Two weeks ago, the Biden Administration announced a collaboration among Mitsui, Renewable Resources Group and S2G Ventures parent company Builder’s Vision focused on identifying $1 billion of farming, agroforestry and water management investments in the developing world. Details are scant but the profile of the announcement reflects ongoing efforts to place agriculture within a broader Federal effort to more proactively engage the private sector, including in global efforts to fight climate change.
Traditional venues continue apace, such as the US International Development Finance Institute’s recent participation in a $106 million debt vehicle supporting developing world food systems managed by responsAbility. The USDA’s $3.1 billion Climate Smart Commodities Program has identified 141 ag-related projects eligible for support under a framework that envisions an average of more than 50 percent of investment coming from “non-Federal” sources, including private sector actors. The AIM for Climate initiative launched by the US and the United Arab Emirates earlier this year includes calls for new forms of targeted partnership that includes investment firms.
These vehicles each use different processes and mechanisms to provide government support for efforts to identify and scale promising ag-related companies. Each can impact sentiment around private funds with the same strategy. Though thinking around potential new forms of equity investment whispered about by some has not yet fully formed (even at the government’s highest levels) signaling around new forms of government support is feeding sentiment in corners of the agriculture investment market.
The theme united separate conferences devoted to controlled environment agriculture and alternative proteins convened in New York recently by re-Think Events. Panelists varyingly argued ag should be included within existing industrial policy like the Inflation Reduction and CHIPs Acts, or that the sector be the focus of a similar devoted effort in support of national security.
The case was made most forcefully by Jonathan Webb, who was then chief executive of CEA producer AppHarvest (and has since been replaced). He described previous experience as a solar developer and the key role government support played in helping overcome challenges related to building scale.
“They took over Washington DC. Took it over. When I was living there, you couldn’t throw a stone and not hit someone in the back of the foot that was lobbying for, or working in, that industry,” he said. “We have to figure out how to work together to position the industry to solve the water crisis out West, or other important issues.”
Of course, government efforts to augment its relations to the private sector do not happen in a vacuum and are already shaping global trade dialogue. A manager active in international agribusiness markets based outside the US told Agri Investor there are better steps the Biden Administration can take to fight climate change than helping locate promising investments.
“From an ideological point of view, governments should facilitate and not intervene and for sure not disrupt or crowd out what private investors can do,” they said. “If we spend a billion dollars, I would love the Biden Administration to review its whole subsidies to its own agriculture sector and orientate so that farmers are incentivized to stop using all of the inputs that have been created by chemical companies in the 50s and 60s and make that shift towards regenerative and organic. It’s not only the Biden administration. The EU is the same thing and it’s pretty much every single government who does this. If you want to be serious about climate, start in your own home country.”