Finding value where others don’t
Land Commodities’ pursues an opportunistic acquisition strategy both in terms of choice of geographical region and specific asset selection. We continuously review our acquisition strategy as market conditions change, but we tend to avoid farms or localities that are currently attracting a lot buyer interest. We prefer farms where the value is less obvious. These are farms with good fundamentals, but which may not be achieving their potential for one reason or another.
Examples of farms you might find us focusing on more than the average buyer are:
- Farms in underperforming regions – The farmland market in any given region is cyclical, primarily based on seasonal conditions. After consecutive poor seasons more owners will be forced to sell and fewer local farmers will be able to finance additional land purchases. Looked at over short time periods, this can provide the false impression that the region is an underperformer. Long-term analysis usually demonstrates that recent performance is rarely representative of the long-term trend or likely future performance.
- Farms with sub-potential management history – Historical data such as yield records, fertiliser history and soil analysis form an important component of the decision making process for farm buyers. This makes perfect sense, but this data is not always representative of a farm’s true potential. For example, in the case of cash strapped farmers, past data can be quite misleading.
- Farms that present badly – For one reason or another, farmers can fall behind with improvements and maintenance. This can put buyers off and these properties can often be acquired at an attractive discount. This is despite the fact that these issues can usually be remedied relatively easily and at a cost well below the acquisition discount that can be achieved.
Land Commodities has the experience and expertise in the markets in which we operate to see through these cosmetic or transitory factors. Our analytical models are calibrated with agronomic and production data taken from hundreds of local farms over many years of operation. This rigorous quantitative approach allows our clients to identify value where others may miss it.