Wednesday, November 30, 2016

"'Sheer number of unknowns' deters private equity from farming"
From Agrimoney:
Private equity firms have largely stayed away from agriculture due to the risks the sector presents, said David Gray, partner at Altima Partners, an investment manager.
"PE firms don't like commodity risk," said Mr Gray.
Such investors had tended to shy away from the production side of the agriculture sector and focus instead on "value add" – that is, the industries processing raw farm commodities into higher value products.
'Number of unknowns'
Besides an apparent lack of liquidity and visibility of fund drivers, uncertainty surrounding the sector kept firms away.
"There is too much uncertainty involving weather and crop," said Mr Gray at the AgriRisk Forum in London. "They don't know what the weather is going to be like or what the production figures will be."...MORE
A couple years ago one private equity fund, ACM was raising $250 million but I don't know if it has deployed all the money. The last time I looked they were growing organic blueberries and hazelnuts but on the one hand if you put that much loot into blueberries you'd probably have antitrust problems and on the other, the international hazelnut cartel is facing declines in the Gin Gimlet end-market and Nutella is getting vertically integrated in their sourcing.
As usual, apologies to the Grant Wood Estate and the Art Institute of Chicago for the image at the top of the post.