Farmer Mac’s president and chief executive sees a convergence between the worlds of energy and agricultural investing as the former private equity executive settles into his new role.
Brad Nordholm, who assumed his Washington, DC-based role in October after 12 years at New York-headquartered electricity infrastructure-focused Starwood Energy Group, told Agri Investor that many of the most important direct and fund investors active in infrastructure also invest in agriculture.
The use of agricultural land for wind and solar operations, as well as investors’ growing focus on water, food and animal waste and wastewater conversion projects, all reflect growing convergence between energy and ag, he added.
“The market is beginning to mature in that there is increased recognition of the need to have credit on both sides and well-structured contracts and proven technologies for these different types of conversion projects,” Nordholm said.
“As that happens, there will be an opportunity for new equity investors in the space. Some will be energy investors that will migrate in this direction. Some could be agriculture and agribusiness investors who will migrate in that direction.”
For Farmer Mac, Nordholm said, such convergence could offer new lending opportunities that advance the organization’s aim of enhancing credit availability in rural America.
According to his LinkedIn profile, Nordholm spent four years as vice-president of AgriBank in Saint Paul, Minnesota, before becoming a managing director for the National Cooperative Bank in Washington, DC, a lender to agricultural co-operatives throughout the United States.
After holding that position for 11 years, Nordholm subsequently had a series of energy and banking-related positions in the Kansas City, Missouri, region before becoming New York-based chief executive and managing director at Starwood Energy in 2006.
“In my career, I’ve had a front-row seat for some of the more dramatic crises in the agriculture and energy sectors,” he said, detailing his mid-1980s experience in agricultural banking and more recent exposure to the sell-off in electric power assets following the Enron accounting scandal early last decade.
Nordholm declined to discuss current delinquency rates for Farmer Mac loans beyond highlighting chief credit officer Curt Covington’s comment on November’s third-quarter earnings call that they then remained below historical levels. He did say that Farmer Mac continues to monitor conditions closely and that rather than assessing the health of a single, national agricultural economy, it focuses on a collection of thousands of small markets, each shaped by a combination of crop selection, soil conditions and balance sheets.
“Frankly, it’s becoming harder to make generalizations about what is going on out there,” said Nordholm. “It’s not just the big operators that are in good stead. It may be certain crops or regions where small operators are able to come up with strategies that are effective or medium-sized operators that are able to come up with strategies that are effective. You really have to dig in and understand what those different producers are doing.”