Layoffs at John Deere blow up investment thesis on food shortages; US farmland to see liquidation
Venture Capital and Private Equity firms poured tens of billions of dollars were poured into shares of farm equipment makers, fertilizer companies, and even indoor vertical farms and cropland. Conventional wisdom was that these were very safe investments that would yield outsized returns as the world struggled to feed itself over coming decades.
That investment thesis has now collapsed, amid plunging global food prices and soaring farm productivity. The ag sector of the developing world produced record crops, and did so without the expensive equipment produced by major Western farm equipment makers, such as John Deere and Case New Holland.
As VC and PE firms are now seeing double-digit annual declines in cash flows from their investments into the agriculture theme, we should expect them to sell their positions, and return to tech sector investment.
Resources and links:
Deere Announces More Layoffs
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John Deere announces another round of layoffs, this time of 287 workers in Quad Cities
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Barrons, World Hunger Is on the Rise. These Companies Have Solutions.
Politico, The world food crisis is about to get worse
McKinsey, A reflection on global food security challenges amid the war in Ukraine and the early impact of climate change
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Who Will Feed China?: Wake-Up Call for a Small Planet (Worldwatch Environmental Alert)
Bill Gates Increases His Stake in Deere to More than 10%
Investment firms are buying more farmland
Reuters, Investment funds stocking up on US farmland in safe-haven bet
Average Chinese national now eats more protein than an American: UN food agency
China factory sourcing website:
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