Idea Agro bets on future's agriculture
Exclusive interview with the fund administrator, Pier Felice Murtas
The Idea Agro investment fund, managed by Dea Capital Alternative Funds with the support of the advisory firm Ettore Fieramosca, specializes in selecting promising opportunities in the agricultural / agro-industrial sector, with a greenfield approach in some cases, i.e. starting from scratch. In other words, the fund directed by Pier Felice Murtas, which has raised 110 million by investing about half of it at the current date, in selected cases starts with the purchase or long-term lease of the land and then proceeds with planting and provisioning. of the structures necessary for the construction of the plant. After two or five years, depending on the type of cultivation, we move on to production. In this it is very similar to infrastructure investment funds. It is no coincidence that the fund has a declared life of 15 years, compared to ten of the market average for closed-end funds, which makes it an instrument suitable for institutions by definition projected over the long term such as pension funds and insurance companies, not for case among the major investors in agriculture and viticulture. The advantage, however, is very tight quality control, right from the earliest stages of project development. So far four of the seven investments of the fund (the others have been purchases of majorities or minorities in existing companies) have followed this approach, albeit in very different product categories, namely olives (Atena), walnuts (Agro Noce), hazelnuts (Agro Nocciole) and SunGold kiwifruit (Agro Gold), in Italian territories ranging from Piedmont to Lazio, and from Tuscany to Emilia Romagna. EFA News has explored some aspects of this modus operandi with Murtas.
Efa: You have invested in different products, territories and cultivation intensities. Is there a factor that unites these initiatives?
Murtas: The development of agro-industrial initiatives in market segments characterized in Italy by sustained demand and limited supply. The goal is to immediately insert the productions into a transformation or marketing process. The main concept is that of the supply chain, but taking quality control as a reference and therefore also the reliability of the product, especially in terms of health protection. For yields we do not place ourselves at very high levels at the expense of quality. We are oriented towards medium-long term sales contracts which are also linked to production costs.
Efa: In this regard, you will be Ferrero's suppliers as part of the Italian Hazelnut Project. Since the giant from Alba has strong needs in terms of supply, I imagine that the supply includes minimum volumes.
Murtas: No, there are no minimum production requirements. Ferrero has committed to buying 75% of our hazelnuts for 15 years at a price, as I mentioned before, which takes into account production costs. We have no particular needs in terms of economies of scale.
Efa: However, hazelnut cultivation is a bit of a special surveillance, also the subject of recent controversies due to the high environmental impact, especially in terms of water consumption and use of pesticides. Furthermore, in the world of finance, the issue of sustainability is strongly emerging. How will you respond to this challenge?
Murtas: These problems are felt above all in the Viterbo area, given the high intensity of cultivation in that area. In our case, yields will be in line with market standards, production will focus on the Giffoni variety, which tends to supply about 3 tons per hectare per year. Furthermore, the lands of Agro Nocciole are in the province of Alessandria, therefore not in the traditional area of Alba, and the plants will take the place of pre-existing and disused crops, especially old cherry trees. I add that the care and protection of the plants will make use of organic products and methods, the availability of which has greatly increased compared to even a few years ago. The Samurai wasp, which feeds on the eggs of the Asian bug, is just one example of a possible natural fight against insect attacks.
Efa: Moving on to walnuts, Agro Noce will focus on the Lara and Chandler varieties. The latter is the most widespread in the world, and stands out among other things for its rather high yields. Since you will sell the production to a company that also produces snacks, the New Factor, don't you fear downward pressure on margins?
Murtas: Chandler's world production is high mainly due to the contribution from California, but it produces a large part for the Chinese market. But to transport walnuts over large distances, it is necessary to dry them more, to the detriment of quality. The Agro Noce plant is located in the province of Ferrara, and the New Factor is from Rimini, so we are not very far from kilometer zero. Furthermore, Italy produces only 15% of the needs. Prices are not a cause for concern in the medium term given the orientation towards local quality.
Efa: Turning to olives, Athena will develop a high-intensity olive grove on approximately 250 hectares on the border between Tuscany and Lazio. What opportunities have you seen in this market?
Murtas: The shortage of organic oil on the Italian market. The olive grove will produce 90% olives for pressing, and the remaining 10% table olives. The development of the crop will be based on the Livita Plus model, a plant construction method developed by the Buccelletti family, our operational partner in the operation. Production will be around 30,000 quintals per year on the current land.
Efa: And who will the production be sold to, remaining within the supply chain perspective?
Murtas: The contract with Ferrero is a bit of a unique case, it is not applicable in general. We have discussions with some medium-large oil producers. We are oriented towards three-year supply contracts.
Efa: Your most recent investment is Agro Gold in partnership with Agrintesa, for the cultivation of the yellow Sungold kiwi. How was the initiative born?
Murtas: It is a product that in New Zealand has surpassed the green one because it is sweeter and softer and therefore also pleasing to children. In Italy the availability is very low and the prices are about double compared to the classic green variety. Another arrow to its bow in Italy is that it recalls the idea of the exotic fruit.
Efa: You still have about 30 million to invest. In what direction do you plan to direct them?
Murtas: First of all in the expansion of existing plants. For example we are evaluating the extension of the olive grove of 200 hectares. In the medium term we are thinking of initiatives such as technological greenhouses that would allow the use of abandoned areas around cities.
EFA News - European Food Agency