Global Agribusiness: How to Stir a Sleeping Giant

Law Firm’s Global Agri-Biz Practice Head Connects ALL the Dots in AgWire Interview

By Marc Dresner, IIR

Joshua Hofheimer, an attorney with Sidley Austin LLP and coordinator of the firm’s global agribusiness practice, isn’t the first to refer to the sector as a sleeping giant.

But he is among an exclusive handful of experts capable of connecting the dots—and the players—necessary to stir global agribusiness from its slumber.

Couple population growth and resource scarcity—they’re not making any more land or water—with undervalued assets, under-production and runaway technological innovation and you have a compelling investment equation.

So why hasn’t the global agribusiness market rocketed off? Well, the math isn’t as simple as it seems.

Hofheimer noted CropLife estimates time-to-market—from discovery to commercialization—of a biotech trait is about 13 years, the cost has risen to approximately $130 million per trait and the regulatory timeframe has doubled to roughly four years.

In addition, there’s a coverage deficiency that’s impeding the flow of venture capital to where it’s needed.

Joshua Hofheimer

“We are still fragmented when you start to look at the inflection points or the intersection between technology and what some people call clean tech and how that influences or overlaps with agriculture in certain areas and the life sciences,” said Hofheimer. “When you start to integrate those different segments into a business or into a business model, the research coverage breaks down because it becomes fragmented.”

Ah, but therein lies the opportunity. Hofheimer and his colleagues aren’t waiting for analysts to catch up; they’re matchmaking.

“When you bring together activists’ interests, entrepreneurial spirit, technology and commercial enterprise, that’s when you will see more and more exciting companies with new ideas that are going to have a really big and innovative impact in this market, and also have a beneficial impact on our environment,” Hofheimer told AgWire.

“I just want to be a part of it by helping to bring companies together and ideas together… We have a great platform for helping those companies to develop and mature, and for those bigger companies to compete on a global scale, and to help investors find and structure some really interesting opportunities,” he added.

In this episode of AgWire, Hofheimer provides a comprehensive overview of the global agribusiness frontier, including:


• Development and commercialization processes
• Global regulatory strategy
• Technological advancement and innovation
• Partnering opportunities and more…

Listen to this episode of AgWire: Part I & Part II


Download an interview transcript.

Editor’s note:Hear more from Josh Hofheimer in person. He’s chairing AgReturn San Francisco March 13-15. For more information or to register, click here.

ABOUT AGWIRE
AgWire is an executive interview series featuring the business leaders, investment experts, innovators and entrepreneurs at the forefront of the agriculture industry. Each episode explores the trends, technologies and drivers shaping the world of agriculture today.

ABOUT THE AUTHOR/INTERVIEWER
Marc Dresner is IIR's sr. editor and special communication project lead. He is the former executive editor of Research Business Report, a confidential newsletter for the market research industry. He may be reached at mdresner@iirusa.com. Follow him @mdrezz.

Agriculture: Inside an Evolving Asset Class

AgWire Interview Series Takes a Fresh Look at Ag’s Investment Status

By Marc Dresner, IIR

Agrarian societies have been around since the Bronze Age; yet from an investment perspective, agriculture remains something of a novelty—albeit one that’s attracting significant attention of late.

Since things like soil, water, husbandry, etc., would make for unlikely passing fads, it’s a safe bet that agriculture as an investment asset class may be coming into its own.

At least that’s John Chu’s assessment.

The managing director of institutional equity research for agri-industry at AltaCorp Capital noted that as far as the S&P goes, agriculture has historically been more or less a corral of fertilizers and chemicals.

“There really wasn’t enough in the agriculture space to qualify it as an independent sector for a particular focus,” Chu told AgWire.

But new player proliferation amidst consolidating bellwethers, technological innovation, and breakthroughs in productivity and sustainability are stirring an otherwise commoditized giant.

Add opportunities in the BRICs to the mix and the agriculture investment equation becomes pretty appealing.

In this episode of AgWire, Chu surveys the factors conspiring to transform agriculture’s asset class status.

Listen to this episode of AgWire here.

Read a transcript of the interview here.

Editor’s note: AgWire is produced by AgReturn, a global conference series focused on the technologies, companies and investment strategies on the cutting edge of agriculture.

Next up: AgReturn San Francisco, March 13-15! For more information or to register, click here.

