Field Notes: California delivers first negative farmland return since 2009; Inside LDC’s Namoi Cotton acquisition; Manulife’s Indonesia SWF deal

California delivers first negative net farmland return since 2009, inside Louis Dreyfus Company’s Namoi Cotton acquisition, Manulife signs Indonesia SWF deal, PAI Partners’ British chilled food play, and more. Welcome to Field Notes, the start-of-the-week briefing for our valued subscribers only.

First look

Almond losses: Negative appreciation across numerous permanent crops wiped out California’s income returns on a net basis. Image: Getty

California delivers first negative net farmland return since 2009

California farmland produced a negative net return in 2023 for the first time since at least 2009, according to the National Committee for Real Estate Investment Fiduciaries.

NCREIF’s data for the Pacific West region, which contains California, registered a return of -3.6 percent for the calendar year, comprised of a -6.16 percent appreciation that counteracted income of 3.22 percent.

Appreciation returns were also faced by permanent croplands across the US, which registered returns of -2.88 percent that trailed the 10.21 percent growth achieved in annual crops during the 2023 calendar year.

Overall, professionally managed farmland produced a cumulative return of 4.96 percent in 2023, across the 1,339 properties the NCREIF index tracks.

Cumulative returns for annual cropland in the index in 2023 was 10.21 percent, comprised of 6.54 percent appreciation and 3.51 percent income earnings. Permanent cropland produced a cumulative return of -2.88 percent during 2023, when properties in the index secured 3.09 percent of income growth that was counteracted by a -5.85 percent appreciation.

Income accounted for 3.4 percent of total return over the trailing year, while appreciation contributed approximately 1.58 percent growth, according to the Q4 NCREIF index.

For the fourth quarter, NCREIF reported total cumulative returns of 2.27 percent, comprised of 1.52 percent income and appreciation of 0.75 percent.

It also reported that permanent cropland produced a -0.36 percent total return during the quarter that ended on December 31, while annual cropland in the index produced 3.92 percent returns in the same period.

Read the full story here.

They said it

“In some cases, if you’re moving here, you’re leaving so much behind. You’re leaving family, friends, sometimes houses, your community. You can’t afford to fail”

One Way Ventures managing partner Eugene Malobrodsky discusses how his firm is trying to support the success of immigrant founders.

Deals

Inside Louis Dreyfus Company’s acquisition of Namoi Cotton

Louise Dreyfus Company made a binding offer to buy the remaining 83 percent of shares it did not already own in Australia’s largest cotton processor and marketer Namoi Cotton in January.

The 62-year-old company’s Australian ownership will end this year when the A$105 million ($68 million; €63 million) deal is finalized.

Namoi Cotton executive chair Tim Watson tells Agri Investor that although some commentators expressed apprehension over the loss of another Australian company – other high-profile deals include Paine Shwartz Partners’ imminent takeover of agribusiness Costa Group and Advent International’s acquisition of fashion label Zimmermann – the changing of hands is not a concern for him.

“Are you driving an Australian car? We don’t have Australian cars anymore. We’re all working on a global footprint,” he said.

LDC’s takeover may cement that global footprint, but the LDC-Namoi relationship has been under construction since their first joint venture – the Namoi Cotton Alliance – in 2013. Watson expects their strong relationship to continue.

“I can’t say for certain what will happen in five years’ time, but LDC sees value in the Namoi business and the Namoi brand, and they’re certainly long-term supporters of agriculture in Australia, so I don’t think anything significantly is going to change,” he said.

LDC Australia managing director Tony Geitz said the Namoi acquisition is a “natural progression” of LDC’s involvement in the company, which includes two joint ventures: the aforementioned Namoi Cotton Alliance and Namoi Cotton Marketing Alliance.

Geitz said LDC will keep operating all 10 of Namoi’s gins across NSW and southern Queensland, as well as its Toowoomba office, while also retaining the Namoi brand name.

“The biggest lesson we have from other countries is that it’s very important to drive higher volumes through our ginning assets,” Geitz said. “If you look at places like the US, India, China and Brazil, which are all large producers, efficiencies are driven by volumes.”

Read the full story here.

PAI Partners’ chilled food play

PAI Partners portfolio company The Compleat Food Group has acquired British chilled foods businesses SK Foods and Zorba Foods from The Entrepreneurial Food Group. Financial details were undisclosed.

