Agribusiness investors continue to strengthen their positions in Spain and Europe's agricultural sector, even as farmers across Europe protest high costs and foreign competition.
advertisementThe European countryside has become one of the continent's most dynamic and profitable areas for investment funds and large agribusiness companies.
Investors can earn returns of over 15% and are safe from the economic and geopolitical uncertainties that have rocked the world since the COVID-19 pandemic, Russia's invasion of Ukraine, and disruption to global trade routes. They have found a safe haven in agriculture.
as a farmer Protests continue across EuropeCarlos Fernandez, Farmer of Seseña, Toledo; central spainI can't understand who is interested in acquiring their neighbor's land.
“It's like the evil eye,” the farmer told Euronews. “In this perfect storm where we are fed up with a lack of profitability and liquidity and are in a state of bankruptcy, investment funds have a lot of economic capacity and it seems unprofitable in rural areas. We look at it as a business.”
Large investors are realizing that agricultural property is a crisis-proof asset. It is estimated that to feed the world's population by 2050, food production will need to increase by 60-70%.
“Amidst financial and political crises and even wars, rural land is the most resilient asset and the asset that best maintains its value. Why? Because we all eat Because we have to,” said Regino Coca, founder of specialist company Cocampo.on agricultural land in spain Land worth 3.5 billion euros is on sale, he told Euronews.
Around 950 investment funds specializing in food and agriculture operate around the world and manage €150 billion of assets.
Of the 32 large transactions recorded in this sector in recent years by specialist investment advisory firm Valoral, 40% were in Europe and more than half involved the acquisition of agricultural land.
Disruptions to global supply chains are moving investment and production closer to mature, stable markets, such as Europe and the United States, where consumers have greater purchasing power.
“in the case of agriculture and livestockmany products are fresh, local, and we require them to be produced nearby, so that determines where the investment will be made,” Coca said.
Who are the new players joining the European field?
According to Luxembourg-based Valoral, Europe's agribusiness sector has seen large deals by large asset managers in recent years.
In May 2023, UK-based M&G acquired a €150 million stake in Regenerate Asset Management, a fund specializing in addressing climate-related challenges in the agribusiness value chain.
Similarly, Belgian asset manager Incofin secured growth funding in April 2023 with support from Degroff Peterkam Asset Management and Coris, with the ability to support sustainable initiatives in the agricultural sector. has been strengthened.
Another notable transaction occurred in December 2022, when BNP Paribas Asset Management acquired a majority stake in Danish natural resources specialist International Woodland Company (IWC).
Furthermore, in October 2022, Spain's Azola Group acquired a 33% stake in Iberia Smart Financial Agro (ISFA Gestion), which is expected to have an area of 10,000 hectares of almond trees on the Iberian Peninsula.
The total amount of transactions made by institutional investors in Iberia in 2022 exceeded 1 billion euros, 20% more than the 800 million euros invested in 2021, according to data from consulting firm CBRE.
Other prominent players in the Iberian market include Bolsciale and Elia, members of the Atitlán group that grow pistachios, almonds and avocados, or S.A., which has more than 900 hectares of production in Spain and specializes in fruit and citrus fruits. There is a multinational company called Citri & Company.
According to Cocampo's latest report on the structure of rural land, 412,269 rural properties were transferred in Spain between January and November 2023, of which 138,000 were sales transactions.
advertisement“In rural Spain, traditional farmers and livestock farmers continue to invest,” Regino Coca explained. “What happens is they do it in small businesses with very low profile. Then you have institutional investors, who move into the world of family offices and large landlords, and then the next group invests. It's a fund.''
Winners and losers of agricultural transformation
Currently, 93.8% of farm owners in Spain are individuals, and 6.2% are legal entities such as trading companies, production cooperatives and public bodies.
However, according to the Cocampo report, “Land ownership will undergo a significant reconfiguration over the next decade, with a small number of large corporations coexisting with farmers, cattle ranchers, and owners of recreational and tourist farms.'' It's called “roar''.
“The former specializes in a specific thing. agricultural, livestock and sustainability products such as renewable energy and CO2 capture. These large corporations will concentrate land and own large farms with large economies of scale. ”
While small and medium-sized farmers face the challenge of high production costs and lack of profitability, large agribusiness companies are gaining ground in this sector thanks to economies of scale, efficiency, sustainability, and the introduction of new technologies. We are able to adapt to new trends.
advertisementAccording to research by the consultancy firm Armanext, production in Spain is largely concentrated in 78,000 producers, who harvest 72% of the value of production, while the other 583,000 farmers They only make 3% of the profit.
“In the past, farmers could live on 10, 20 or 30 hectares of land,” Coca told Euronews. “Today, in order to make a profit with these crops, you need investment and area of 100 or 150 hectares or more, as well as investment in machinery. This has made it very difficult for small and medium-sized farmers and livestock farmers. Masu.” . ”
“When we talk about rural profitability, investing in Spain is profitable depending on the crop and region. Mechanization and economies of scale determine profitability,” added the Cocampo founder.
generational change
In a scenario where 40% of farmers are over 65 years old and almost half of annual transactions represent inheritances, investors see an opportunity to acquire farmland.
“Currently, 41.3% of rural landowners in Spain are over 65 years old,” Coca said. “They are farmers and ranchers in the final years of their working lives and are not in a position to expand their farmland or invest in the machinery needed to optimize cultivation. But those who compete with them are We can do that.'”
advertisementFarmers' unions have warned of the consequences of changes in ownership structures, which, in their opinion, “do not create social structure, do not sustain rural populations and the environment, and do not support the social and professional model of agriculture. “This could lead to the disappearance of the agriculture,” COAG (Coordination Committee for Farmers and Ranchers Organizations) explained in a recent report.
Movements within the agricultural sector include strengthening agricultural cooperatives that unite farmers so that they have the strength to stand up to other operators, are able to invest, and have the land they need to compete in the agricultural sector. I'm looking for it.
But above all, they want policies that guarantee generational succession of farmers so that young farmers can come to the countryside.
“Investment funds and agri-food companies are buying up small and medium-sized farmers,” Coca said. “But we also found that there are farmers who are not as old and have investments that we would consider traditional.”
“I don’t think we should be afraid of progress or progress, but I do believe we need a controlled generational change, with government encouragement and oversight, paying particular attention to what we want the countryside to become. Because the countryside is our sustenance and is part of our tradition and culture,” Coca concluded.
advertisementThis article was originally published in spanish.
