international consulting opportunities interest in the agriculture space gary thien afm, ara thien...

International Consulting OpportunitiesInterest in the Agriculture Space

Gary Thien AFM, ARA

Thien Farm Management, Inc.

101 East Graham Ave.

Council Bluffs, Iowa 51503

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Thesis of Investment Community

• Amount of Arable Land per person continues to decline each year

• Population growth continues to increase food demand

• Urbanization and family income levels– Creates more protein demand– More protein demand means increased feed

usage for livestock

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The Investors

• Sovereign Wealth• Hedge Fund Companies• Public and Private Pension Funds• Family Offices

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Investment Strategies

• Spreading Risks– Weather– Political– Currency

• Types of Markets- Developed Countries

• United States• Canada• Australia

– Developing Countries• Brazil• Argentina• Eastern Europe

– Frontier Countries• FSU (Former Soviet

Union)• Africa

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Land or Operation

• Land Play -- Own and Lease to Others– Expect Lower Returns without Operational Risk

• Operational Play -- Own and Operate– Expect Higher Returns with more Risk

• Mix of Land and Operational • Agriculture Infrastructure

– Processing– Rail– Storage

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Decision Making on Agricultural Assets

• How much to invest - % of total portfolio in ag.• How much risk to take - • How to spread or mitigate the risk• Investment horizon• Exit Strategies

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Investment Offices

• Large Staffs of investment analysts• Responsible for other people’s money• Global Knowledge• Extensive Financial Models

Issues • Investment Committee turn-around time

– Exclusivity may be granted – When working with farm sellers-time is of the

essence

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Scope of Investments

• Generally substantial investments in terms of money– $10 to $100 mm into a land fund or single asset– 5,000 to 200,000 hectares

• Sole Investor• Partner Investor – Stack in the Existing

Operation• Targeting Specific Enterprises

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Challenges in Global Investment

• Land is a limited Resource• Management is an extremely limited Resource• Expats• Logistics• Political and Currency Risks• Commodity Markets• Multiple and integrated enterprises

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Investor Needs

• Appraisal– US and Globally

• Management– US and Globally

• Direct Management• Employee Searches• Financial Accounting

• Consulting– US and Globally

• Reviewing “pitch” material

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Investor Needs-Agriculture Specific

• Understanding– Soils– Weather– Crops to be grown– Yields– Fertility and Chemical

needs– Direct and Indirect

Costs– Machinery inventory

and capabilities

– Storage– Employees and

capabilities– Systems and controls– Capital Improvement

needs– Organic and outside

growth– Budgeting

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Hazards of International Work

• Language Barrier• Working in foreign currencies & weights/meas. • Logistics• Time• Visas

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…. Utilize a minimum and no till crop production system

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…Modern and efficient grain storage and conditioning

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…Modern Seeding Equipment

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Questions?

• What is the current attitude for agricultural investment?