Field Notes: Climate buyers skew NCREIF forestry benchmark; Mitsui and Nomura back New Forests vehicle; US becomes net food importer

Climate buyers skewer NCREIF forestry benchmark; Mitsui and Nomura back New Forests vehicle; US becomes a net food importer; Cibus and Aqua Capital exit portfolio companies and more. Welcome to Field Notes, the start-of-the-week briefing for our valued subscribers only.

First look

pine treesClimate buyers skew NCREIF forestry benchmark
MassPRIM’s director of real estate and timberland Tim Schlitzer said the pension’s timber portfolio underperformed the NCREIF benchmark due to a large climate mitigation focused transaction.

According to minutes from the May meeting of the Real Estate and Timber Committee, Schlitzer said the ongoing adjustment among timber appraisers to climate-derived demand is among factors adding “noise” to the NCREIF benchmark, which the $96 billion pension uses to measure performance of its timberland investments.

The pension’s timber portfolio returned 5.9 percent over the past fiscal year, which is the time during which it underperformed the NCREIF timber index by about 500 basis points. The portfolio delivered a three-year return of 8.4 percent, which is in line with the benchmark.

“The largest timberland transaction that occurred in the US last year was effectively a climate buyer,” said Schlitzer. “It was a climate mitigation strategy that bought an almost $2 billion portfolio that ended up in the benchmark price that appraisers were probably not going to quite reach when they marked properties overall because there was such a premium paid.

“There’s an understanding that’s being developed by the appraisers right now. So, sort of a benchmark appraiser mismatch there.”

Schlitzer added that along with an influx of a “whole new class of buyers” carrying out climate mitigation strategies, well-funded public timber companies have moved to own more of their supply chains to address vulnerabilities revealed by the covid-19 pandemic.

“The appraisers come in, and they really apply a whole different set of discount rates,” he said. “New assumptions on harvesting, new assumptions on what logs will sell for and the cost inputs. So, we typically see some noise there.”

Read the full article here.

They said it

“We often now see policy processes that don’t have a voice from the forestry sector at the table, so you end up with different groups – NGOs, governments, technical organizations – wrangling over rules without the people who have to implement them actually at the table”

David Brand, chairman of New Forests and the new International Sustainable Forestry Coalition, discusses why the ISFC is needed to unify the forestry sector’s voice.


US becomes net food importer for only second time in 55 years
Fresh fruit and vegetable imports driven by changes in cost and consumer preference made the US a net food importer over the past year for just the second time in 55 years, according to Farmer Mac’s quarterly economic overview, The Feed.

The report cited consumer preference for greater fresh produce availability, lower production costs in competing countries and the sharp appreciation of the dollar between 2020 and 2022 as some of the biggest reasons why imports have become more favorable.

“The growth of these imports has led to significant challenges for some domestic growers while creating opportunities for others,” said the report. “Overall, farmers that embrace and adapt to shifts in where produce is grown could be more likely to thrive in the long-term.”

Subtitled Charting Global Trade Winds, the report also includes an overview of challenges and opportunities in the aftermath of a 23 percent surge in trade volume between 2019 and 2022. Analysts highlighted factors contributing to a pullback in US exports since that have included a strong dollar and competition from Brazil while stressing the importance of monitoring global trade.

“The collapse of the farm economy in the 1980s coincided with a dramatic pullback in corn and soybean trade with several European countries. The 2013-14 agricultural super-cycle unwinding coincided with a trade dispute between the US and China from 2017 to 2019,” Farmer Mac chief economist Jackson Takach wrote. “The 2022 expansion cycle is also starting to cool, and it is no coincidence that through June 2023, US ag exports are down 11 percent compared with the first half of 2022.”

The report also addressed recent cooling of growth in farmland markets, the long-term prospects for India as an export market and oversupply in almonds, among other topics.

Read the full report here.

