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Attracting Capital to Agriculture

Attracting Capital to Agriculture . Challenges & Opportunities!. Agenda. Agriculture’s historical performance The coming Global Food Crisis Present issues with global capital markets Attracting capital – why, who and how Challenges of attracting capital Possible solutions.

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Attracting Capital to Agriculture

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  1. Attracting Capital to Agriculture Challenges & Opportunities!

  2. Agenda Agriculture’s historical performance The coming Global Food Crisis Present issues with global capital markets Attracting capital – why, who and how Challenges of attracting capital Possible solutions

  3. Agriculture’s Historical Performance Source ABARE & Cornish Consultancy

  4. Risk/Return per Asset Class 1980-2010 Source: Cornish Consultancy

  5. Agriculture’s Historical Performance Ag has been a good investment, particularly over past 10 years Less volatility than other investments? Increased commodity prices? Expectations for the future – the “new normal” (PIMCO)

  6. Price Predictions– Where Will We Go?

  7. DJII – Is the Equity Bullmarket Over?

  8. Global Food Crisis

  9. Global Food Crisis Emerging demand in China, India and SE Asia Constraints on water, land, fertiliser and supply shocks Biofuels and agriculture’s increasing correlation with energy prices Rapid $US depreciation Investment funds and behavioural impacts

  10. Global Capital Markets Sovereign Debt Issues (Europe and USA) Currency debasement Volatile stock markets Bull market in US Treasury’s Where do you invest money? Looking for emerging markets and alternative asset classes?

  11. Attracting Capital Why do you want to do it? What is your exit strategy? Who are you going to ask to invest? How are you going to do it?

  12. Types of Capital Bank debt Shared Crop Equity (AACL) Individual Investors Private Equity Superannuation Funds Sovereign Wealth Funds Initial Public Offering (IPO) on the sharemarket

  13. Challenges of Attracting Equity Capital Size of investment & relevance Exit strategy Volatility of earnings Strength of cashflow Which industries Geographic diversity

  14. Challenges of Attracting Equity Capital Management capability and accountability Corporate governance and reporting Structure – separate land from operations Lack of understanding of agricultural investment Lack of investment grade product and track record RISK!!

  15. Performance of Corporate Agriculture Australian performance has largely been poor Good at raising capital, not so good at managing farms Listed companies rarely trade above NTA Family farms have more competitive cost base Human resource issues Do they just want to own land and lease it out?

  16. Solutions Need to overcome challenges mentioned previously Structured products that are easily bought/sold Pooled investments between family farmers Finding HNW individuals to invest with Offtake agreements with SWF

  17. Solutions Funds interested in green energy or biodiversity? People that can manage large businesses Education about agriculture for the investment community Need to combine best aspects of family farms with corporate money.

  18. Deja Vu all over again?

  19. Thankyou

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