As sustainability, precision agriculture, and ESG ideas reshape the agribusiness panorama, stakeholders throughout the worth chain are grappling with how you can adapt — and make investments — properly. From evaluating the true ROI of sustainability, to overcoming boundaries in ag tech adoption, Jim Clark, Managing Companion at Granite Creek Capital Companions, gives a candid perspective on the place the business is headed.
ABG: Sustainability is a key focus in agribusiness, however measuring its influence might be difficult. What particular metrics or standards ought to firms use to guage their sustainability practices earlier than searching for funding? And will you share an instance of how ESG components have influenced funding traits within the business not too long ago?
Jim Clark: Granite Creek has two methods in agribusiness. We spend money on working firms, basically non-public fairness, and we additionally handle a fund devoted to row crop farmland. We at the moment personal  round 8,000 acres within the Higher Midwest, primarily rising corn and soybeans.
On the non-public fairness aspect — the industrial enterprise aspect — ESG hasn’t been a high precedence thus far. We’re conscious of it, but it surely’s not a core a part of our funding standards. That mentioned, lots of the companies we pursue or have invested in do promote farm-level effectivity. They help higher useful resource administration, yield enhancement, and waste discount. Whereas these aren’t strictly ESG metrics, they’re adjoining and complementary to ESG practices.
Nonetheless, a lot of the concentrate on these goal enterprise attributes come from the angle of serving to farmers enhance their backside line. If the associated ESG advantages come up as a byproduct of those services or products, that’s a bonus.
On the farmland funding aspect — below our funding entity known as Moraine Farmland Companions — we do have extra express ESG advantages. These primarily take the type of different vitality integrations. Presently, about 40% of our holdings embrace both wind or photo voltaic vitality elements, with photo voltaic being extra distinguished.
Jim Clark
Moreover, we make efforts to observe USDA protocols concerning conservation. Sure areas of our land are left fallow to help native species — like butterflies and bees — and the USDA gives incentive applications to keep up these pure habitats as they align with improved pollination and soil conservation.
ABG: With the fast progress of ag tech improvements, which particular applied sciences do you consider are poised to have essentially the most vital influence on agriculture in 2025?
JC: From what we’ve seen, there’s been a noticeable uptick in innovation round livestock know-how, notably in wearables. These can embrace ear tags, collars, or different gadgets geared up with biometric monitoring capabilities to trace the well being and exercise of animals throughout varied farm settings.
Trying forward, we count on additional integration of those wearables with farm administration techniques, together with direct tie-ins with native on-farm gateways. For these applied sciences to be actually efficient, farmers, service suppliers, and {hardware} builders should prioritize which knowledge to gather, when and the place to seize it, and the way greatest to course of and current it.
In the end, the aim is to synthesize that knowledge into actionable insights that assist farm house owners, managers, and advisors make knowledgeable choices. Whereas the ecosystem is enhancing, delivering knowledge to clients in a related, usable format continues to be very a lot a piece in progress. It’s evolving, however we’re seeing optimistic momentum.
ABG: With vertical integration gaining momentum throughout the ag provide chain, how do you see this development reshaping the business? And what components ought to firms think about when evaluating whether or not to combine extra facets of their operations?
JC: This can be a material the place our perspective could also be considerably restricted, given the character of our investments. On the non-public fairness aspect, Granite Creek primarily invests in smaller companies, usually these with revenues between $25 million and $100 million.
At that dimension and scale, the chance to pursue vertical integration is extra constrained. The businesses we spend money on typically lack the scale and assets wanted to tackle a number of segments of the availability chain successfully.
We are inclined to see vertical integration play out extra amongst bigger gamers out there with the size and infrastructure to handle a number of levels of manufacturing, processing, or distribution. Given the place we focus our funding efforts, most of our portfolio firms aren’t at the moment positioned to pursue vertical integration in a significant manner.
ABG: Agribusinesses typically wrestle to steadiness the long-term returns from sustainable practices with the necessity to display short-term monetary efficiency. How do you see firms managing this rigidity?
JC: We’d agree that sustainability, whereas a rising precedence, is usually seen as a longer-term aspiration. The monetary return from sustainability investments is usually oblique and tougher to measure, particularly on a farmer’s revenue and loss assertion.
