By Autumn Demberger, AgInvesting Media

AgTech advancements, natural capital demands, and evolving regulations are transforming agribusiness in emerging markets (EM). But true success comes from balancing these structural tailwinds against persistent geopolitical, regulatory and climate risks.

Luckily, as Stephen Birkwood, Partner at Lonmile, noted, “when you’re dealing with the owners of assets in the EM, they’re typically smart and sophisticated individuals … because they are very astute and up to speed on what’s going on geopolitically, what’s going on within their country, what’s going on within their region, and what’s going on in the commodity markets.”

He added that, “Emerging markets are where the growth is going to come from over the coming years, and there’re a number of reasons for that.”

These reasons, he said, will be some of the key points discussed at this year’s Global AgInvesting Europe Summit, held 12-13 Oct.

During the session “Emerging Markets in Focus: Where Is the Next Agriculture Investment Opportunity?” Birkwood and co-panelists from across the ag sector will share insight on how emerging markets are drawing renewed attention across the agriculture value chain. Panelists will also examine where capital is finding opportunity today, how investors are evaluating market-specific risks and operating complexities, and which geographies, sectors, and strategies are shaping the next phase of agriculture investment in emerging markets.

Finding Opportunities in the Emerging Markets

What makes emerging markets a standout for investors is their innovation. As Birkwood noted, new entrants are coming into the space on a frequent basis, it seems, and these individuals are spending the time to understand what’s needed beyond “traditional” solutions in order to create a path of longevity for the agribusinesses they serve.

“Where you’re looking at the EM markets, most market participants are typically funded by banks. The opportunity for private credit is to assist the farmers, the sector, with funding structures that they haven’t perhaps looked at in the past, and then you can essentially assist them with their growth,” he said.

When thinking about emerging markets, however, investors will also be thinking about their risk management strategy, because no matter which market it is—traditional, emerging, or otherwise—investors want to make sure the funds are going to the assets with the best risk adjusted returns.

“Investors are going to care a great deal about the collateral package and the projected cash flow,” said Birkwood. With emerging markets, “there probably will be a more stringent focus on risk mitigation strategies, because the EM is typically perceived as higher risk.”

That isn’t to say the risk outweighs the opportunity; as someone who primarily works in the financial space, Birkwood is watching the opportunities available to think outside the box for the agribusiness sector.

“There is a lot you can do structuring-wise in order to make the ultimate transaction more interesting for both the investor and the issuer,” Birkwood said. In the traditional markets, function and order already have a set standard. But in EM, growth is exponential. “There are structures that are going to evolve that have never been done before,” he said.

The Longevity of Farming Plays a Role

One key thing about the agriculture sector as a whole is that farming tends to be a generational business. The people behind it are not in it for short-term returns.

“This is their livelihood. This is everything,” said Birkwood. “This is a way of life and is multi-generational. I can attest to this from personal experience with my Dutch farming family roots.

Because farmers have a long-term view of their business, there’s a space for emerging markets to create more optimal structures suited to that long-term viewpoint.

For example, “the capital markets aren’t particularly long term, in that, if you’re issuing debt, it’s like anywhere from one to five years for a loan and maybe a little longer for bonds,” Birkwood said.

“Amortising debt on a linear basis doesnt typically suit a borrower in the agricultural sector because harvests are a function of the weather and that is unpredictable and increasingly so — 2026 is an El Nino year for example. This isn’t a zero sum game; we need to innovate and create structures which work for investors but also suit the borrowers such that they are not constantly in fear of breaching covenants. There is a lot of work to do across EM and we just getting started.”

Where You Can Learn More

Birkwood will be joined by three additional panelists: Débora Toledo, Director in Relationship Management, Aura Hexa; Supun Ranasinghe, Investor, Board Member, Silal; and Gulnara Yunusova, Treasurer of IFAD. To see the full GAI Europe agenda and plan your trip, visit here.

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