The strategic acquisitions are part of PAI’s plans to turn Compleat Food Group into the UK’s “number one chilled prepared food company,” said a statement.

Compleat was created in 2020 when PAI simultaneously acquired chilled savory pastry producer Addo Food Group and chilled food supplier Winterbotham Darby, both of which are British companies.

The platform company acquired organic, plant-based cheese producer Palace Culture in October.

SK Foods and Zorba Foods have a combined turnover of more than £160 million ($201 million; €187 million) and over 1,150 employees.

Read the full story here.

Fund watch

Future food closes €40m Article 9 fund

Dutch venture capital firm Future Food Fund has closed its Article 9 impact fund on €40 million.

Future Food Fund II was backed by a €20 million commitment from the European Investment Fund, with participation from other LPs including Risk Capital Resources and the Dutch Future Fund, among others.

The vehicle will invest in seed and Series A funding rounds for Western European agtech companies, with an emphasis on regenerative agriculture, zero-impact foods and circular systems.

“Future Food Fund II is more than an investment vehicle, it’s a catalyst for change,” said founding partner Peter Arensman.

“We are not just investing in companies, we are investing in a brighter future for our planet. We are grateful to have such a strong base of entrepreneurs who have continued to support us since our inception, and we are equally appreciative of the commitment from our valued partners both in the Netherlands and across Europe.”

Read the full story here.

People

Edwards’ Cattle Australia appointment

Garry Edwards, the founder and managing director of Queensland-headquartered asset manager AAM Investment Group, has been appointed as chair of industry body Cattle Australia.

Edwards had been vice-chair of CA since December 2022 and operates his own beef cattle enterprise in the Stroud region of New South Wales. He oversees investments for AAM that include cattle operations in NSW, Queensland and the Northern Territory.

He said his priorities as chair of CA would be to increase transparency for cattle producers over how levy funds are allocated, to proactively engage and develop positions on key environmental matters faced by the cattle sector and agriculture as a whole, and growing the advocacy role that CA plays as the largest agricultural levy-paying contributor to the Australian economy.

Cattle Australia itself has only existed since 2021, when it was established as the new peak body for the sector following a restricting of previous representative groups.

In a statement Edwards said: “I thank those who have supported Cattle Australia in its foundational year, and encourage all levy-paying grass-fed cattle producers to support the CA board as we work to represent industry, lead and direct policy development and implementation, and protect the profitability, competitiveness and future of Australia’s beef industry.”

VC fundraising 

Heura, a Spanish plant-based meat start-up, raised €40 million in a Series B funding round backed by KKR’s Upfield, Unovis Asset Management, the European Circular Bioeconomy Fund and Newtree Impact, among others.

Traive, a Brazilian agriculture credit risk startup, raised $20 million in a funding round led by Banco do Brasil.

UniFAHS, a Thai biotechnology start-up specialising in sustainable agriculture and food safety, raised a $1.4 million seed funding round led by A2D Ventures, with participation from Asian Development Bank Ventures and InnoSpace (Thailand).

Aquaconnect, an Indian aquaculture start-up, raised $4 million in a pre-Series B funding round led by S2G Ventures.

Also in the news…

DOWNLOAD: Agri-food and forestry fundraising stabilizes at $8bn

Annual fundraising for 2023 has slotted into the $8.2bn five-year average as 2022 emerges as the market’s major slump-year since 2018 (Agri Investor).

DOWNLOAD: Global venture capital fundraising report 2023

Global venture capital fundraising experienced a significant decline in 2023, but it was the fifth consecutive year when the total exceeded $100 billion (Venture Capital Journal).

Windset Farms vets buyout interest from PE firms

The family-owned greenhouse operator runs two greenhouse facilities in Santa Maria, California and Delta, British Columbia (PE Hub).

TPG recruits Goldman Sachs’ infra co-head for Rise Climate

TPG is poised to launch its Rise Climate Infrastructure vehicle, see ‘substantial opportunities’ to build real assets ‘within our current TPG Rise Climate portfolio’ (New Private Markets).

Plant-based shrimp maker New Wave Foods ceases operations

‘We couldn’t outrun industry headwinds’ says cofounder and CEO Michelle Wolf (AgFunder).

Sweet and salty: Blue Road’s Diamond Foods among companies coming to market

Blue Road Capital, Brynwood Partners and Union Capital are selling – or about to sell – makers of snacks and/or sweets (PE Hub).