PRIVATE CAPITAL & SUSTAINABLE AGRICULTURAL INVESTMENT

Transcription

1 PRIVATE CAPITAL & SUSTAINABLE AGRICULTURAL INVESTMENT ANNUAL WORLD BANK CONFERENCE ON LAND & POVERTY - APRIL 2012 Renatto Barbieri - R.Barbieri@galtere.com

2 WHAT IS SUSTAINABLE? The definition of sustainable practices will vary with the level of commitment to practices that will foster human growth without harming the planet The truth does not come in different shades, but it is colored by the desire for short-term gains Public and private capital will equally justify agricultural activities that are far from being sustainable provided the short term outcome is financially convenient Renatto Barbieri - R.Barbieri@galtere.com 2

3 DEFINING SUSTAINABILITY The Triple Bottom Line People: Social Justice Planet: Environmental Stewardship Profit: Long-term Perpetual Profit The Brundtland Commission: "..development that meets the needs of the present without compromising the ability of future generations to meet their own needs Renatto Barbieri - R.Barbieri@galtere.com 3

4 CAN SUSTAINABLE AGRICULTURAL PRODUCTION BE ACHIEVED? SUSTAINABLE RICE FARM Renatto Barbieri - R.Barbieri@galtere.com 4

5 WHAT IS SUSTAINABLE? CONVENTIONAL RICE FARM Renatto Barbieri - R.Barbieri@galtere.com 5

6 GRAZING EXAMPLE: Set Stocking Neighbor: Regular Phosphorous Applications Five Year Weekly Rotation: No Phosphorus or Other Fertilizers for 12 Years Renatto Barbieri - R.Barbieri@galtere.com 6

7 GRAZING EXAMPLE: 4000 Acre Property No fertilizer for 12 years, subdivision to 40 acres, 1100 cows rotated weekly 5 year weekly rotation Set Stocking Neighbour No P or other fertilizers Regular P applications for 12 years Autumn Cows and Calves 1 Week s Grazing Ready to Move (Last year s autumn calves weaned 360 kg at 9 months of age) Renatto Barbieri - R.Barbieri@galtere.com 7

8 YES, SUSTAINABLE AGRICULTURAL PRODUCTION CAN BE ACHIEVED Sustainable practices + sustainable cash flows = successful business model In order to run a successful business model: Know what is the desired result Understand the process Consciously initiate the process The Result: production output that is nutritiously complete, thus resulting in an overall increase in human well being, paired with sustainable and continued profits The Process: holistic practices that operate in partnership with the local community and nature while making use of benign technology The Beginning: communicate clearly the objective to all while leaving no room for compromising high standards or integrity Renatto Barbieri - R.Barbieri@galtere.com 8

9 WHAT IS BEING DONE TODAY Diet Change: Change in diet is forced upon the population through the removal of choices and misleading propaganda Investment: Investments are being undertaken in response to wants and not needs Lack of Knowledge: General lack of depth of knowledge encourages the propagation of fear. The fear of a food crisis is headline driven and is largely connected to price increases in soybeans and corn, which contribute marginally to the carbohydrate intake of the world s population Convenience: For the sake of convenience, we destroy our aquifers, soil, trees, etc. so that we can produce industrial crops that will be utilized to feed animals that could well be fed with other crop inputs Biofuels: Policies that foster the use of first generation biofuels contribute to the use of vast amounts of energy in their production and water use while aiding in fertile soil depletion. In summary, private investments in agriculture are following short-term headline driven macroeconomic trends and not environmentally related long-term socioeconomic trends Renatto Barbieri - R.Barbieri@galtere.com 9

10 WHAT IS BEING DONE TODAY Land Grabs : NGOs fostering the debate on a very narrow aspect of land grabs while missing the broader picture There is no such thing as a land grab. What we are faced with is resources mismanagement at both the public and private level No entity that is engaged in sustainable business practices would ever engage into land grabs. This is because the quality of the output, or the enterprise, is only as good as the quality of the human resources involved with it Best Practices = Sustainable Practices Renatto Barbieri - R.Barbieri@galtere.com 10

11 UPCOMING BOTTLENECKS: MILLED RICE STOCKS TO USE RATIO Renatto Barbieri - R.Barbieri@galtere.com 11

12 UPCOMING BOTTLENECKS: WHEAT STOCKS TO USE RATIO Renatto Barbieri - R.Barbieri@galtere.com 12

13 WALKING A FINE LINE Major staples stocks to use ratio are running at approximately 90 days and not evenly distributed around the world Should an extreme weather event, crop disease, or natural disaster strike, the world is ill prepared to cope with the ramifications Current attention is being dedicated to the growing of industrial crops such as sugar-cane, soybeans and corn with little attention being paid to staple crop production This undue attention has the effect of magnifying future supply problems as very little attention is being paid to practicing any form of sustainable agriculture Renatto Barbieri - R.Barbieri@galtere.com 13

14 CONSEQUENCES OF TODAY S PRACTICES: Soil Erosion: increasingly fast rate leading to pesticides, herbicides and fertilizer run off that create dead zones (US Gulf), floods, fish kill, etc. Increased Chemical Use: Widespread use of chemicals in farming has consequent detrimental health effects to farmers, consumers, and the environment Water Inefficiency and Waste: Agriculture is the largest water consumer in the world. There is no real focus on minimizing water waste in this industry Environmental and Health Damages are not priced in the equation: Damage is encouraged either directly or indirectly through misguided government policies, private investment in inappropriate areas, policies that make it difficult to educate the consumer, policies that cater to political goals as opposed to solving the real issues We live in a closed circuit envionment. Everything that is directly or indirectly input, spread, dumped, drilled, spilled, sprayed in our farms will revert into a positive, or negative result. It is obvious that the current result have been and continue to be negative. Renatto Barbieri - R.Barbieri@galtere.com 14

15 CONCLUSION Private capital must be deployed in the agricultural sector in order to help solve some of the upcoming food security challenges Such investment have to be made within a truly sustainable framework as opposed to superficial labeling schemes and uninformed policy, which actually increase the depletion of the planet s scarce resources Private capital must work had-in-hand with the public sector in order define appropriate investment principles and priorities for this sector Renatto Barbieri - R.Barbieri@galtere.com 15

16 ADDITIONAL QUESTIONS ABOUT PRIVATE CAPITAL DEPLOYMENT IN AGRICULTURE: What are the drivers for private capital deployment in agriculture? Are risks being taken and rewarded (short-term) without a thorough analysis or complete understanding of risks in agriculture? Are investments being made in areas that are not appropriate for intensive farming? Why has private investment in agriculture been focused on capital gains due to land appreciation driven by the rising prices of a handful of non-staple agricultural commodities? Is there an opportunity to make money in sustainable agricultural staples production? Should private capital sponsor the use of current environmentally destructive agricultural technologies that focus on short term gains (pesticides, herbicides, genetic engineering, etc.) or focus on the use and further development of sustainable technologies and farming practices? Are investors promoting the destruction of plant and animal diversity through investments in large monoculture operations? Wouldn t such investment expose the investor to a concentration risk that cannot be mitigated? Renatto Barbieri - R.Barbieri@galtere.com 16