Field Notes: The EU’s Nature Restoration Law is on the brink; Goldman Sachs and Earth Capital back aquaculture; annualized Australian farmland returns hold steady.

The EU’s Nature Restoration Law is on the brink; Goldman Sachs and Earth Capital back aquaculture; annualized Australian farmland returns hold steady; and the pros and cons of fewer but larger farms. Welcome to Field Notes, the start-of-the-week briefing for our valued subscribers only.

First look

EU’s Nature Restoration Law on the brink
The EU’s Nature Restoration Law could receive its final death knell this week depending on the outcome of a vote to be held on June 15 by the European Parliament’s Committee on Environment, Public Health and Food Safety.

The proposed law, which was tabled in June 2022, has already been voted down by the Agriculture and Rural Development Committee and the Fisheries Committee, which held their votes on May 23 and 24 2023, respectively.

The Nature Restoration Law proposes to have restoration measures in place on at least 20 percent of the EU’s land, river and sea areas by 2030 and repair all ecosystems in need of restoration by 2050. The targets would be legally binding for all member states.

‘We don’t need more legislation’: Following the setbacks delivered by the agriculture and fisheries committees, the influential European People’s Party group, which is recognized as the largest political grouping in the European Parliament, with 177 MEP members from across member states, withdrew from negotiations on the legislation on May 31.

“There are currently up to 23 regulations related to nature restoration and more than 40 texts taking communications, strategies and regulations into account. One more additional text will bring no added value,” said MEP Niclas Herbst, who negotiated the law on behalf of the EPP Group in the fisheries committee.

“The European Commission should have made other suggestions creating consistency with existing legislation”, he added.

Multinational corporates rally: Nestlé, Danone and SPAR are among 39 businesses that have co-signed a statement “calling for the urgent adoption of an ambitious and legally-binding EU Nature Restoration Law”, arguing that the law should be saved on business and environmental grounds. Another coalition of 29 corporations including Unilever and IKEA are expected to issue a separate open letter today, which is also in support of the legislation.

Of 818 assessments carried out by the European Environment Agency on the conservation status of habitats at EU level for the period 2013-18, only 15 percent of habitat assessments were given a ‘good’ conservation status. The EEA rated 45 percent as ‘poor’ and 36 percent were rated as ‘bad’. The remaining 4 percent was rated ‘unknown’.

They said it

“The underlying issues between the two countries are pretty similar to what they were two years ago, but the actual diplomacy has changed. The megaphones were put down”

Albert Tse, founder of private equity firm Wattle Hill Capital, said at The Australian’s Global Food Forum in Melbourne that tensions between China and Australia are beginning to improve


Goldman Sachs and Earth Capital dive into aquaculture
Goldman Sachs Asset Management has struck an agreement with SalMar for its 72.11 percent share in salmon farming services provider Frøy, at a price of Nkr76.50 ($7; €6.50).

Following completion of the share sale, which is subject to regulatory approval, Goldman Sachs will make an unconditional mandatory cash offer to acquire the remaining shares in Frøy at a total consideration of just under $600 million. Frøy’s board has recommended the company’s shareholders accept the mandatory offer.

Frøy, at a glance: Frøy is an integrated provider of aqua services to Norwegian salmon farmers, with a fleet of more 80 vessels and a team of more than 900 members of staff.

Frøy’s service offering includes transport of fish, sorting, counting, cleaning of nets, treatment for diseases and lice, inspection, installation and maintenance of salmon farming sites.

Earth Capital makes Ace Aquatec play
Cleantech investor Earth Capital has made an investment of an undisclosed size in Scottish aquaculture technology company Ace Aquatec.

Earth Capital joins Aqua-Spark and Chroma Ventures as the company’s principal investors, as it seeks to expand its service offering across markets such as UK, Europe, Canada, South America, and Southeast Asia.

Ace Aquatec will welcome Earth Capital senior investment manager Bradley Jones to its board as part of the deal. Chroma Ventures’ principal Chris van der Kuyl also joins the board as chair.

“Championing sustainable practices and setting high welfare standards paves the way to ensuring that seafood farming becomes one of the biggest opportunities to responsibly feed a growing population,” said Earth Capital senior investment manager Bradley Jones.

Aqua Spark investment manager Josien Bakker added: “We have built a well-known brand due to the company’s accessibility and scientific evidence, its growth since then is proof that breakthrough technologies are being embraced by farmers, processors and supermarkets pushing for improved fish welfare across the entire industry.”


