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Insight

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

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.

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Author

Malachy Mitchell

Managing Director

Malachy Mitchell is co-founder and Managing Director of Farrelly & Mitchell. He works with CEOs, executives and leaders from private enterprises and public sector institutions.

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

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

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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.

Download Full Insight

Author

Malachy Mitchell

Managing Director

Malachy Mitchell is co-founder and Managing Director of Farrelly & Mitchell. He works with CEOs, executives and leaders from private enterprises and public sector institutions.

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