|
First, the leasing strategy involves buying land and leasing it to farmers. In some cases, these are cash leases delivering a fixed coupon every year. In other cases, the returns are aligned with the profits of the operating partner who leases the land. Second, the “traditional” strategy is about ownership/direct operation of the land, with involvement in various parts of the value chain depending on the investment. And third, the PE strategy involves taking stakes in companies which are involved in various parts of the agricultural value chain. Phatisa, the PE firm, is a good example of this. With its US$246m African Agricultural Fund (AAF), it’s investing in food and agri focused pan-African businesses. Its US$41.95m Pan-African Housing Fund is investing in affordable housing in East and Southern Africa. Timberland is a useful material in construction.
But what about going for a two-pronged strategy? A report by Manulife, the asset manager, explores what a combined timberland/farmland investment portfolio might look like. It provides a fascinating comparison of the risk/return profile of a combined portfolio to commercial real estate and other financial assets. The report’s authors argue that having a broader investment mandate across both sectors enhances an investor’s ability to act opportunistically.
It’s worth noting however that while farmland and timberland provide huge promise, ESG considerations need to be thought through seriously. Deforestation, crop disease, rule of law issues, etc are just some of the areas that investors should take particular note of.
The following research papers on timberland and farmland, curated by the Savvy Investor content team, explore in further detail a number of key issues: i) the characteristics of timberland and farmland as an alternative asset class, ii) whether these investments are suited to the current rising interest rate environment, iii) the history of investment in these areas and iv) how to gain investor exposure.
For compliance reasons, this paper is only accessible in certain geographies This article provides a comparison of the risk-return profile of a combined timberland/farmland investment to commercial real estate and financial assets. Further, the authors analyse the performance results over the past twenty-five years for pure timberland investments and pure farmland investments compared to a combined timberland/farmland model portfolio.
This paper examines the institutional farmland industry's in detail – back to its roots in the 1970s and earlier – and asks its “pioneers” to share the lessons they’ve learned that can be applied to today’s global farmland/agricultural investment landscape.
Agriculture and Timberland have received strong attention from institutional investors in 2017, as have other “niche” real assets. While Timberland is a relatively well established sector, the past three years have seen a distinctive new group of non-timber agriculture funds coming onto the scene. This research note tackles structures, fees, opportunity types and risks.
For compliance reasons, this paper is only accessible in certain geographies Over the coming months, the strong fundamentals currently characterizing the U.S. economy should be sufficient to offset any potential negative impacts of rising interest rates on timberland markets. In the medium-term, timberland should be well positioned to weather a cyclical economic down-turn resulting from further increases in interest rates.
This report by TIAA sets out customized KPIs that track the firm's performance across crops and regions.
This 17-page report uses the UN-backed Principles for Responsible Investment Farmland guidelines to create 16 key performance indicators (KPIs) specifically for timber.
Timberland investment continues to be an attractive alternative investment strategy for many institutional investors. This KPMG survey provides insights into investor profiles, attitudes and certain underwriting criteria, as well as forward looking sentiment on timberland as a distinct investment class.
The evolution of agriculture as an asset class is reflected in shifts in allocations of institutional capital across the value chain. This paper by HighQuest explores this in more detail.
Finistere Ventures, an agtech-focused venture firm, has released its 2018 Agtech Investment Review, developed in collaboration with PitchBook. The review provides in-depth insight on global venture financing activity across agtech, sub-sector trends, regional variations and more, spotlighting agtech challenges and opportunities across Latin America.
For compliance reasons, this paper is only accessible in certain geographies This paper has been authored by researchers from the Australian Export Grains Innovation Centre. It provides insights (with Australia in mind) into the many changes underway in the Argentinian grains industry and its supply chains.
|
