At first glance, agriculture and agribusiness investment may seem like a very small niche within the alternatives market, and that’s fair enough: allocations to the sector comprise a small part of institutional portfolios – and most organisations lack dedicated agri specialists, relying instead on a more generalist real assets portfolio manager.
But not only is agriculture one of the oldest asset classes – farmland has been held by the world’s oldest institutions and elites for hundreds of years – it is also incredibly diverse and made up of many sub-sectors.
Agri investment’s first iterations were in the relatively passive form of buying land and leasing it to farmers. In the US, this is a well-established investment model many institutional investors are familiar with. The US timberland investment market is arguably even more established after pension funds started buying forestland in the 1980s.
Today, investors have many potential routes for gaining exposure to agriculture’s macro story – of growing global populations, increasing demand for protein and healthy food amid limited global natural resources. Taking into account different geographies and channels within the vast agricultural supply chain, investors can quite literally invest anywhere from farm to fork.
This of course makes for a complex outlook for the growing number of investors and managers entering the asset class for the first time or seeking to broaden their exposure. Where in the agri value chain should they invest? What types of risk-return profiles are most suitable to a particular institution’s strategy?
Our inaugural Agri Almanac helps address these questions by highlighting a number of agri’s most interesting sub-sectors, including timberland (p. 8), agtech (p. 15), infrastructure (p. 26) and water investment (p. 20). Industry experts also provide snapshots on key topics including beef farming (p. 5), dairy (p. 11), agriculture debt (p. 18) and Asian plantations (p. 23).
Increasing education and understanding of agriculture and its various iterations among the investment community is essential for the sector to grow. Thus it’s with great pleasure we bring you this special overview of agri investment today.