Although far from a new priority for holders of “patient capital” as deployed by family offices and investment firms, agriculture and food technology – in the broadest sense – is a hot topic in due to supply disruptions. This news service looks at what’s happening, including bubbling opportunities and new ideas.
The term “supply chain disruptions” sounds rather abstract, but over the past three years people have had to learn what it means: empty shelves, skyrocketing prices for bread, fruit and vegetables and basic household items. In the developed world like the United States, Europe, and developed parts of Asia, it hits wallets hard. In emerging countries as in parts of Africa, Asia and Latin America, the results are hunger and unrest.
Russia’s invasion of Ukraine in February compounded food supply and production problems that were already feeling the pinch after Covid-19. Ukraine produces about one-fifth of the world’s marketable wheat market, for example, not to mention being a major supplier of sunflower oil. This has clearly caught the attention of wealth and asset managers, at least judging by the weight of emails this news service has received. Investment firms large and small talk about “food security” and the case for it. (You could say the smart money should have done this months ago.) Agriculture in all its forms is making headlines.
Whether it’s modern technologies such as the use of drones to fly over fields, hydroponics (using fluids to support plant growth instead of soil); genetically modified crops (controversial but important area); new approaches to irrigation and fertilizers and agricultural machinery, farming is big business. Shares of tractor and harvester giant John Deere (now even more famous for being used to tow Russian tanks from Ukrainian farms) have jumped 92% in the past five years, although they have fallen more than 11 % since January, unable to completely ignore a broader decline in global equities. The performance of other large companies was mixed.
Farmland is also a classic “direct investment” game, of course. Microsoft tycoon and philanthropist Bill Gates owns 242,000 acres of North American farmland (source: AFN, August 27). In the past, hedge fund rainmaker Jim Rogers has touted the wisdom of riding the commodity super cycle. Farmland has certain qualities beyond the obvious benefits of food production: it can act as a hedge against inflation and, apart from time-consuming and expensive land reclamation efforts, it is relatively scarce. . (That said, new methods of agricultural production, including hydroponics, and the rise of “artificial meat,” mean that supply constraints might not be as severe as assumed.)
There’s a lot going on in farms, logistics, food distribution and marketing. And this news service will produce more articles examining what the wealth industry thinks about food as an investment area. We’re going to dig “in the weeds” (please excuse the pun) to find out why agriculture makes a good place for the kind of “patient capital” that wealth management offices, private banks and heritage exercise.
Also, we will not ignore the risks and problems that exist: the frictions that can arise when modern science collides with environmental/aesthetic concerns about the state of landscapes.
There are also subsidies and tariffs – a long-standing issue in agriculture – labor practices, logistics and distribution. We hope readers find these articles interesting and urge those wishing to comment to contact the editors: [email protected] and [email protected]