Business

Global pressures on food production and why family offices are meeting the challenge

Since the Russians invaded Ukraine in January, wheat and barley prices have soared. Ukraine has warned that crop sowing will halve this spring, as a result of the fighting. The United Nations has warned of a “hunger hurricane” with Russia and Ukraine together accounting for half the world’s sunflower oil and 30% of its wheat. 

Agriculture is also being hit by weather extremes, as the world teeters on the edge of catastrophic climate change. Food security has become a big talking point.

Animal farming is facing its own challenges, as a result of growing distaste over the way livestock is slaughtered.  Activist Carl Icahn is currently involved in proxy battles at Mcdonald’s and supermarket chain Kroger over the way they profit from the suffering of pigs

Film and sports stars often sympathise with the green lobby and Robert Downey Jr, who plays Iron Man in the Marvel film franchise, has gone one better by creating a sustainable investment office. 

There is no shortage of opportunities for family offices to boost food production and develop alternatives. The ownership of farmland in locations less exposed to climate change could also work nicely for landowners, particularly Bill Gates, who has acquired 242,000 acres across nineteen states through his family office, Cascade Investment. 

Agricultural technology has developed to serve the farming sector, incorporating robotics, and, more recently, pollination ventures like Beeflow and BeeHero which use AI to care for honey bees.  

As well as farmland, however, Bill Gates has invested in meatless meat companies like Beyond Meat and Impossible Foods. New strains of food tech are becoming a key investment theme for today’s savvy investors, not only because it is creating innovative technologies but also because of its positive societal impact. Every year investors drill deeper into the science which lurks behind the food chain. 

Older-established ventures are trying to crack mainstream markets, although they are finding it is tough to compete with established food manufacturers and sophisticated newcomers. 

According to PitchBook, VC firms invested more than $39 billion into food tech companies in 2021, double the previous year. And family offices are keen to back the science which lies behind them, including protein harvested from cells, rather than animals. 

Several of them have been profiled by Family Capital. They include Jeremy Coller’s CPT Capital, a strong supporter of animal rights; Lukas Walton’s Builders Vision and Nat Simon’s Prelude Ventures

The Losa Group, a central American family office managing the wealth of the Bosch Gutiérrez family, invested in BlueNalu, a Californian food production company in January 2021. BlueNalu’s mission is to become the global leader in cell-grown seafood. Another of its investments last year was Israeli plant-based meat start-up, Redefine Meat, which uses 3D printing technology to create synthetic meat.

The majority of family offices invest in alternative foods on a more occasional basis, often with the encouragement of their next generation. Bio-engineered foods, based on proteins, are on the rise, along with family-backed businesses which specialise in the broader food science sector.

Robert Downey’s Footprint Coalition, started in 2021, is a relatively new arrival. Its venture capital arm is seeking out companies developing new technologies to boost the environment, and a non-profit business. Last year, it invested in Nobell Foods, which has developed a technology to use soybeans to genetically make casein – the protein that gives cheese its distinctive taste and texture and provides relief to individuals who are lactose intolerant.

Footprint has also invested in French insect farming startup Ÿnsect which raised $224 million in 2020 to expand in the US through the purchase of Jord Producers.

The vertical farms run by Ÿnsect use proprietary technology to produce Molitor and Buffalo mealworms, used to feed anything from pets and animals, as well as individuals with a penchant for insect protein. like Downey Jr.’s Footprint Coalition, like other sustainable investors, appreciate the fact that Ÿnsect’s operating model is carbon negative. 

Another of its investments – highlighting the vast scope of investment opportunities within Foodtech – is Wildtype, which has developed a way of harvesting cells to make cellular salmon using the same fermenters used by craft beer producers. It’s a novel way to tackle ocean degradation, plastic pollution and general environmental damage, while producing a product that Wildtype claims is ‘sushi-grade’. 

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