Agri Investor Forum 2016: Delegates eyeing Latin America

Latin America proved popular among delegates, but political unrest and liquidity challenges exist.

An audience poll conducted at the Agri Investor Forum in Chicago last week cited Latin America as the region of greatest interest to delegates, but panellists cautioned that political unrest and liquidity challenges exist in many countries.

As a result, they said that finding strong local partners is key to finding investment opportunities in the region.

Tony Salas, chief executive officer of Shared-X, said the greatest opportunity and political support exists in Chile, Colombia, Costa Rica, the Dominican Republic and Peru.

But Paraguay, Bolivia Ecuador, Nicaragua, Venezuela, Haiti and Brazil in particular are more challenging, he added, calling Brazil a “whole different planet” where protectionism makes it particularly important to have local partners.

The country has also been impacted by political turmoil stemming from the ouster of President Dilma Rouseff in late August. But Proterra Investment Partners partner Rich Gammil was optimistic, noting that the worst of the instability may have passed, as the business environment improves.

His optimism was supported by developments highlighted in the World Bank’s annual Doing Business report released last week. The report found that Brazil implemented reforms aimed at supporting tax payment and cross-border trade last year in part by investing in electronic systems to facilitate trade. Of the 189 countries ranked by their “ease of doing business” in 2015, Brazil improved from the previous year to come in at 116.

During a panel discussion on emerging markets at the event, Suzanne Gaboury, director of agribusiness at FMO, noted that while corporations such as Archer Daniels Midland and Cargill are already well-established and expanding in Latin American agriculture, the African market is more fragmented.

Receptiveness to foreign investment varies greatly across Africa, she said, advising delegates considering projects there to closely examine local laws, contracts and regulations surrounding land ownership prior to making investments.

She also highlighted the sugar industry in an East Africa, a region with strong historical ties to India, as a particularly attractive opportunity due to the availability of land in the region.

Discussing China, panellists pointed to a transformation that will unfold in different stages over the coming decades. Global Ag Partners founder Jennifer Wu said current opportunities are concentrated in consumer-driven sectors such as food safety, baby food and growing demand for organic products and coffee, but that further opportunities in years to come could stem from government efforts to improve soil quality and address pollution.