Investing in Agriculture

Perhaps ‘unicorns’ weren’t a realistic expectation for agriculture in the first place.

There are so many different types of ‘agriculture,’ it is understandably confusing for outside investors to discern where the risks and opportunities lie. Still, new sources of capital are crucial for levering change.

The patchwork of different influences on productivity and profits in agriculture includes some obvious ones, like labor costs, and some that operate indirectly, like energy markets. Investing is riskier the less influences are understood, hence all the new regulations coming for corporate sustainability disclosures.

Climate-Related Risk Disclosures

Consider for example the upcoming Canadian Sustainability Disclosure Standards (CSDS) explained by Carbon One to require businesses to report their processes and management of climate-related risks. An example of a climate-related risk in agriculture would be a fire or flood that kills large numbers of livestock in confined animal feeding operations (CAFO’s).

Businesses like Maple Leaf and Cargill, as well as the supply-managed farming sectors, have already experienced climate-related business disruptions… quite severely during the pandemic in processing plants, and on farms in British Columbia. Public markets will require disclosure to investors on how these risks will be mitigated going forward.