of portfolio diversification and therefore help manage risk.

Hear GAI News’ full interview with Pittman here – including Pittman’s outlook for farmland prices and farm rents for both row and permanent crops, as well as the strategies used by investors to weather fluctuations in farmland values.

Note: This interview was recorded on August 18.

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Sarah Day Levesque

The post What Today’s Farmland Prices Mean for Investors [+PODCAST] appeared first on Global AgInvesting.

Finding and retaining good talent in any company is critical for success. But the challenge of accomplishing this is exacerbated for start-ups, who have limited capital resources and unsure futures.

Greg Duerksen, president at executive search firm, Kincannon & Reed, explains that a big challenge facing agtech today is under-capitalisation – when a company ends up settling on talent because they feel like they don’t have the resources to get the level of talent and experience that it really needs to succeed.

In an interview with GAI News, Duerksen explains why talent is so critical to agtech companies, what top talent looks like for agtech and what companies can do to attract the right talent.

Listen to podcast interview here:

The post Addressing the Talent Challenge in AgTech [+PODCAST] appeared first on Global AgInvesting.

From expanding coverage in mainstream media to the growing number of innovators creating solutions designed to address agricultural and food challenges, the increasing momentum behind agtech is undeniable. Global AgInvesting’s deal activity data indicates that the number of capital deals involving agtech companies and the number of agtech investment funds launched increased from 2015 to 2016. Meanwhile, the number of accelerators dedicated to facilitating the growth and success of emerging agtech companies has ballooned with no less than six accelerators launches in the second quarter of 2016 alone.

At Global AgInvesting’s recent AgTech Week event in San Francisco, investors and innovators in the agtech space gathered to discuss the enormous opportunities that the sector presents, as well as the challenges that lie ahead. One familiar face in the crowd was Paul Pittman, chief executive of publicly traded real estate investment trust (REIT) Farmland Partners, and a recognized leader in the agricultural investment space.

Farmland Partners is dedicated to farmland investment in North America and currently has a portfolio of 268 farms under contract with an aggregate of 113,933 acres. Pittman, who has a farm and finance background, has led the company since its 2014 public offering, but many may not know that he’s also been a technology entrepreneur and understands the headwinds that agtech entrepreneurs face.

With this varied background across agriculture, finance, technology and real asset investment, Pittman has a unique perspective on agtech. GAI News had the opportunity to sit down with him at the AgTech Week event. He shared his thoughts on the challenges to adoption of new technologies by farmers, explained the role technology plays in Farmland Partners’ investment decisions, and explained what technologies he thinks will be the most crucial in today’s rapidly developing farm and food system.

Listen to the complete conversation here.

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Sarah Day Levesque

The post Agtech: A Farmland Investor Perspective [+PODCAST] appeared first on Global AgInvesting.

Global AgInvesting’s AgTech Week event, held last week in San Francisco, brought together more than 250 stakeholders, including innovators and investors, in the agtech space to share insights and build relationships to move solutions forward. One of the biggest themes of the week was the growing opportunity in plant biology. Coverage of the topic included a look at how far the sector has come and what challenges still remain. Attendees heard from industry veterans including Jerry Caulder, Chairman of Finistere Ventures and Robb Fraley, Executive Vice President & Chief Technology Officer at Monsanto. Julie Borlaug, of the Borlaug Institute and granddaughter of Dr. Norman Borlaug, discussed the importance of collaboration in the ag biotech arena. A panel of plant science innovators from Benson Hill, ZeaKal and PlantResponse explored new opportunities and why the time is right for disruption.

As a featured speaker at the event, Robb Fraley, provided some insightful and inspiring comments on ag biotech. One of the early pioneers of biotech, Fraley, expressed his confidence that that the world will achieve food security on a reduced footprint by 2050. However, while world-class science is critical to drive solutions to farmers and consumers, he argued it is insufficient without public trust. Twenty years ago Fraley wouldn’t have believed the success that ag biotech has had but he also wouldn’t have believed there would still be debate over the technology’s benefits and safety.

I had the opportunity to catch up with him after his session and ask him about this and the need to build public trust about biotech. Listen to the podcast below to hear what he had to say.

