Pause on agribusiness investment as COVID-19 eats away at certainties

25 July 2020
video

Henry Wilkes, a London-based agricultural investment advisor working with Farrelly & Mitchell on a Spanish food-based project believes new investments are vulnerable. “Will investors start to see distressed assets crop up, and choose those ahead of pioneering or greenfield possibilities? If so, why should they opt for riskier early stage projects, if there are proven opportunities available?”

It is an evolving situation, and the consensus among investment funds appears to be about playing the waiting game, but the potential emergence of distressed assets is undoubtedly a motivator. If there is to be growth and investment opportunities in food and agribusiness in the short to medium term, this looks a likely channel.

Specialised produce vulnerable?

With guidance in short supply, what can we deduce?

What is apparent is that farming businesses serving niche and specialised products for restaurants and other catering outlets are highly exposed. If lockdown doesn’t work and restaurants do not reopen in a conventional manner, can these businesses adapt?

Wilkes cited the example of a goat cheese manufacturer he spoke to recently who serves high- restaurants in the UK. That individual says his business will run out of money within three months.

Meanwhile in southern Europe, berry producers are under similar pressure, as restaurant demand has suddenly vanished.

Click here for the full insight: 

Pause on agribusiness investment as COVID-19 eats away at certainties

25 July 2020

Henry Wilkes, a London-based agricultural investment advisor working with Farrelly & Mitchell on a Spanish food-based project believes new investments are vulnerable. “Will investors start to see distressed assets crop up, and choose those ahead of pioneering or greenfield possibilities? If so, why should they opt for riskier early stage projects, if there are proven opportunities available?”

It is an evolving situation, and the consensus among investment funds appears to be about playing the waiting game, but the potential emergence of distressed assets is undoubtedly a motivator. If there is to be growth and investment opportunities in food and agribusiness in the short to medium term, this looks a likely channel.

Specialised produce vulnerable?

With guidance in short supply, what can we deduce?

What is apparent is that farming businesses serving niche and specialised products for restaurants and other catering outlets are highly exposed. If lockdown doesn’t work and restaurants do not reopen in a conventional manner, can these businesses adapt?

Wilkes cited the example of a goat cheese manufacturer he spoke to recently who serves high- restaurants in the UK. That individual says his business will run out of money within three months.

Meanwhile in southern Europe, berry producers are under similar pressure, as restaurant demand has suddenly vanished.

Click here for the full insight: 

Malachy Mitchell's featured publications

See All Posts

Agribusiness

The race to net zero farming systems

The agriculture sector is extremely vulnerable to a changing climate. Already, changes in rainfall in Australia have cut profits across the sector by 23% compared to what could have been achieved in pre-2000 conditions.

Blog

Agribusiness

COP 26: Methane Emission Reduction

The recent UN conference on climate change (COP26) led to commitments by key nations on reducing greenhouse gas (GHG) emissions which will have long-term impacts on a wide range of industries.

Blog

Agribusiness

Gene editing versus Gene modificatio

Many see the use of genetic modification and gene editing as an attractive means to increase the efficiency of global crop production to meet environmental and economic challenges facing the planet.

Blog
See All Posts

Insightful blogs on topical agri-food themes.

Get in touch with us or find an office closest to you.
Register now