Australian farmland’s tale of two halves
The latest edition of the quarterly ANREV Australian Farmland Index, which draws on data provided by seven asset managers and covers 58 separate farmland assets worth a combined A$1.8 billion, has found that investment returns are holding reasonably steady across all types of farmland – although there are signs that performance is becoming more patchy.

ANREV recorded that the annualized return for all farmland to the end of March 2023 was 12.31 percent, comprising an income return of 5.78 percent and capital growth of 6.29 percent – but the difference in performance between annual cropping and livestock enterprises and permanent cropping enterprises is stark. The former continued to see double-digit investment returns, while the latter had performed negatively over the past 12 months.

And on a quarterly basis, the result for Q1 2023 was the lowest recorded since the inception of the index in 2015, a negative return of -1.95 percent, again driven by lower returns from permanent farmland.

In commentary on the index, Argyle Capital Partners said performance had “moderated considerably” during the quarter after several years of strong returns, due to poor weather conditions and lower prices for certain commodities.

Read the full story here.


University of Colorado on new risks from global farm numbers halving
Research from the University of Colorado has projected that the global number of farms will drop from 616 million in 2020 to 272 million by 2100, as continued urbanization drives a doubling of average farm sizes, which brings new risks and opportunities.

Assistant professor Zia Mehrabi’s findings draw on data that tracks annual growth in the number of farms globally since 1960 and are contained within a paper published in the May edition of the journal Nature Sustainability.

The  reports adds that while the number of farms has already been declining in the US and Europe for decades, the trend will extend more forcefully across Asia, Oceania, Latin America and elsewhere by as early as 2050.

Loss of food security and biodiversity: The paper argues that in addition to the potential biodiversity loss and threats to food security, decline in the number of farms globally increases risk in the form of vulnerability to shocks in the food system.

“If you decrease the number of farms and increase their size, the effect of that shock on your portfolio is going to increase. You’re carrying more risk,” said Mehrabi.

Mehrabi concedes some benefits to ongoing farm consolidation in the form of economic opportunity for those able to choose career paths outside agriculture. He also highlights future social challenges created by the fact the agriculture industry is already among the sectors with the highest suicide rates by occupation in the US.

“By the end of the century, we’ll likely have half the number of farmers feeding even more people. We really need to think about how we can have the education and support systems in place to support those farmers.”

VC fundraising

Uncommon, a British cultivated meat company specialising in pork, has raised a $30 million Series A funding round led by Balderton Capital and Lowercarbon, with participation from Red Alpine, East Alpha and previous investors Max and Sam Altman, Miray Zaki and Sebastiano Castiglioni.

Elemental Enzymes, a Missouri-based company that specializes in enzyme, peptide, protein, and biological chemistry solutions for growers, received an investment of an undisclosed size from Paine Schwartz.

Nori, a Washington-based carbon removal marketplace, raised $6.25 million in a funding round led by M13, Toyota Ventures, Placeholder and Cargill.

Ahara, a California-based provider of personalized food and supplements recommendations, raised more than $10 million in a seed funding round led by Greycroft with participation from Headline, SHAKTI, Dr. Samuel Jampolis, co-founder Julie Wainwright and Sandy Sholl.

Cuzen Matcha, a California-based food-tech startup focused on matcha tea, raised $3.6 million in a Series A funding round led by Digital Garage Group, with participation from Joyance Partners, and more than 20 angel investors.

MyForest Foods, a New York-based alternative protein company, raised $15 million in Series A funding round led by parent company Ecovative Design. MyForest Foods uses mycelium to grow fibres – its bacon product is sold in more than 100 retailers in the US.

Charm Industrial, a California-based carbon removal technology company, raised $100 million in a Series B round led by General Catalyst, with participation from Lowercarbon, Exor Ventures, Kinnevik, Thrive Capital and Elad Gil.

Also in the news…

How impact fund portfolio companies perform at exit
Nearly half of portfolio companies in impact funds exceed GPs’ financial performance targets at exit, which is ‘encouraging for a traditional investor who’s thinking about investing in impact’ (NPM).
JBS building world’s largest cultivated beef protein plantJBS believes the BioTech Foods facility will strengthen food security and transform the company into global cultivated protein leader (Food Manufacture).

How private equity is readying for more regulation
A raft of regulatory changes coming down the line means fund managers are needing to rely on third-party providers more than ever (PEI).

Project Jaal puts hefty WA, Vic portfolio on market
An institutional-grade portfolio spanning close to 43,000 hectares across two states has hit the market with price expectations of $400 million (Grain Central).

UK schemes pushing consultants at the cutting edge of ESG
Rapid rise of climate and onset of biodiversity considerations leaves consultants and schemes working out offerings together (Responsible Investor).

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