Agribusiness Quarter in Review – Q1-2024

Welcome to Cascadia’s Agribusiness Quarter in Review newsletter for Q1 2024 where we provide our perspectives on the capital markets, market trends, notable industry transactions, and more across the Production Agriculture, Ag Inputs, AgTech, and AgriFood Processing sub-sectors.

In this quarter’s addition, we cover The Private Equity Opportunity in Agriculture Inputs, Cascadia’s Agribusiness Year in Review, and Other Agribusiness Industry Updates.

If you have any questions, thoughts, or comments, we’d welcome the opportunity to discuss further. Please feel free to email us or subscribe to future Agribusiness Quarter in Reviews.


Topic of the Quarter — The Private Equity Opportunity in Agricultural Inputs

The agricultural input industry plays a vital role in supporting global food production by providing essential resources and materials to farmers. This sector encompasses a wide range of products and services, including seeds, crop nutrition, soil amendments, and crop protection. Growth in this category has primarily been driven by an ever-increasing need for innovative solutions by growers and significant investments in new technologies. The typically mature agricultural input industry has been recently reignited for its next cycle of growth. The time is now for the $70 billion agriculture inputs industry, and Cascadia expects significant platform opportunity and further industry consolidation in the near-term.

Recent technological advancements have significantly influenced the agricultural input industry, transforming traditional farming practices into more efficient and sustainable methods. Traditionally, research and development of new agricultural input technologies have been led by large strategic businesses. But in recent years, mid-sized and more nimble agricultural input businesses have taken the lead in developing and commercializing new technologies, while large strategic agriculture inputs businesses have opted to focus on acquiring and integrating leading agricultural input businesses.

This shift has created a unique window of opportunity for mid-sized agricultural businesses to build market-leading platforms and capture broader agricultural input market growth. These market-leading platforms along with the key principles listed below have created an opportunity for private equity investors to step into the agricultural input market.

The Parallels Between Food Ingredients and Agriculture Inputs:

We see significant parallels between the food ingredient sector and the agriculture input sector. Food ingredients has long been on the private equity radar, and for good reason. Investors looking for high margin, high growth companies, with a sticky customer base and product differentiation are attracted to the food ingredient sectors. Agriculture input companies possess many similar characteristics, making them ripe for additional private equity investment and interest. The agriculture input segment is benefiting from many similar tailwinds:

  • Large and fast-growing market supported by generational industry tailwinds
  • Business models that are resilient and mission critical in nature. Agriculture inputs are a necessity to growers, and will get pulled year in and year out
  • Moderate competitor fragmentation with platform, product, and add-on expansion opportunities
  • Valuable point in the agribusiness value chain that can maintain pricing power over customers and suppliers
  • R&D and product differentiation creates a sticky customer base. Growers are wary of switching inputs
  • Necessary and differentiated products create strong margin and free cash flow profiles for companies in the category
  • Active and acquisitive strategic buyer set creates attractive exit opportunities

Proof is in the Numbers:

Many Private Equity Investors are Seeing Success in the Sector:

While private equity investment in the agriculture input sector remains nascent compared to food ingredients, below we spotlight a subset of investors that are experiencing success in the agriculture input category today:


Updates From Our Team — 2023 Year-in-Review

As the Agribusiness Team at Cascadia reflects on the accomplishments and experiences of 2023, we are grateful for the relationships and partnerships that helped define our journey. Over the past twenty-four months, our team has remained the most active Agribusiness team in the country.

Global Agribusiness Transactions Closed in 2022 & 2023*

*As of 12/31/2023
*League table names selected by Cascadia may not be all-inclusive; data derived from materials supplied by public sources, PitchBook,
 Merger Market, Capital IQ Market Data, Company Websites. which Cascadia believes to be accurate; however, no independent 
verification of such material has been made

In July of 2023, we also expanded our team and welcomed Owen Baldrica as a senior member of the team. Owen, who joined us from Lazard, brought valuable skills and has enhanced our capabilities, contributing to our shared success with our clients.

In December of 2023, we hosted nearly 200 executives, entrepreneurs, investors and strategics in Orange County, California at our annual Cascadia Connect Food, Bev & Ag conference. At the conference, Cascadia Managing Director, Scott Porter, had the opportunity to interview AgTech veteran, Dave Friedberg, the former founder of The Climate Corporation and current CEO of Ohalo. You can catch the interview by clicking on the photo below.

Looking forward to 2024, we are enthusiastic about building upon our achievements and tackling new challenges for our clients. As a team, we remain committed to being the middle market leader in Agribusiness M&A advisory, and we are confident that our disciplined focus on this subsector will lead to even greater success.


