Reasons and Tips for Investing in Agribusiness
Agri-food, an investment for the future
Agribusiness and its ecosystem have enormous economic, social and environmental weight. Globally, this activity accounts for about 10% of global GDP and consumption, and 25-30% of employment.
The value chain of the agri-food industry includes a wide range of businesses, ranging from suppliers of agricultural machinery, seeds, chemicals, animal health tests and vaccines, packaging, crop insurance and distribution. The agri-food sector is also characterized by a significant number of very varied companies. While large groups seem to dominate the sector, there are also a large number of profitable medium and small businesses, supported by the emergence of innovative start-ups.
Megatrends favorable to long-term investment
Productivity that respects the environment facing a strong demand.
The selection of tomorrow’s values is structured around mega-trends that underpin the growth of the agri-food ecosystem; namely:
- Growth and ageing of the world’s population
- Major social economic changes such as the growth of the middle classes
- Continued urbanization, particularly in emerging countries
- Increasing consideration of environmental criteria
- Taking public health into account
These trends are reflected in strong demand for food products.
But these mega-trends mainly lead to changes in food and consumption behaviour, hence the emergence of new investment opportunities. These opportunities are strongly correlated with the current or future development of industries whose objective are, in addition to their quantitative aspect, the production of food and nutrients meeting a demand that is becoming more and more segmented and specific. This according to the preferences of populations, that are better educated, informed, and have increasing incomes. This will lead to a further and qualitative increase in the demand for healthy functional foods, certified and with their guaranteed traceability.
According to projections of food needs, population changes and available resources by 2030/2050, the observation seems clear: there is a gap to be filled between tomorrow’s food supply and demand, which requires substantial investments. This knowing that constraints in terms of resources should also appear (quantity and quality of water, cultivable land, etc.).
A varied and innovative investment universe in full evolution
The perimeter of investment in this area is given by an open-ended definition of the agri-food sector where, due to innovations, borders are more and more open. It therefore becomes difficult to speak of food without referring to capital goods, specialty chemicals (new generation fertilizers and pesticides), genomics applied to crops and finished products, treatment, maintenance and food packaging, etc.
In addition, the sector’s production is now closely linked to food security, ecological and energy efficiency issues, and above all nutritional and health responsibility. Thus, the mechanism for building a quality portfolio in this sector requires a good knowledge of the food matrix, its interaction with its ecosystem, and the financial qualities specific to each company.
Agri-food for family and multinational businesses
The arrival in Paraguay of the giants of the agri-food industry is relatively recent. By improving partnership with local businesses, foreign groups are gaining production capacity, competitiveness, flexibility and securing their supply.
This allows companies to adopt optimized management, acquire know-how, technology and an adapted organization.
Numerous investment opportunities to be developed to respond to changes in behavior in terms of food and consumption patterns of the population.
These opportunities are strongly correlated with the current or future development of industries aimed at producing food and nutrients to meet a demand that is becoming increasingly segmented and specific.
This will focus on the production of healthy functional foods and those that are certified to ensure their traceability.
A modernization and rationalization of the production tool in order to be competitive in terms of cost and aim for industrial excellence.
Many European cooperatives have underestimated production abroad and have lost competitiveness with international producing groups. Unlike some giants, like Walmart, who understood the interest of Paraguay.
Alongside the behemoths, Paraguay offers many opportunities for Start-ups and young or small innovative companies.
Paraguay’s land is renowned for its agricultural qualities and is able to provide natural and organic products.
With one of the lowest production costs, Paraguay offers many opportunities in the processing of agri-food products.
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