Investment in crop fields and food industry will exceed 2 billion dollars in 2023

The agri-food sector is vital in Spain because it monopolizes agriculture. It accounted for 9.2% of gross domestic product (GDP) and contributed €8,000 million as a positive balance to the trade balanceWithin the sector after exporting 35,000 million in 2022 agribusiness Various asset types are included. “On the one hand, farms or businesses engaged in agricultural production, everything related to olive groves, almond trees, woody crops such as avocados or pistachios and garden plants such as tomatoes, as well as the whole industry used in agriculture. Related to animal exploitation, forestry or rural recreational activities “We don’t include everything here,” he explains. Manuel Valadas of AlbuquerqueDepartment leader at a Southern European consulting firm.

Buying and selling of farms

There are currently 17 million hectares of crops in Spain, 76% of which is devoted to dry land and 24% to irrigation. About second country European Union with greater agricultural expansion. According to CBRE, the main crops are olive oil, almond trees and citrus fruits. Agricultural land is a market in high demand. According to the study in question, in the last six yearsOn average, more than 400,000 rural properties are processed annually. There were 234,000 transactions in the first half of 2023, 43% of which took place in Castilla y León, Andalusia and Castilla-La Mancha.

HE investment appetite of corporate capital Currently concentrated in these cultivated areas access to irrigation; those for rain-fed or agricultural production are traded only among local investors. A market with high demand. “Investment funds will only go where there is water: for example in Alqueva, Portugal or other parts of Andalusia or Badajoz. They also prefer large lands with woody crops such as hazelnuts, avocados, citrus fruits and subtropical fruits. fruits (red fruits) or olive trees, but these do not exclude horticultural fields,” says its manager agribusiness at CBRE.

Who are the main investors?

Albuquerque’s Manuel Valadas stands out Four investor profiles in the Spanish agri-food sector: Local citizens who purchase land in their own area, family office or special instruments that allocate part of the investment portfolio to rural areas, industrial companies and, finally, investment funds private equity (Private equity). Each of them participates in some part of the chain. “For example, private equity They are not buying land, but instead investing in the industrial part, genetics or technology,” emphasizes the CBRE manager.

The consulting firm’s research 900 mutual funds Active and expert in the agricultural-food sectorAlmost nine times more than in the early years of the millennium. “While Europe has seen its share of activity increase as both investors and managers explore the opportunities offered by its geography, North America continues to concentrate more than 50% of this investment. The Iberian Peninsula in particular plays a very important role due to its geographical climate, crop diversity, quality of its soils “They point out the efficiency of irrigation systems and the size of farms,” ​​they point out.

most repeated action it is in this industry buy and rent land from sellerIt is a type of transaction known as . sale and leaseback. Although the returns offered by these investments start from 5%, they can exceed 15%. “The least profitable asset is uncultivated land,” says Valadas de Albuquerque. While transactions made by pension funds and large insurance companies provide returns between 5 percent and 8 percent, land acquisition and operation by an operator can provide returns between 8 and 12 percent. In the case of investments where the protagonist is an investment fund private equityAccording to the CBRE report, the expected return on shares in companies operating in the agricultural sector can exceed 15%. Profitability in the case of leasing land is lower than in the case of leasing a producer; in this case risks associated with crops are assumed.

“The main option is to buy land with access to water and rent it to a producer. This is a very low-risk purchase, the value of which has increased significantly in recent years. There are two benefits, one of which is from renting. The value of agricultural land has increased by double digits annually in recent years “Although revaluation rates are not expected to be maintained, we anticipate a positive change, perhaps in the high single digits. No one invests to earn 4% on their own,” emphasizes CBRE’s agribusiness manager. The prices of these agricultural lands can vary between 30,000 and 100,000 euros per hectare.. “Uncultivated land with water rights usually costs between 30,000 and 50,000 euros, but for some plantations, such as avocados, this figure can reach or exceed 100,000 euros,” the manager concludes.