THE LAY OF THE LAND
Treetops Capital invests in and operates agribusinesses and agricultural land predominately in Eastern Europe where it has a strong local presence. Our strategy is to provide strong financial returns by introducing modern technologies, infrastructure, and best practices that increase yields, operational controls, and sustainability. Treetops strives to adapt businesses to international standards in both the processing stage and the distribution of final products, in order to help professionalize the sector and strengthen value chains. Treetops also utilizes public-private partnerships and innovative financial structures to enhance the risk-reward profile for private investors. For example, the Overseas Private Investment Corporation (OPIC), a US government development agency, has provided Treetops with a senior loan facility to invest in agribusinesses in Romania. Additionally, Treetops has accessed grants from the European Union for sustainable agricultural projects. Beyond financial returns, Treetops strives to engage in the key tenants of sustainable agriculture: Satisfy human food needs, enhance environmental quality and resources, sustain the economic viability of agriculture, and enhance the quality of life for farmers, farm workers, and society as a whole.
SATISFY GROWING HUMAN FOOD NEEDS
- Increase food production and enhance productivity through the use of modern agricultural practices and technology
- Contribute to import substitution, increasing reliability on locally produced agricultural products to sustain growing demand
ENHANCE ENVIRONMENTAL QUALITY & RESOURCES
- Engage in best practices of sustainable agriculture such as no-till farming water management practices for water preservation, soil erosion management, sustainable fertilizer management, and ecological pesticide, herbicide and fungicide application
- Utilize renewable energy whenever possible.
SUSTAIN THE ECONOMIC VIABILITY OF AGRICULTURE
Increase agricultural productivity and the value of agricultural land by using best practices of sustainable agriculture
- Reduce drainage, irrigation, and input costs through the use of modern agricultural practices and technology
ENHANCE THE QUALITY OF LIFE OFR FARMERS, FARM WORKERS AND SOCIETY AS A WHOLE
- Investments will generate employment positions for low-income workers
- Romanian economy will benefit from increased tax base from production
- Population will benefit from increased availability of local agricultural products and reduced prices
HIGHLIGHTS OF INVESTING IN AGRICULTURE
GLOBAL FORCES ARE INCREASING DEMAND FOR AGRICULTURAL PRODUCTS
A recent World Bank study shows that food production needs to increase 70% by 2050 in order to feed a projected 9 billion people. Global forces such as population growth, economic growth in emerging markets, and rising per capita incomes are greatly increasing the demand for agricultural goods, whereas trends such as urbanization, soil depletion, and use of land for biofuel production are decreasing the supply of arable land.
AGRICULTURAL INVESTMENTS OFFER A STRONG HEDGE AGAINST INFLATION AND MARKET RISK
Investors are seeking agricultural investments as a strong hedge against inflation, as its value will increase from rising food prices. Agricultural products also tend to have lower correlation with traditional asset classes; food commodities and gold have closely followed each other, more than doubling in price since 2007. However unlike gold, it is clear the rise in food prices is backed by productive assets that will continue increasing in value given global forces described above.
MODERNIZING AGRICUTLURE IMPROVES YIELDS AND SUSTAINABILITY
Many developing countries are operating well below their productive capacities and do not fulfill domestic demand, as basic subsistence farming is still often the norm. There is a strong opportunity to introduce modern technologies and best practices to increase efficiency, as many large buyers are seeking a steady supply of quality, reliable domestic production. Investing along agricultural value chains in irrigation, cold storage facilities, silos, and processing facilities also offers tremendous economic and social value.
HIGHLIGHTS OF INVESTING IN ROMANIA AND THE CEE REGION
Investing in agriculture in emerging markets can offer both significant capital appreciation and solid annual returns due to the lower cost of entry and additional potential for land / production improvements as compared to developed markets. Investments in Central and East Europe (CEE), including Romania, have an attractive risk / reward profile.
SOME POINTS TO CONSIDER:
- A stable climate and high quality soils makes CEE one of the three most attractive crop growing regions in the world.
- Land values are well below Western European levels and are expected to converge over time.
- The CEE is an attractive and relatively untapped market for agricultural products given unfulfilled domestic and increasing global demand.
- Labor costs in the CEE are well below those of Western Europe.
- The CEE benefits from a a stable regulatory and political environment given its EU membership; this includes protection of land ownership and title rights.
- There is a strong potential to increase productivity and yields through technology and best practices in order to overcome the prevalence of subsistence farming, land fragmentation, poor/aging storage infrastructure, inadequate irrigation and a lack of modern facilities and equipment.
- The CEE provides direct access to Western European markets, proximity to Middle Eastern markets, and favorable transport logistics due the quality of its roads, access to deep water ports, etc.