LP commitment

Mitsui and Nomura back New Forests Asia
Japanese conglomerate Mitsui & Co and financial services group Nomura have each made commitments of an undisclosed size to New Forests Asia’s Tropical Asia Forest Fund II.

The vehicle had raised $120 million against a $300 million target prior to the commitments, according to Agri Investor‘s database.

New Forests Asia is a wholly owned subsidiary of New Forests, which was itself acquired by Mitsui & Co and Nomura in May 2022.

“Through this investment in TAFF II, Mitsui will contribute to the realization of a decarbonized society by promoting investment in sustainable forest resources in Southeast Asia, where timber demand is expected to further increase,” Mitsui said in a statement.

New Forests’ TAFF II was also backed by Sumitomo Mitsui Trust Bank in March 2022, following the bank’s first foray into forestry in July 2021 through a commitment to Manulife Investment Management Timberland and Agriculture’s Hancock Timberland and Farmland Fund. The size of both commitments was undisclosed.

Read the full article here.

Regenerative ag

Regenerative ag has innumerate outcomes  
Agricultural non-profit research center Rothamsted has published the initial results of a multi-year regenerative farming study that shows practices used to avoid tilling and fertilizer use is a complex balancing act with many possible outcomes.

Rothamsted began its study in two contrasting sites in the UK in 2017 and 2018 to understand the impact of different cropping systems on crop yield.

The study focused on the four management factors of (1) phased rotations; (2) cultivation – conventional vs reduced tillage; (3) nutrition – additional organic amendment vs standard mineral fertilization; and (4) crop protection – conventional vs smart crop protection to arrive at 24 emergent cropping systems at each site.

“Reduced tillage resulted in lower wheat yields but the effect varied with rotation, previous crop and site,” said the report.

“Organic amendments significantly increased spring barley yield by 8 percent on average though the effect again varied with site. The plowed cropping systems tended to produce higher caloric yield overall than systems under reduced tillage.”

Rotation and nutrition factor of the study


Climate Asset Management inks first Australia deal
Climate Asset Management has acquired approximately 1,800ha of farmland in the Bundaberg region of Queensland, which was formerly used for high-intensity sugar cane production and will be converted it into a macadamia orchard.

The transaction marks the HSBC and Pollination JV’s first acquisition in Australia. Financial details were undisclosed.

CAM made the investment through its Natural Capital Strategy, which is a closed-end fund with a fundraising target of $1 billion. It is the fund’s third deal, following investments in almonds in Spain and in almonds and olives in Portugal.

The firm had raised more than $650 million across its two funds: the Natural Capital Strategy and the Nature-Based Carbon Strategy. Commitments were split roughly evenly between the two funds, with HSBC acting as anchor investor in both.

CAM chief investment officer Ben O’Donnell told Agri Investor about the acquisition: “The sugar cane industry has had some challenges in Australia and there are other institutions looking at how to transition the sector to be more sustainable – but we feel there is an opportunity here not just to generate returns [from the farm] but to also stack environmental credits into the transaction.

“And regardless of whether we can realize extra income from those credits, it will help us improve the underlying landscape and the connectivity between it and the broader native habitat that surrounds it.”

Read the full article here.

Cibus exits Innoliva to Feira Comox
Fiera Comox has acquired Spanish extra virgin olive oil business Innoliva Group from Cibus Capital. Financial details were undisclosed.

Cibus acquired its 99 percent stake in Innoliva in 2017 and it was the largest asset in its Fund I, the firm said. Fund I closed on $322 million in 2019 and took $130 million in co-investments.

During Cibus’s five-year hold of the asset, “Innoliva has doubled its footprint from 4,300 hectares of super-high-density olive oil production to over 8,300ha of diversified products including almonds and table olives and completed the conversion of over 2,300ha of olive orchards to organic production,” the firm said. The sale marks Fund I’s first exit of a wholly owned portfolio business.

Cibus Capital is currently in market raising the second generation of its flagship vehicle, which has raised $340 million against a $600 million target, according to Agri Investor’s database.