And that creates some skepticism amongst farmers. If the advantages aren’t clearly seen or measurable, individuals begin asking, “What am I actually getting out of this?”
This rigidity has been exacerbated by declining farm margins lately. With income tightening, any strategic initiative — sustainability-related or not — wants to indicate a transparent, near-term return on funding to get severe consideration from farmers, ranchers and different agribusinesses within the worth chain.
That mentioned, there are sustainability practices that may drive effectivity, cut back waste, enhance product high quality, and even command a premium worth from downstream companions. When these advantages are clear and quantifiable, such initiatives can and shall be prioritized within the brief time period.
Nonetheless, in lots of instances, the market or downstream companions haven’t but acknowledged or proven a willingness to pay for these added sustainability advantages. Because of this, these initiatives typically get pushed down the precedence listing and deferred to a future time when the financial incentive is stronger.
ABG: How ought to firms strategy threat administration when it comes to environmental and social governance? What key issues ought to agribusinesses take note when integrating ESG into their company methods?
JC: One of many challenges with ESG in agribusiness is that environmental and social governance considerations are sometimes regionally pushed. A enterprise operation in a single geography or state might face very completely different points than an operation in one other, so threat administration should be tailor-made to native realities. Once we have a look at our portfolio firms, we concentrate on how administration and possession perceive their influence on their fast setting and neighborhood — each the place merchandise are manufactured and the place they’re finally used within the discipline.
We actively encourage our firms to make proactive investments in areas like course of controls, customary working procedures, enhanced high quality administration techniques, and data techniques. Accountable byproduct and waste administration can also be a key focus. These are all matters we focus on repeatedly on the administration and board ranges.
We’ve seen — each in our personal firms and throughout the broader market — that if there’s a breakdown or mismanagement in any of those areas, the results might be severe. You possibly can lose a buyer’s belief, and that impacts not solely short-term gross sales and income but in addition long-term enterprise prospects. Rebuilding that belief can take a really very long time.
So, there’s a powerful incentive to get these operational and course of controls proper. Past being a great company citizen and safeguarding your fame, investments in ESG-related processes typically have the additional advantage of sustaining or enhancing monetary efficiency. That makes it simpler to justify and help them throughout the group.
ABG: As precision agriculture and knowledge analytics proceed to develop, what do you see as the largest boundaries to adoption on the farm stage? How can business stakeholders, together with funding companies, assist speed up the widespread use of those applied sciences?
JC: One of many greatest adoption challenges is the fragmentation of the agricultural market —regardless of consolidation traits, there are nonetheless many unbiased operators, making consciousness and outreach troublesome. Farming is usually a lower-margin enterprise, so upfront and ongoing tech prices generally is a barrier. Knowledge privateness is one other concern, as many farmers are uneasy about the place their knowledge goes and who can entry it. The dearth of standardization throughout farm administration platforms additionally provides threat, as selecting the incorrect system might be expensive. Lastly, the time and labor required to coach workers and combine new know-how pushed instruments is a significant hurdle for already stretched operations.
ABG: Given these challenges, how can stakeholders, like funding companies, authorities companies, and personal firms, assist help broader adoption?
JC: First, we have to handle infrastructure reliability. These techniques rely closely on fiber optics, broadband, and satellite tv for pc protection. If farms don’t have dependable web, the effectiveness of those instruments is straight away compromised.
Second, the ag tech business should discover methods to scale back the price of use. Whether or not by driving down the worth of adoption or subsidizing early implementation via authorities or non-public help, there must be a technique to ease the added monetary burden on farmers.
Subsequent, we have to promote standardization and simplification. If there’s a transparent, dominant platform—or if the tech turns into extra user-friendly via open-source fashions or refined interfaces—then adoption will probably improve.
Lastly, and maybe most significantly, we’d like extra proof of idea of those thrilling applied sciences. Farmers wish to know: Does it work? Will it pay for itself? Meaning investing in college and personal analysis trials, establishing facilities of excellence, and leveraging peer-to-peer advertising and marketing. Farmers belief their friends greater than they belief a gross sales rep from an unfamiliar firm. If early adopters can communicate credibly concerning the worth of those applied sciences, others shall be way more prone to observe.
In any business, however particularly in agriculture, phrase of mouth from trusted friends carries extra weight than firm messaging. That belief is vital to accelerating adoption.
