May 11, 2022

By Lynda Kiernan-Stone, Global AgInvesting Media

The Development Bank of Japan (DBJ) continues to display its position as an investment leader, becoming the first Japanese investor to agree to back ADM Capital Europe’s (ADMCEU) Cibus Fund II. 

This announcement marks DBJ’s fourth investment in the food and agri space following commitments made to Equilibrium, TIR, and Proterra.

In October 2021, GAI News was given the opportunity to sit down with Mr. Seiji Tomosada, managing executive officer, in charge of Corporate Finance Department, Division 3, Sustainable Solution Department, Hokkaido, Niigata, Tokai Branch with DBJ, to discuss the bank’s approach to agricultural and natural resource investment, and its goals for the future.

Challenges abound. In Japan, the average age of agricultural workers is 67 years, and between 2015-2030 the number of self-employed farmers in the country is expected to decline by 40 percent.

Compounding this issue is the highly fragmented nature of Japan’s farmland, with the average cultivated area under management being just three hectares (7.41 acres) per household; dietary changes resulting in the yearly decline of rice consumption leading to paddy fields being converted to low-profit crops such as feed rice, wheat, and soybeans; and little shift toward higher margin crops that can support the maintaining of the country’s farmland.

Additional factors to consider are a relatively low labor productivity level of Japanese agriculture as compared to other developed countries, the urgency of responding to the effects of climate change, and the damage being perpetrated by soil and water pollution.

“We are now thinking of concentrating our efforts on this target,”  Mr. Tomosada told GAI News. “In this context, of course, investment related to agriculture, such as SDGs, is becoming a trend, and when we think about the world as a whole in the future, there is a demand for immediate action.” 

Since 2017, ADMCEU has advised on more than 25 venture, growth, and buyout investments in the food and agriculture sectors that have fostered positive impacts on production efficiency, addressed labor shortages, and strengthened biodiversity.

ADMCEU has led many of these companies to scale up their business, and supported them by leveraging its own network of sector specialists to help companies expand their sales channels.

Launched by ADM Capital in 2016, the Cibus Funds strategy specializes in making sustainable food and agriculture investments in mid-sized companies that are leading the future of food through innovation, disruption, increased resource efficiency, and sustainability.

A funding target of $800 million has been set across the two funds, with Cibus Fund II carrying expectations of raising $600 million, of which, the Los Angeles County Employees Retirement Association committed $80 million. 

Through its investment in Cibus Fund II, DBJ stated that it intends to gain advanced knowledge pertaining to how to solve agricultural issues arising in developed countries, thereby contributing to the industry’s next phase of growth.

This goal is related to what DBJ calls the Japan Story – the benefit that any given investment can bring to bear for Japanese companies and Japanese projects in the future. 

DBJ explained that this is being accomplished through the application of its corporate philosophy – “Design the future with financial expertise: Continue to expand financial frontiers; provide the best solutions for customers and society; pursue sustainable development for Japan and the world,” adding that the bank will continue to actively support the development of the food and agriculture industries in Japan. 

~ Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Unconventional Ag. She can be reached at lkiernan-stone@globalaginvesting.com.

*The content put forth by Global AgInvesting News and its parent company HighQuest Partners is intended to be used and must be used for informational purposes only. All information or other material herein is not to be construed as legal, tax, investment, financial, or other advice. Global AgInvesting and HighQuest Partners are not a fiduciary in any manner, and the reader assumes the sole responsibility of evaluating the merits and risks associated with the use of any information or other content on this site.