Darren Rabenou
Head of Food & Agriculture

The consequences of COVID-19 triggered global concern around food security. Even developed countries such as the UK worried about food shortages during the global lockdown because borders were basically closed. In some regions, such as the Middle East, there were concerns about the potential political unrest due to shortages and rising food prices. While the pandemic is a distant memory for some, the Ukraine war has brought food security front and center again. Many have forgotten that Ukraine is a large, low-cost food producer and considered the breadbasket of Europe. The US, on the other hand, has less to worry about given the size and the scope of its food market. That is not the case for people in a lot of countries that depend more on importing food, including G7 countries. The war in Ukraine has once again created a worry in places such as the Middle East and Africa. A good example is Egypt. Egypt is a primary importer of Ukrainian grain, so that is not only a worry for the local Egyptian government, but for the region, as well. Ukraine’s export markets include China, Europe and Africa.

The private sector is a key catalyst to supporting food security. Growth capital has a role in investing and promoting new food ideas. For example, protein-based food alternatives such as Beyond Meat — a plant-based, vegan meat — are typically initially funded by the “venture community”. The venture community also invests in food technology, such as agriculture technology, drones and robotics on the farm, or water technology. Infrastructure capital, however, is really the most important capital source here, and I think that is not reported as much because growth equity capital typically invests in “cooler” ideas. Growth equity and venture capital are investing in very innovative type ideas, but for many cases, innovations don’t work well. Infrastructure capital is what brings size and scope, has long-term impact and brings down costs. Long term, it is this type of infrastructure capital — not growth equity — that will bring down the cost of food in scale. Food investing only works when there is an endgame that supports scale and lower costs. Investing in a new apple variety or a citrus variety only works if there is enough demand for it that it brings down its unit costs. Consequently, the cost goes down and can be competitive from a production perspective.

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