ABOUT AGWIRE
AgWire is an executive interview series featuring the business leaders, investment experts, innovators and entrepreneurs at the forefront of the agriculture industry. Each episode explores the trends, technologies and drivers shaping the world of agriculture today.

ABOUT THE AUTHOR/INTERVIEWER
Marc Dresner is an IIR USA communication lead specializing in audience engagement. He is the former executive editor of Research Business Report, a confidential newsletter for the market research industry. He may be reached at mdresner@iirusa.com. Follow him @mdrezz.

Ag Chat Spotlights Investing at the Intersection of Agriculture and Technology

Smart, Smaller Scale Plays Land Private Equity Fund Comfortably in the Catbird Seat

By Marc Dresner, IBC Life Sciences

Michael Curry, managing partner at Investeco Capital, has carved out a plum investment niche in Canada’s burgeoning “intelligent agriculture” market for his firm and its clients.

While big private equity funds tend to concentrate on big deals with big companies to the tune of tens of millions, Investeco frequently takes minority stakes ($2-3 million) in early-mid-stage, modest players ($7-10 million rev.) who turn a tidy profit on a promising product with substantial growth potential.

“We don’t have a lot of competition for deal flow,” Curry told Ag Chat. “There is so little capital looking into these areas in Canada that the door is open when we go to see these companies.”

“These entrepreneurs are doing very well; they’re not prepared to sell half the company at this stage,” Curry added. “We like people who think long-term and not in short cycles. These businesses have to have compelling reasons to be around for a long time.”

Investeco’s fund pours expansion capital into agricultural and environmentally sustainable interests in four main areas: water, energy, food and technology.

According to Curry, the sweet spot often rests at the intersection of agriculture and technology: GPS navigation for tractors, variable rate application for seeding and fertilizer, UV water filtration, etc.

“To grow in a sustainable, economical manner going forward, [agribusiness is] going to have to increase yields and crops. We are going to have to use less energy doing so. We are going to have to use less water,” said Curry. “So we see tremendous opportunity in the marriage of technology and agriculture production.”

In this edition of Ag Chat, we’ll also explore:


• The trend toward de-commoditized, value-add food production


• The resurgence of local, resilient supply chains


• Why Wal-Mart is now selling organic milk…

Listen to Part 1.

Listen to Part 2.

Download the transcript.


ABOUT AG CHAT
Ag Chat is an executive interview series featuring the business experts, investors and entrepreneurs at the forefront of sustainable agriculture. Each episode explores the trends, technologies and drivers shaping the world of sustainable agriculture today.

ABOUT THE AUTHOR/INTERVIEWER
Marc Dresner works closely with IBC Life Sciences as a communication lead. He is the former executive editor of Research Business Report, a confidential newsletter for the market research industry. He may be reached at mdresner@iirusa.com. Follow him @mdrezz.

Massively Underpriced Post-Soviet Agriculture Market Promises Huge Returns

“AG Chat” Explores Eastern Europe's Enormous Investment Potential

For nearly 20 years, George Rohr and his partners have been gradually, meticulously nudging a sleeping giant—and cultivating what may be the most fertile agriculture investment opportunity on the planet.

Shortly after the fall of the Soviet Union, NCH Capital (Rohr is co-founder and president) began investing in Russia, Ukraine and post-Soviet Eastern Europe, whose black-earth belt ranks among the world’s greatest—and least optimized—agricultural resources.

“There is a massive shortage of capital that prevails across asset classes, across the geography and across eleven time zones,” said Rohr, who noted NCH has concentrated on bringing “some of the most productive farmland in the world back into productive capacity.”

NCH is today one of the largest Western investors of institutional capital in farmland and agribusiness assets in the region. Rohr says the quality of these assets wasn't the only attraction; they’re also ridiculously undervalued.

Before the Bolsheviks, this land constituted the Old World’s breadbasket. And after being mismanaged and relatively neglected for the better part of the 20th Century under the Soviets, Rohr says the new, progressive governments under whose stewardship this agricultural treasure fell opened the door to Western investors.

But Western investors have been slow to throw in, in cases preferring to cast lots with other emerging markets like Brazil and China—in no small measure due to innacuracies perpetuated by Western media, according to Rohr.

Consequently, NCH has been able—by direct purchase or lease—to acquire, aggregate and operationalize roughly 700,000 hectares of prime farmland in Russia, Ukraine and other Eastern European countries at a fraction of their actual value.

