In an age of market volatility, diversification is increasingly important. Investors bold enough to expand into international agribusiness will find untapped opportunities, strong upside potential, and an industry poised to profit from the coming rise in global population. However, it is imperative that investors and asset managers walk the ground themselves, getting to know the local financial and agricultural scenario as well as building trustworthy relationships with communities before investing.
Knowing the Terrain in Agribusiness Investment
Farmfolio recognizes that photos and reports can either over or undersell an asset’s potential. Some investment managers and funds tend to only present the best possible front for the project that they are promoting. Thus, it is imperative for investors to fully experience what they are getting themselves into. Oftentimes, these site visits and experiences do not negatively impact the prospect of investment. Rather visits add context and breadth for investors to more fully understand what they are involved with. This is why Farmfolio constantly organizes due diligence trips to potential projects and invites all prospective investors to site visits before investing.
Likewise, an experienced and well-balanced management team that believes in what it is doing is one of the most important indicators to investors of whether a project will succeed. If the project manager and the team do not truly believe in the opportunity, it will be evident when you talk with them face-to-face. If you are traveling to a country where you do not speak the language, have your research trip provider arrange for interpreters to meet you at the project site. Farmfolio’s farm visits allow our stakeholders to talk with the local workers, ask them what they think of a project, and watch how our field managers interact with their teams. It is always important to listen and observe how the workers respond to questions and how they perform their work; it speaks volumes as to how much they believe in what they are doing.
Additionally, investors and asset managers need to experience the geopolitical and economic climate of the country they are active in and what it could become during the investment’s lifetime. Talking with locals about the current political administration, particularly what they think of foreign investors, is important in getting a sense of what role agriculture plays within the local economy. Farmfolio’s team is constantly talking with local sellers of agricultural products and asking about where they get their supply from, how business is going, and what would make their business more profitable.
Simultaneously, experienced asset managers and international investors know how to convert money back and forth between currencies in order to get a sense for how easy or difficult it is. Similarly, Farmfolio conducts due diligence on both local and regional banks to assess what is best for foreigners to hold capital. While individuals may never necessarily require this technical know-how as absentee agricultural investors, it provides managers and financiers with a contextual and fundamental understanding of the geography and economic climate in which we are investing.