The firm’s venture capital strategy, Cibus Enterprise Fund II, has raised $85 million against a $200 million target. Enterprise Fund I closed on $66 million in 2020 and took $50 million in co-investments.

Read the full article here.

Aqua Capital and GIC exit Biotrop in €532 million deal 
Sao Paulo-headquartered Aqua Capital has exited its investment in Brazilian biological inputs provider Biotrop through a €532 million sale to Belgian crop protection firm Biobest. Singaporean sovereign wealth fund GIC has also sold its stake in the business as part of the deal.

The deal features a two-stage close with Biobest first acquiring an 85 percent stake in Biotrop, which is expected to complete by the end of the year. The company will acquire the remaining 15 percent stake following a three-year transition period.

Biobest will finance the deal through a capital raise that includes new investors Tikehau Capital, M&G Investments and Unigrains, as well as other investors close to the company’s majority owner, Belgian industrial group Floridienne. The round is valued at €400 million, according to Bloomberg.

Aqua Capital established Biotrop in 2017 alongside Antonio Zem, a former executive with Philadelphia-headquartered crop protection company FMC Agricultural Products.

In 2019, following Aqua Capital’s $30 million acquisition of a majority stake in Brazilian biologicals provider Total Biotechnologia – which was merged with Biotrop –  Popik told Agri Investor the firm opted to build Biotrop from scratch because it could not find any reasonably priced companies with market presence and proprietary technology.

“Sometimes we see this in some higher-tech, specialty segments, where there are many more interested parties wanting to acquire something – be it a controlling or minority stake – than there are good companies to be bought or sold,” he said at the time. “Biologicals clearly fits that pattern, both in Brazil and in the US.”

Read the full article here.

VC fundraising

Phycom, a Dutch microalgae start-up, has raised €9 million in a funding round backed by Corbion,, Invest-NL and Invest International.

Eat Just, a California-based alterative protein company, raised a funding round of an undisclosed size led by VegInvest/Ahimsa Foundation.

ViAqua Therapeutics, an Israeli aquaculture diseases prevention company, raised $8.25 million in a funding round led by S2G Ventures with participation from Rabo Ventures, The Trendlines Group, Agriline Limited, Nutreco, I-Lab Angels and Circle Investments.

Momofuku Goods, a New York-based provider of “restaurant-grade” pantry essentials, raised $11.5 million in a funding round led by Alliance Consumer Growth with participation from Siddhi Capital.

SkinnyDipped, a Washington-based healthy snacks company, raised $12 million in Series A funding round led by entrepreneur David Grutman, with participation from dozens of individual investors.

Opna, a British carbon projects financing platform, raised $6.5 million in a seed funding round led by Atomi, with participation from previous investors like Pale Blue Dot, MCJ Collective, Angelinvest and Tiny VC.

Also in the news…

EU watchdog monitors surge of cash going into biodiversity funds
The surge in money going into biodiversity funds warrants increased monitoring to avoid greenwashing, says EU securities regulator (Reuters).

Roc Partners acquires Australian egg producer Pace Farm
The Sydney-based private equity firm will invest in Pace Farm through its Premium Food Fund, which is the vehicle’s sixth investment (Agri Investor).

Greens won’t support revised Murray Darling Basin Plan in current form
Support from political party Australian Greens is likely to be crucial to the revised plan’s passage through the federal parliament (ABC News).

How does AI supercharge due diligence?
More VC firms are turning to artificial intelligence as part of the underwriting process (Venture Capital Journal [registration required]).

NGFS launches nature framework for central banks and supervisors
Governor of Banque de France calls on ISSB to use work by EU and NGFS as a source of inspiration for its proposed project on biodiversity (Responsible Investor [registration required]).

PE buys into the ‘better-for-you’ food sector
Riverside, Butterfly, Wind Point are banking on healthier eating habits (PE Hub [registration required]).

Today’s letter was prepared by Binyamin Ali, Chris Janiec and Daniel Kemp