For more information on Global AgInvesting’s AgTech Week event, visit the event page.

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Sarah Day Levesque

The post Monsanto CTO Robb Fraley on What’s Critical to AgTech Success appeared first on Global AgInvesting.

While the past five years have delivered both increased innovation and investment in agricultural technology (agtech), the value it promises to deliver to farmers has been widely unrealized, as of yet, according to a new white paper.

Investment in agtech reached a new record high in 2015, reaching $4.6 billion and almost doubling investment from the year prior, according to AgFunder’s AgTech Investing Report, Year in Review 2015. In a new white paper entitled “Beyond the Hype: How Agricultural Technology Wins Customers and Creates Value,” Dr. Arne Duss of HighPath Consulting and Jonah Kolb of Moore & Warner explain that despite this momentum and all of the potential value that agtech offers, adoption lags.

In an interview with GAI News Kolb points out that adoption may be slower than some market players and investors might think.  He argues that most agtech offerings are not yet widely accepted nor have the technologies been widely adopted beyond the “soft” adoption rates that come with beta testing and discounted or free trials. Instead, agtech remains stuck on one side of a chasm between early adopters of disruptive technology and early majority adopters.

Economic, demographic and market factors today present agtech with several impediments to adoption, including a decrease in farm incomes and a large proportion of change-averse farm operators approaching retirement. The challenge, then, becomes understanding how agtech crosses this chasm to reach broader adoption.

Duss and Kolb detail six steps to help companies and investors address this task and speed the rate of adoption. The steps include:

Justify the value added by agtech products;

Demonstrate efficacy through independent scientific studies;

Align distribution of agtech products to the way farm inputs are marketed today;

Target a niche market to build initial market share and establish a beach head;

Emphasize ease of use and systems compatibility; and

Match business and technology goals to crop seasonality

For more on how these work, download Beyond the Hype: How Agricultural Technology Wins Customers and Creates Value.

In a recent interview with GAI News Duss and Kolb discuss why the hype around agtech exists today, how they identify agtech that offers true value, why farmers are both excited and overwhelmed by agtech, and the most critical strategy to speed adoption.

Listen to interview here:

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Sarah Day Levesque

The post Addressing the Agtech Adoption Gap: Headwinds and Solutions appeared first on Global AgInvesting.

by Lynda Kiernan

Securing good partners is key to successful investing – a tenant that Blue Sky Real Assets embraces. This is evident in the firm’s third single-asset private equity co-investment it originated with Kialla Pure Foods. GAI News had the opportunity to sit down with Michael Blakeney, Investment Director with Blue Sky, to discuss this unique investment at this week’s Global AgInvesting 2016.

Historically, Blue Sky has structured its single-asset investments as a co-investment linked with an operating partner as a means of building a historical track record and educating investors. Previous co-investments conducted by Blue Sky include ventures with Customized Farming Management and other investors, and Southern Cross Farms. The firm’s most recent is a co-investment with Kialla Pure Foods and is set to capitalize on the increasing demand for organic grain.

Market demand for organics is booming – not only in Australia but also in Asia and the U.S. but the bulk of Australia’s organic grain is grown on dryland, or rain-fed operations, creating a challenging seasonal domestic supply to the processing industry.

Seeing a need, Blue Sky and Kialla plan to take conventional farmland, expand with irrigation infrastructure and water rights, and convert it to organic production. Together with Kialla’s leading organic grain processing and milling business and its marketing and exporting capabilities, this will create an integrated supply chain feeding a high-demand market.

Under the terms of the co-investment, Kialla will maintain approximately 70% of its milling business, and will invest 20% into the farming business, while in turn Blue Sky will take approximately 30% of the milling business, and 80% of the farming business. In addition, Kialla will act as the operating partner, bringing its young, progressive, management team that has deep experience in irrigated organic grain production, a history of earnings growth and a history of building markets to conduct and oversee the conversion of the farmland

“We think that ‘s very good alignment,” Mr. Blakeney told GAI News. “That ‘s very much the model for our agri private equity strategy.”

