London-based Agro-Ecological Investment Management, an asset management boutique focused on ecological investment in farmland, is to launch Agro-Ecological Farmland Investment Fund 1, its maiden private equity vehicle, in the first quarter of 2010.
The fund is targeting commitments of between $50 million and $60 million and expects to see a first close by the end of April 2010, Geoff Burke, Agro-Ecological’s managing director, told PEI Asia.
Agro-Ecological: Shifting farms to organics
The fund will focus on investments in farmland in New Zealand, but is also looking at investment opportunities in South America, primarily in Uruguay, Southern Africa and the United States. The firm said in a statement these are all markets where agricultural demand remains strong, but markets are undersupplied.
Agro-Ecological will acquire conventionally-managed farms and will convert them to organic production. It will focus on profitable, sustainable and ecologically-cognisant farmland asset management, the firm said.
“We have identified a number of prospects for this first fund, and we look forward to beginning our investment process early in 2010,” Burke said in a statement. “What we are doing, in essence, is opening up an out-performing and secure asset class that has hitherto been unavailable to investors,” he added.
According to the firm, Asia, which comprises 60 percent of the world’s population, has only 30 percent of its agricultural resources. The continent’s food supply will be even more constrained by 2050 as the amount of farmland decreases through urbanisation and degradation.
The firm said it is estimated that if the current agricultural productivity levels continue, the amount of additional land required to meet projected food demand will be about 3 billion hectares.
The firm also said that organic agriculture represented 31 million hectares of croplands and pastures and a market of $52 billion in 2008. The market is still growing, with a forecast growth of 14 percent to 15 percent in 2009. By 2013, global sales of organic food and beverages are expected to grow to $85 billion.
Burke has worked for the Organic Research Centre at Elm Farm in Berkshire as organic farm adviser, business development manager and as managing director of the organic arable marketing group. He was also the founding managing director of the Organic Seed Producers Company.
Besides Burke, the firm’s other principals are Charles Merfield, director and head of agronomy, and Jonathan Bell, head of investment for New Zealand.
Merfield’s research has covered topics such as weed management, tillage, soil nutrient management, and pest and disease management. In the past, he has served as advisor to the Government of Uruguay’s National Agricultural Research Institute on the expansion of the country’s organic agriculture programme. He has also undertaken research for the Irish Government’s Agriculture and Food Development Authority to assist the expansion of organic agriculture in the country.
Bell is the director of Bell & Associates, which provides business advisory services to a range of primary industry organisations. He was also formerly the Southern North Island regional manager for Rabobank. In total, he has 11 years’ experience in rural banking in New Zealand.