Insight
Pause on agribusiness investment as COVID-19 eats away at certainties
Efforts to contain the coronavirus means agribusiness investment is in suspended animation. Should the global economic pause be ended within a relatively short timeframe, there is reason to believe that business as usual will return. If disruption is more prolonged, certain types of investment are likely to suffer.
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.
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 helping to grow their food sector companies and agribusinesses.
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Pause on agribusiness investment as COVID-19 eats away at certainties
Efforts to contain the coronavirus means agribusiness investment is in suspended animation. Should the global economic pause be ended within a relatively short timeframe, there is reason to believe that business as usual will return. If disruption is more prolonged, certain types of investment are likely to suffer.
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.
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 helping to grow their food sector companies and agribusinesses.
Subcribe today
Stay up to date with the latest agribusiness blog, Insights, and more sent straight to your inbox.
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Government & multilaterals
TAG food management targets profitable growth in local food & beverage
Food safety & security
The cost of living crisis: Inflation, price caps and the road to food security
Insect protein, how can companies overcome the ‘yuck’ factor?
Insect protein, how can companies overcome the ‘yuck’ factor?
Food & beverage
The rise of agriculture as an institutional asset class
Food safety & security
BBC report draws on Farrelly & Mitchell analysis of COVID-19 impact in Arab nations
Food safety & security
Supply chains & food security: assessing the impact of disruptive forces
Food safety & security
Farrelly & Mitchell analysis: Lebanon explosion exposes lack of food security plan
Is Covid-19 accelerating ESG investment in food and agribusiness?
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Government & multilaterals