The investment will provide Blue Sky exposure along the full organic agribusiness value chain, from water rights, productive irrigated farmland for the production of organic grain, to grain storage and handling facilities, to processing and milling capabilities, and Kialla’s marketing and export business. Through these exposures, the investment will encapsulate everything that Blue Sky targets in its investments, including:

Additionally, a market premium is indeed locked-in through an existing offtake agreement with the farmland. Although Blue Sky is aware that there will likely be a yield discount associated with the conversion to organic production methods, the market premium will more than offset this discrepancy. Click here to listen to Mr. Blakeney explain more.

Looking down the pipeline, Blue Sky envisions a somewhat short timeline for an investment of this kind with an expected exit occurring within four to six years. Kialla will have the independent option to decide whether to exit at the same time.  Given the particular exposures, synergies, and advantages inherent in this investment, the firm is targeting a return on investment in the high teens.

“We always look at the exits before we get in. It’s probably the first or second conversation we have with our operating partners,” says Mr. Blakeney. He goes on to explain that there are three determined possible exit routes for this investment – an exit through a trade sale, whereby a larger milling business would look to buy the venture, an exit to a secondary, or a fund that is aggregating these types of assets, or through a split of the venture resulting in the sale of the milling business, the farming business, and the water rights respectively.

As compelling as Blue Sky’s single-asset structure is, the firm is attracting larger institutional investors, and moving forward, its investment vehicle structure will likely reflect this shift.

“The single investment funds have been really good for our existing investor base,” says Mr. Blakeney, “but we’re moving into a far more institutional investor base at the moment. As you’re probably aware, we have First State Super, one of Australia’s largest pension funds investing on a separate managed account with us, and we’re building this bigger fund, the Blue Sky Strategic Australian Agriculture Fund, to provide solutions for more institutional investors, so we don’t envisage a lot more of these single asset type funds.”

It would seem that looking to the future, the sky’s the limit for Blue Sky Real Assets.

The post Blue Sky Investing in Australia’s Organic Grain Supply Chain appeared first on Global AgInvesting.

By Lynda Kiernan

In what is thought to be a first of its kind partnership, agtech and life sciences venture capital firm Finistere Ventures and institutional farmland owner and manager International Farming Corporation (IFC) have launched agtech equity growth fund Willow Hill Ventures. Finistere partner, Arama Kukutai sat down with GAI News at Global AgInvesting 2016 to discuss Willow Hill Ventures and what sets it apart.

Willow Hill Ventures is a growth equity-focused vehicle that will capitalize on the diverse tools brought by Finistere and IFC. By nature of IFC’s involvement, the fund is connected with a widespread base of several million acres of farmland owned or influenced by IFC across 20 U.S. states.  These will help serve as an on-farm innovation ecosystem to be used by the fund’s portfolio companies. Through the fund’s integrated on-farm testing and development capabilities, combined with access to the expertise offered by IFC’s agronomy, technical, and operational teams, companies that Willow Hill invests in will build market traction, with their technologies reaching scale with already-established validation, certification, and recommendation which in turn will increase farmer adoption.

“Today’s farmers are bombarded with a dizzying array of technology solutions while trying to navigate evolving consumer food trends and the pressures of a consolidating farm sector,” noted Charlie McNairy, CEO of IFC. “Our farm labs discover and test the latest disruptive technologies so we can rapidly vet and validate the technologies ready for scale while reducing investment risk — both for the investor and the farmer.”

Finistere brings a long history of venture capital in the agtech space and experience identifying scalable technology. This will come in handy as Willow Hill Ventures will focus on companies at Series C rounds or later, where in recent history funding has fallen short.

“We think based on the pipeline that we’re seeing from early stage, and what the typical company needs, we think there’s a several billion dollar funding gap,” Arama Kukutai told GAI News.

The scale of the fund, which will be managed by Finistere, remains undetermined at this time, but both Finistere and IFC will be actively fundraising, and both will work together to select the companies in which to invest.

When asked if there were specific technologies being targeted for investment, Mr. Kukutai told GAI News that a broad range of technologies are being examined across the agtech class, but key factors that each portfolio company must present including:

Listen to Mr. Kukutai expand upon the importance of functionality here.

