Agricultural Investing
February 02, 2023
In this episode of Engaging Alternatives Spotlight, Elana Margulies-Snyderman, Director, Publications, EisnerAmper, speaks with Shonda Warner, Managing Partner, Chess Ag Full Harvest Partners, an asset management firm focused on agricultural investment opportunities. Shonda shares her outlook for agricultural investing, including the greatest opportunities and challenges, her experience being a woman investment manager in the industry, how the firm is embracing DEI and more.
Transcript
EMS:
Absolutely. So to kick off the conversation, tell us a little about your firm and how you got to where you are today.
SW:Well, my firm started in 2006, but I actually was born into a farming family, so I grew up doing everything that needed to be done on a farm. When I finished university, I went to work for Cargill as a grain trader, so commodities and agriculture are in my blood. I took a little detour as a proprietary trader for Goldman Sachs, but in 2006 I decided to come full circle again after I guess probably 20 years away, and set up an agricultural asset management company. Take all that experience in the financial world and all that experience in the agricultural world and blend those two things together.
EMS:Great. So Shonda, given your focus on agricultural strategies, I would love to hear your outlook for the space.
SW:Right. It's such an interesting time right now. I think that the space is receiving more focus than ever. With the pandemic supply chain disruptions and with the climatological disasters that we're seeing all over the world, all of a sudden the food that people normally expect to be on the grocery store shelves isn't there and they're asking a lot more questions about why and what's happening and will this continue.
EMS:Shonda, more specifically, where do you see some of the greatest opportunities and why?
SW:I think that there's opportunities all over the place. I think that they have to start on the investment side of things with the least sexy investment, but it's the most important investment, and that is the investment directly into farmland or farming itself. I say that because last year $52 billion went into ag tech and this year I think we're on chorus for another huge amount of investment in ag tech. And ag tech really isn't relevant if we can't grow food. If farmers aren't working and if we're not farming our farms, ag tech is there as a support to make our jobs more efficient and easier to do, less labor intensive, things like that. But I think that it's imperative right now that we all sit back and think about what's happening. What are the implications of it? Where is there good water that's likely to be unaffected in the next 5, 10, 15 years? We can guess further out than that, but it's much more difficult. And are we growing the food that has the highest nutritious impact?
I think that that second question is a question that really nobody's been asking themselves for a long time. So we find investment opportunities in answering those questions and then implementing those answers. So for instance, where can we grow nuts and berries where we ... Hazelnuts are a very interesting subject. The price has been very volatile lately, down this past season, but they use 70% less water, a hazelnut does, and it's full of protein and fairly easy to grow. So making decisions when we look at a piece of land and say, "Gee, shall we grow grass seed or should we grow hazelnuts or what should we grow here?" Diversification's very important, but also I think what the highest and best nutrition usage for those acres are is something that doesn't get a lot of attention and maybe should.
EMS:Shonda, to shift gears a little bit, on the other hand, what are some of the greatest challenges you see and why?
SW:Well, the big challenges are obviously the weather. We can try and stay away from hurricane zones and earthquake zones and wildfire zones and everything else, but we could still be wrong. So that's a massive challenge. We could expect rain because it's rained between let's say 20 and 45 inches every year for the last 80 years, and next year it could rain eight and mess up our plans. So I think that one thing that's worthwhile for people to bear in mind if they're thinking about investing in ag, and I think it's a wonderful thing to invest in anyway, is that diversification is one of the best risk mitigation tools you could possibly practice.
EMS:Shonda, being a woman money manager is such an inspiration in this business, and I'd love for you to share your experience in this role and what you're doing to inspire others.
SW:It's been an interesting ride. I'll say that. It's perhaps less welcoming to women in general than even Wall Street was back in the '80s and that's saying something, but we all have our passions and I love growing things. So you just put your head down and you grit your teeth and you roll forward and you find the cool people out there who don't care who you are. If you're interesting and have useful discussion and useful things to add, they want to talk to you. And make those your friends and colleagues and work world. I would like to inspire obviously more women and more minorities actually to start to farm for a variety of reasons.
One, on the women's side of things, just because we're 50% of the population makeup and we have a lot to add and we see things in a different way. And sometimes that helps when you're growing plants. We spend a lot of time teaching all the women who work for us to use every implement and drive large machines and all sorts of things that they typically wouldn't be able to do if they were working on the average farm in the United States. So that's fun, and women tend to work with us, especially ones that are very interested in doing all those things.
I would say on the minority side of things, there's so many people of every different color and persuasion and religion in this country, we are a world's great melting pot, and the variety of food that's available in the US is astounding. A lot of that food is imported. I think it's so much fun to grow some of those interesting Middle Eastern vegetables or South American potatoes or the diversity of food is so much broader than what we have been experiencing for a while. Actually, today I'm at a farm in Idaho and one of their specialties is they grow purple barley, and apparently it tastes amazing that I can't wait to taste some later this afternoon. So I think that more people coming from different parts of the world together in our weird melting pot country have a lot to bring to the table in terms of interesting foods that we could grow and add to our diets.
EMS:Absolutely, Shonda. We covered a lot of ground today, so I wanted to see what your future plans are for the firm.
SW:Well, we just continue to farm and we do some processing and manage money for some folks and try and be interesting and nimble and thoughtful about it. And everybody, the hot word is regenerative ag. That's a new word for us. But we've been using cover crops and practicing no-till for 20 years. So I guess for us we like to call it thoughtful farming. Sometimes it's organic, sometimes it's conventional. It depends on the environmental burdens that you ... If you're in a high humidity, hot weather, it's hard to manage the pests, so you can't really do organic. So we are agnostic and pragmatic, but we really care about continuing to build soil quality and plant diversity and biodiversity for animals and plants that are around our fields. I guess that's what you'll find us doing going forward.
EMS:Shonda, I wanted to thank you so much for sharing your perspective with our listeners and thank you for listening to the EisnerAmper podcast series. Visit EisnerAmper.com for more information on this in a host of other topics, and join us for our next EisnerAmper podcast when we get down to business.
Transcribed by Rev.com
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