Notable Industry Transactions — Q4 2023

Paine Schwartz Partners Closes Acquisition of Costa Group

Costa’s shareholders voted in favor of accepting an offer of $3.20 per share from an experienced North American based consortium made up of Paine Schwartz Partners, Driscoll’s Inc. and British Columbia Investment Management Corporation. You can read more about it here

Ever Fresh Fruit Company is Recapitalized by Tilia Holdings

In Dec of 2023, Ever Fresh Fruit Company, a premier provider of custom formulated fruit and flavor ingredient solutions, was recapitalization by Tilia Holdings, a private investment firm focused exclusively on the food supply chain. You can read more about it here

OCI Global Sells Iowa Fertilizer Co. plant to Koch Industries

In Dec of 2023, OCI Global entered into a binding equity purchase agreement for the sale of 100% of its equity interests in Iowa Fertilizer Company LLC to Koch Ag & Energy Solutions for $3.6 billion. You can read more about it here


Quarter in a Chart: VC Activity in AgTech Returned to Normalized Levels in 2023

After reach all time highs in the zero-interest environment of 2020 – 2022, AgTech deal volumes and values returned to a normalized level in 2023. Investors are now valuing cash flowing technologies with proven ROIs over typical early-stage investments in unproven technologies.

As there is continued interest rate pressure on investor returns, Cascadia suspects we will see similar-to-decreasing activity in the AgTech market in 2024.


What We’re Reading

John Deere, Corteva Partner to Deliver Customized Agronomic Solutions

This partnership combines the digital and onboard capabilities of John Deere with the agronomic expertise and analysis of Corteva

Read Here

Cascadia Connect Food, Beverage & Agribusiness Conference 2023 Recap

Cascadia hosted its annual Food, Beverage & Agribusiness Conference in Laguna Beach, California. The conference was headlined by a keynote fireside chat with David Friedberg

Read Here

While Still Above Average, Farm Income is Forecast to Fall This Year

U.S. farm income will tumble for the second year in a row from the record set in 2022, pulled down by lower commodity prices and rising production costs

Read Here

Evogene and their Subsidiaries Announce Partnerships with Syngenta and Bayer Crop Science

Shane Thomas breaks down who Evogene is and what their partnerships mean in his latest Upstream Ag article

Read Here


Catch us at these Conferences in Early 2024


Contact Us

Scott Porter Headshot
Scott Porter Managing Director Food, Beverage & Agribusiness
Owen Baldrica Headshot
Owen Baldrica Director Food, Beverage & Agribusiness
Erik Einwalter Headshot
Erik Einwalter Managing Director Food, Beverage & Agribusiness
Bryan Jaffe Headshot
Bryan Jaffe Chief Operating Officer, Investment Banking and Managing Director Food, Beverage & Agribusiness
George Sent Headshot
George Sent Managing Director Food, Beverage & Agribusiness

 

 

Disclaimer

This presentation is being furnished by Cascadia Capital, LLC (“Cascadia”) to the recipient and is intended as an outline of matters for informational and discussion purposes only. The information contained in this presentation, including any market data and industry information, has been derived entirely from material supplied by public sources, which Cascadia believes to be accurate; however, no independent verification of such material has been made and any estimates made by Cascadia based on material from such sources are by their nature inherently inexact. Accordingly, Cascadia does not make any representation or warranty, nor is any such representation or warranty implied, as to the accuracy or completeness of the information contained herein, and Cascadia is not responsible for any misstatements or omissions in this presentation. Cascadia has no obligation to update the information contained herein.


This presentation may include certain statements, estimates and projections with respect to a company, or industry, including certain forward-looking statements. Any such statements, estimates and projections reflect various assumptions, which may or may not prove to be accurate or correct, concerning anticipated results and are subject to significant business, economic and competitive uncertainties and contingencies, all of which are beyond the control of Cascadia. Accordingly, there can be no assurance that such statements, estimates and projections will be realized. Such statements, estimates and projections are likely to vary from actual results and those variations may be material. No such statements, estimates or projections constitute a guarantee, promise, forecast or prediction of the future and Cascadia does not represent or warrant that any estimates or projections will be achieved. Cascadia neither: (i) accepts responsibility for or makes representations as to the accuracy or completeness of any forward-looking statements, estimates or projections contained in this presentation, nor (ii) undertakes any obligation to update or revise any forward-looking statements, estimates or projections for any reason after the date of this presentation. All financial data in this presentation is provided for informational and discussion purposes only.
Past performance is not necessarily indicative, or a guarantee, of future results. There can be no assurance that any Cascadia project will achieve comparable results as those presented herein. The information contained in this presentation is strictly confidential and may not be reproduced, distributed, disclosed or disseminated, in whole or in part, to any third party without the prior written consent of Cascadia.

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