The fund will be aiming for returns that are on par with private equity returns, and is targeting exit timelines within the three to five year range.

The post Finistere, IFC Launch First of its Kind Agtech Growth Fund – Exclusive appeared first on Global AgInvesting.

Jose Minaya

Senior Managing Director and Head of Private Markets Asset Management

TIAA-CREF Asset Management

Listen to the entire interview with Jose Minaya, senior managing director and head of private markets asset management at TIAA-CREF Asset Management, here.

By Sarah Day Levesque and Gerelyn Terzo

Financial services provider TIAA-CREF, which oversees $869 billion in assets under management including $8 billion dedicated to farmland, is expanding its alternative investment platform. The firm on Aug. 4 revealed it reached financial close on TIAA-CREF Global Agriculture II LLC (TCGA II), a global agriculture investment partnership, with $3 billion in capital commitments, surpassing its target of $2.5 billion.

Jose Minaya, senior managing director and head of private markets asset management at TIAA-CREF Asset Management, told Global AgInvesting the oversubscribed status of the fund suggests the industry has turned a corner. “I think with this vehicle and what we’ve done is further sign of more interest in this space,” he said, adding that while investors are more comfortable with the asset class, institutional investor penetration is still small.

TCGA II will invest in “high quality farmland assets” across North America, South America, Australia and parts of Europe with a focus on major grain exporting regions. It is the sequel to TCGA I, which similarly reached oversubscribed status with $2 billion in capital commitments at final close. While the first investment vehicle was focused on the United States, Australia and Brazil, TCGA II will offer greater diversification with exposure to Chile and New Zealand, as well as Central and Eastern Europe.

TCGA II has already deployed $500 million, Minaya said, adding that its alternative investment platform is a consistent pipeline that only invests where the firm has people on the ground. “We haven’t stopped investing since 2007. It’s just in the form of creating collaborative vehicles for our capital to go and for everyone to benefit from the scale of that platform.”

TIAA-CREF looks at returns through a historical lens. Minaya points out that the NCREIF Farmland Index has historically been approximately 11 percent returns, comprised of an even split between income and capital appreciation. The fund expects to see returns in line with the future performance of the index.

“[In] natural resources you go through cycles of harsh weather or natural events. That ability in a model where you’re not directly exposed to the operation and you’re still clipping that coupon, more of a rent payment, has helped us manage our returns or volatility through different cycles,” said Minaya.

TCGA II received capital commitments from nearly two dozen U.S. and international institutions with long-term investment horizons for this asset class including return commitments from investors in the maiden agriculture fund. Investors include:

“With its low correlation to traditional asset classes like stocks and bonds, farmland offers excellent portfolio diversification benefits for investors and a hedge against inflation,” said Minaya in a press release. “The macroeconomic fundamentals for investing in farmland are very positive and we view the launch of this new strategy as a testament to the ongoing potential and attractiveness of this asset class.”

Global Diversification & Scale

TIAA-CREF adopted a global theme in its approach to agriculture investing so as not to make a bet on any individual region or crop, which in addition to achieving scale is critical Minaya said considering agriculture is still an emerging asset class.

The strategy for TCGA II resembles that of the firm’s early days as an ag investor in that the focus is on farmland assets that predominately follow a lease model (which reduces volatility) only with a more global perspective.

Australia, for instance, provides exposure to a developed market in the Southern Hemisphere that offers more scale than can be achieved in the United States, where the market is more fragmented and competitive for land acquisition. Australia, however, is not as developed a market as the U.S. or Brazil from a tenant perspective, leading TCGA II to target a lower weighting down under.

“It’s a developed market; there’s that upside potential as the market matures from a tenant perspective, so we still want to get exposure to that region. But we balance and measure that exposure and we also balance it with some lease-type operating strategies,” he said.

Brazil, meanwhile, offers the greatest scale but there are hurdles in this emerging market, largely tied to the underdeveloped nature of the country’s ag infrastructure, which TIAA-CREF views as an opportunity. Rising food demand, for instance, leads to production increases, which translates to more land being converted to produce more crops. And the high precipitation in the country means a farm can produce twice the harvest that a U.S. farm can grow, which complements TCGA II from a diversification perspective.