In this candid “Ag Chat” interview, George Rohr will:

• Outline NCH's approach to agriculture investment in Russia, Ukraine and Eastern Europe

• Provide an overview of infrastructure and transport issues

• Address misconceptions with regard to property rights, transparency, governance, etc. facing prospective investors, and much more...

“You are going to see increasing diversification in [Russia and Ukraine] away from natural gas, oil and other harder natural resources as a source of foreign revenue toward agricultural commodities. This sector really is the sleeping giant for both countries,” said Rohr.

“There are great returns to be made from riding the elevator from the fourth subbasement to the ground floor,” he added, noting the market is maturing, and opportunities like this don't come often or last forever.

Listen to Part 1.

Download a transcript of Part 1.

Listen to Part 2.

Download a transcript of Part 2.

ABOUT AG CHAT
Ag Chat is an executive interview series featuring the business experts, investors and entrepreneurs at the forefront of sustainable agriculture. Each episode explores the trends, technologies and drivers shaping the world of sustainable agriculture today.

ABOUT THE AUTHOR/INTERVIEWER
Marc Dresner works closely with IBC Life Sciences as a communication lead. He is the former executive editor of Research Business Report, a confidential newsletter for the marketing research industry. He may be reached at mdresner@iirusa.com. Follow him @mdrezz.

How To Invest In A Changing Climate—Literally

AG Chat Interview Series Talks Global Warming Investment Strategy

Climate change has long been a controversial topic, despite consensus among the overwhelming majority of the world’s climatologists that this phenomenon is genuine.

But when investors begin creating strategies around climate change forecasts, you know the verdict is definitely in.

To wit: As part of Deutsche Bank’s Climate Change Advisory service, Director and Senior Investment Analyst Bruce Kahn maintains an investment horizon of one to two decades based on anticipated global warming trends.

Bruce Kahn

In this episode of AG Chat, Kahn discusses the potential impact of climate change on global agriculture markets and what investors need to consider when entering these markets.

We’ll also look at emerging markets, consumption trends and various macroeconomic factors that have conspired to create enormous opportunities in water, food, feed and fuel.

Listen to this episode of AG Chat here.

Download a transcript of our interview here.

And be sure to tune in next week, when AG Chat features Dave Smardon, President and CEO of Bioenterprise Corporation, who takes us on an in-depth tour of the agricultural technology sector—which appears poised to break out in spectacular fashion!

ABOUT AG Chat

AG Chat is an executive interview series featuring the business experts, investors and entrepreneurs at the forefront of sustainable agriculture. Each episode explores the trends, technologies and drivers shaping the world of sustainable agriculture today.

ABOUT THE AUTHOR/INTERVIEWER
Marc Dresner works closely with IBC Life Sciences as a communication lead with a background in trade journalism and marketing. He is the former executive editor of Research Business Report, a confidential newsletter for the marketing research and consumer insights industry. He may be reached at mdresner@iirusa.com. Follow him @mdrezz.

We're launching a new podcast interview series here at AgReturn called Ag Chat!

We invite you to join us on Wednesdays throughout every month for podcasts featuring in-depth interviews with agribusiness experts, investors and entrepreneurs at the forefront of sustainable agriculture and the water sector.

Back in March, we interviewed Ejnar Knudsen, co-portfolio manager of the Agriculture Fund at Passport Capital – one of the top hedge funds in the world.

Based on the success of that podcast, we've decided to launch a whole series dedicated to hearing what the experts have to say -- so stay tuned for more great interviews to take the conversation to new heights!

Since our blog is fairly new, we'd like to to kick off Ag Chat today with our first-ever podcast:

Ejnar Knudsen Talks Shop: An Ag Chat Podcast - Knudsen explains why we’re at the early stages of a massive agriculture market reset – in step with an iterative, 38-year cycle – and the impact of quantitative easing in the ag sector, as well as how a “silent tsunami” of global proportions poses new challenges and fresh opportunities to agriculture investors.

Click here to listen to the interview or download the transcript.

Valerie M. Russo is a Senior Social Media Strategist on the AgReturn team, with a technology, anthropology, marketing and publishing business acumen. She is a published poet and also maintains a literary blog. She may be reached at vrusso@iirusa.com. Follow her @Literanista.