Farm Progress

California is the state with the largest agricultural production in the U.S., and yet when most financial investors think of investments in California companies they think of Silicon Valley technology start-ups, real estate companies or cutting edge fashion firms.California is the world's fifth largest supplier of food and agricultural commodities. The various players in California agriculture are some of the most sophisticated in the world and compete on a global scale.

November 11, 2010

4 Min Read

California is the state with the largest agricultural production in the U.S., and yet when most financial investors think of investments in California companies they think of Silicon Valley technology start-ups, real estate companies or cutting edge fashion firms.

Joe Hudson and Phil Christensen want to change all that. Hudson, a venture capitalist and Christensen, an agricultural asset manager took a number of big name investors on a Central Valley tour to introduce them to what makes California agriculture a $30 billion industry and educate them about agricultural related companies as potential investments.

Christensen said: "California is the world's fifth largest supplier of food and agricultural commodities. The various players in California agriculture are some of the most sophisticated in the world and compete on a global scale. Many investors however, are not familiar with the industry and the way it works, because it is different from other sectors such as technology and consumer packaged goods.

"At the same time," Hudson continued, "We want to introduce growers to a group of sophisticated investors such as VCs and institutions like pension funds, endowments and private equity funds. By bringing the investors to the farm, we want to show them various businesses so the two groups can better understand each other's world and requirements."

In addition to building bridges between investors and agriculture, Hudson and Christensen hoped for three significant outcomes from the tour:

• Identify new investment opportunities with above average returns.

• Familiarize growers with new technology innovations, to help them improve their competitiveness.

• Help to create new, high-paying jobs in rural areas.

The two-day tour started at UC Davis on Tuesday, Nov. 9, and ended Wednesday, Nov. 10, in Fresno. At UC Davis (Nov. 9) the group attended a series of talks from key researchers and professors on topics including water policy and UCD research priorities. In Sacramento, the team had the opportunity to talk with a series of policy makers and influencers. Stops included a sustainable farm on the cutting edge of farm based energy production and a tour of Bronco Winery, the fourth largest producer of wine in the US, led by the CEO, Fred Franzia.

Nov. 10 featured a tour of a large diversified grape and tree-nut farm, followed by a networking lunch in Fresno, with more than a dozen of the top 100 growers in the US. The tour ended with a tour of a large scale dairy.

Some of the investor attendees include partners from such well known firms as Mohr Davidow Ventures, Kleiner Perkins, Khosla Ventures, US Venture Partners and J.R. Simplot Co.

According to Christensen, "A significant number of large private investors are starting to make bolder and longer-term bets that the world's need for food will continue to grow. While some traditional investment funds have invested hundreds of billions of dollars into booming financial markets for commodities like wheat, corn and soybeans, an increasing number of private equity firms have looked to investments in fresh produce companies to provide additional returns to their portfolios. Notable examples include the biggest players in the carrot, treefruit, organic and onion industries with well known names such as Bolthouse Farms, Earthbound Farms and River Point Farms. At the same time, many more produce companies have been unable to access the broader capital markets because of a lack of knowledge and actionable information for potential investors. As California's agricultural industries evolve and their capital requirements increase, we believe that more companies will look to new and non traditional sources of capital for their growth."

Lance Donny, chief financial officer of PureSense, a company funded by One Earth Capital, said that "tapping into the Venture Capital and Institutional Investor networks helps to enrich the agricultural industry not only by providing greater access to capital but also by providing more direct access to technological innovation and its applications to agriculture."

Hudson and Christensen met a few years ago on a trip to Chile which was designed to introduce North Americans to Chile's agribusiness powerhouse economy. Their two backgrounds are as different as that of the attendees of the tour they've organized. While Christensen studied Agricultural Business Management at California State University, Fresno, farmed walnuts and stone fruit and developed grape vineyards, kiwi plantations, and citrus orchards during his career, Hudson did not follow a traditional path to agriculture. After graduating with a degree in psychology from college he worked as a strategic business consultant in the financial, wireless, and environmental industries.

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