Commodity prices in Brazil for items such as sugar, cotton and corn have fallen of late, but that does not upset the firm’s long-term investment strategy. “Recently we’ve seen opportunities to go in and buy assets at the targeted returns that we seek,” Minaya said.

Listen to the entire interview with Jose Minaya, senior managing director and head of private markets asset management at TIAA-CREF Asset Management, here.

The post TIAA-CREF Unveils $3 Billion Global Ag Investment Vehicle (Premium Content) appeared first on Global AgInvesting.

Wade Barnes

Founder, CEO and President

Farmer’s Edge

Listen to the interview here.   

By Sarah Day Levesque

Despite the emergence of investment in precision ag in 2014, deals in precision ag accounted for 30% of all agtech deals in 2014 but only 12% of capital invested in agtech. And while the average precision ag investment was relatively small at $1.15 million and most deals were in early stage opportunities, Canadian-based precision ag firm, Farmer’s Edge stands out as a later stage precision ag company that has captured the attention of major investors.

With a focus on providing a complete solution to the farmer using a comprehensive platform that utilizes agronomy, hardware and software, Farmer’s Edge has experienced strong growth since the company was founded 10 years ago. Acreage has expanded from 25,000 acres to close to 4 million acres with a global presence in Canada, United States, South America, Russia, Eastern Europe and Australia.

The company has had an active past nine months, as well, with major investments from Kleiner Perkins Caufield & Byers’ Green Growth Fund, most recently from Mitsui & Co. and plans to announce another major investment very soon.

Global AgInvesting had the opportunity to sit down with Farmer’s Edge, founder, CEO and President, Wade Barnes, to discuss the 10-year journey the company has been on, where investments will be allocated, plans for expansion and what keeps Barnes up at night.

Listen to the interview here.   

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The post Farmers Edge CEO Talks Recent Investments, Plans for Expansion [+PODCAST] appeared first on Global AgInvesting.

Dave Gebhardt

Chief Strategy Officer

FarmLink

By Garrett Baldwin

With GAI AgTech Week 2015 set for June 22-24 in San Francisco, GAI News is exploring the impact of data science in the agricultural sector. Growth in the industry has been remarkable in recent years as new innovations have dramatically improved the overall performance of farms across the country, from optimization of soil quality to dramatically conserving water in times of drought. But we’re just at the beginning of this technological wave in the agricultural sector. According to a recent report, even though corn and soy crops reached record levels in 2014, more than $9.5 billion in potential revenues were lost because of poor optimization of farmland. That’s a big opportunity and bigger challenge for the future.

In fact, as the global population swells and food demand is expected to surge through 2050, one of the most fundamental challenges over the next few decades is if how farmers are capable of maximizing the performance of their current land and labor, while maximize yields with their current resources, including our dwindling fresh water sources.

This week, GAI had the good fortune of catching up with Dr. Dave Gebhardt, the Chief Strategy Officer – Data Products and Agronomy with Farmlink. The data science and technology company is a leader in boosting productivity, profitability and sustainability of the global food system through its cutting edge platforms. Cooperation between companies like Farmlink and farmers around the nation has led to an increase in the efficiency of crop-growing operations, especially in staples like soy, corn, wheat, and rice.

In this podcast, Dr. Gebhardt discusses the opportunities and challenges ahead for data science, the new frontier as data science is linked across the booming Internet of Things, and provides insight into how agricultural experts and novices can take part in this unstoppable trend in the sector.

Data science will be a central discussion point at GAI AgTech Week, which will offer two and a half days of engaging keynote presentations by industry leaders, thought-provoking panels, innovative company presentations and interactive workshops. The event is designed to educate and inspire investors and entrepreneurs with a broad range of investment opportunities in the food and agriculture technology sectors worldwide.

Listen to podcast here!

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Learn more about AgTech Week at www.agtechweek.com

To receive relevant news stories with summaries provided by GAI News, subscribe to daily or weekly service.

The post The Rise of Data Science in Agriculture [+PODCAST] (Premium Content) appeared first on Global AgInvesting.