Sun World International – a Bakersfield, California, table grape producer owned by asset management firm Renewable Resources Group – has sold its California farmland to a new entity named Famous Vineyards.
The latter is a group of unidentified investors.
In a 6 May statement, Sun World wrote the sale “triggers a redeployment of resources” to Sun World Innovations, the company’s technology, breeding and licensing business.
“The understanding is that the acquired land will continue to be farmed for table grapes,” Sun World wrote of the San Joaquin and Coachella Valley farmland. The properties are under contract to Pasadena produce supplier Sun Pacific.
RRG declined to comment and Sun World representatives did not return messages.
Launched in 2015, Sun World Innovations is a fruit breeder and licensor of proprietary produce, offering eight varieties of seedless grapes and seven varieties of stone fruit. The unit was also used to evaluate more than 100 potential agtech investment opportunities and made limited investments in agtech, in addition to securing 1,400 licensees for its crops, according to its website.
In an interview with Eurofruit, chief executive Merrill Dibble, who is staying on during a transition period, said the sale came only after guarantees that the farmland would continue to be used for farming.
Dibble acknowledged a desire to shift its exposure away from farming played a role in the sale, after highlighting a “growing interest within the company” to focus more on the breeding and licensing unit.
“Stepping away from farming allows us to focus on Innovations,” said Dibble. “The company plans to expand breeding and technology investments and also to apply the intellectual capital we have achieved in table grapes in other ways. We’re convinced an accelerated Sun World Innovations will make a meaningful contribution to the global produce industry.”
A source familiar with the deal told Agri Investor that California’s table grape industry has been challenged with over-planting and increasing labor costs that have forced at least one family-owned operation to sell this year.
“This is not an offensive situation; this is more likely defense and saying: ‘Enough is enough, it’s better to put this in the hands of someone that is more of an operator in the industry than a financial investor’,” the source said. “They probably couldn’t get a price they needed for the genetics, or the buyer just didn’t value the genetics.”
The source added they do not know the identity of the buyers but expected the farmland Sun World has sold to be converted to other crops, possibly almonds and easy-peel citrus. The source added that traditionally water-focused RRG has been “very aggressive” in its expansion.
“It’s been a march of all the institutional capital trying to get into ag-land anything,” the source said. “There has been a lot of indiscriminate investing in a lot of areas of agriculture without people appreciating the complexity and operational challenges.”
The source said it is their understanding that RRG has partnered with Carpricorn Investment Group, a vehicle affiliated with eBay’s founding president Jeff Skoll.
A second source said they too understood Capricorn to be RRG’s strategic partner. While RRG is primarily focused on water, the second source said, those investments have also provided it with opportunities in other areas of agriculture.
“The fact that it was an ag deal – it doesn’t smell like a water deal – was a little bit surprising to me,” added the second source.
Capricorn representatives did not return messages seeking further detail.