A few managers are beginning to focus on earlier stage agriculture companies, with some taking minority stakes rather than buyouts.
Santa Monica, Calif.-based agriculture money management firm Pontifax Global Food and Agriculture Technology Fund LP is making growth capital investments in agriculture companies with a focus on technological innovation.
The firm does not make early stage, venture capital investments, said Phil Erlanger, managing partner and co-founder of Pontifax. Rather, Pontifax focuses on companies that have proven technologies that are achieving commercial sales, he said.
"From harvest to the time the food gets to the plate, agriculture is very inefficient," Mr. Erlanger said. "We were an early mover in agriculture technology."
One company in which Pontifax has invested makes slow-release fertilizer out of organic waste. "It's more environmentally sustainable and it is highly efficient," Mr. Erlanger said.
People in emerging markets are eating more calories and protein per capita than they had in the past. Combine that growing demand with global warming, water scarcity and less land available for agriculture because of increased development, and there's a need for more efficient, more sustainable agriculture technology, he said.
"Farmers are in a very, very tough business," Mr. Erlanger explained. Commodity crop prices are under pressure, which is making it difficult for farms to be profitable. The result is that the amount of available farmland is in decline, so existing farmland needs to be more productive, he said.
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By Arleen Jacobuis