Obstacles to Farm Capital Investment

In stark contrast to the record real capital investment in computers and electrical equipment, real capital investment for other sectors that matter more to trucking companies from a freight generation standpoint are performing dismally so far in 2025. Two charts below. Thoughts: •The top chart shows real agricultural equipment investment. Investment was down 20% year-over-year in Q1 2025 and 14% in Q2 2025. These are two of the weakest readings over the last 18 years (data stretches back to Q1 2007). The most recent investment peak occurred during 2021 and 2022 when commodity prices for corn and soybeans were far stronger. Farmers today face many challenges including (i) China’s reluctance to purchase new crop soybeans that are about to be harvested; (ii) low commodity prices (outside of slaughter cattle); and (iii) labor availability due to changes in immigration enforcement. All these factors bode ill for domestic farm equipment producers like John Deere, which is made more problematic because tariffs are substantially raising manufacturing costs (making US exports of farm equipment less competitive). •The bottom chart shows real capital investment for mining & oilfield machinery. Despite repeated statements of “drill, baby, drill”, capital investment has fallen in 2025. Q2 2025’s reading was particularly bad, coming in a -27% year-over-year. Low crude oil prices, more OPEC production, and oil drillers increasingly focusing on return on investment (as opposed to sinking as many wells as quickly as possible like they did in 2011-2014) mean that we won’t ever see the type of capital investment in this equipment that we did 11 years ago. Furthermore, on the mining front, coal mining certainly isn’t a growth sector (output today is down 25% from 2017 and down 50% from 2006: https://lnkd.in/gBG-MMA6). Implication: one observation that fascinates me is how many people believe a change of the resident of 1600 Pennsylvania Avenue can somehow change the workings of underlying economic mechanisms. People can throw out slogans like “drill, baby, drill”, but at the end of the data, fundamental economic mechanisms and principles drive outcomes. For firms like trucking companies trying to forecast demand, don’t let political biases get in the way of economic reality. For example, back in December and January, I was one of the few commentators who predicted how detrimental major tariffs would be to what we all thought would be a much stronger year in the for-hire trucking sector. Other commentators disagreed. It turns out I was far more correct than the pro-tariff perspective ended up being. Why? Because my predictions are grounded in underlying economic theory and empirical findings, whereas the other perspective wasn’t. If people can’t provide multiple peer reviewed studies to support their predictions, it’s troubling to say the least. #supplychain #shipsandshipping #freight #trucking #truckload #economics

Who Controls the Land Controls the Future of Farming Lack of land access is another of the main obstacles to regenerative agriculture in Europe. Farmers who want to build soil health, restore biodiversity, and farm in a way that benefits both people and the planet often face an impossible hurdle: they don’t own the land they farm - or they can’t afford to buy it. Why Access to Land Is the Problem 📈 Farmland prices differ significantly across Europe, but are rising throughout. In 2022, the cost of a hectare of arable land ranged from €3,700 in Croatia to €233,230 in Malta. England and Wales hit record highs in early 2024, driven by speculation, government funding, and private investment in environmental schemes. ⏳ Leases are too short for long-term stewardship. In Ireland, 91% of rented farmland is under 11-month (!) “conacre” agreements. In Finland, nearly 40% of leases last just five years. If you don’t know if you’ll be farming the same land in a few years, why invest in soil restoration or agroforestry? 🏦 Investment is a double-edged sword. There's a significant rise in institutional money flowing into farmland, partly to support regenerative agriculture. But this also drives up prices and consolidates land ownership, making it even harder for small farmers and new entrants to get a foothold. What good is ecological regenerative management if it erodes the social fabric of the place? What are the Opportunities for Change? ✅ Stronger lease protections. France’s Statut du fermage mandates minimum 9-year leases, giving tenant farmers stability to invest in soil health. Similar policies across Europe would make regenerative agriculture a viable long-term choice. ✅ Tax incentives for long leases. Ireland offers tax breaks for landowners leasing for 5 to 15 years or more. The U.S. has similar programs under its Conservation Reserve Transition Incentives Program (CRP-TIP). These strategies work. ✅ Community and cooperative land models. Across Europe, innovative land ownership structures are breaking the cycle of speculation and exclusion: Lenteland (Netherlands): Community-owned cooperatives steward farmland regeneratively. Terre de Liens (France): Buys farmland and leases it long-term to sustainable farmers. Regionalwert AG (Germany): A citizen investment model funding regional organic farms. And the new Land Stewards (Italy): A program by regenerartive farmers for regenerative farmers to purchase land together. Regenerative agriculture is about more than cover crops and no-till. If we want a resilient, regenerative food system, we need to think about ownership, access, and incentives. What models are working in your region? From private initiatives to national policies to cooperative models, we have many solutions already. Let's list them below. (Photo below of Herberto Brunk's beautiful Herdade das Escravides de Baixo in Portugal)

Africa does not have an agriculture problem. It has a trade finance problem. That was one of the clearest insights from my recent conversation with Oluwadara Adekunle, Managing Partner and CEO of Farmties Capital Limited, on the Unlocking Africa Podcast. Africa produces globally competitive cocoa, cashew, coffee, shea and tea. Demand from North America and Europe is not the constraint. The real bottleneck is working capital, trade infrastructure, and financing that actually matches how agricultural trade works. As Dara shared… “If you increase productivity and then you are experiencing 30 to 50 percent loss because of poor post harvest practices or lack of access to markets, then why are you really increasing productivity?” In this episode, we discuss why the often quoted 100 billion dollar trade finance gap continues to hold back African agricultural SMEs, even when they have confirmed export orders and buyers waiting. Dara shared a great example from her experience on the ground… “I visited a cashew processing factory during harvest season. They had demand from North America, the contracts were there, but the factory was shut because the bank loan had been pending for months.” This is not an isolated story. It is systemic. We also explored how FARMTIES Fund I, a 50 million dollar profit sharing trade finance fund, is taking a different approach by financing transactions rather than balance sheets and acting as a long-term partner instead of a short-term lender. As Dara put it… “Can we be that friend? Can we be that trusted partner that provides revolving working capital so agribusinesses can fulfil trade and grow?” We discussed: • Why Africa’s challenge is not production, but capital that does not fit agricultural realities • How working capital linked to confirmed export orders unlocks repeatable growth • Why African agribusiness risk is often perceived rather than real • What makes an agribusiness truly investment ready and trade ready • How blended finance and technical assistance reduce risk in practice • Why inclusive and gender focused value chains are commercially smart One insight that stayed with me: “Investing in women is the lowest risk you can take. Research shows it, and practical experience shows it.” This episode is essential listening for founders scaling exports, investors curious about Africa, policymakers serious about moving from aid to trade, and anyone interested in Africa’s role in global food security. Africa’s growth will not be unlocked by pilots or promises. It will be unlocked by finance that works for Africa’s real economy. ⬇️ Listen now, link in the comments below ⬇️ #AfricaTrade #Agribusiness #TradeFinance #AfricanSMEs #ImpactInvesting #GlobalTrade #Podcast

Financing Agricultural Trade in Africa: Challenges and Opportunities Agriculture is the backbone of many African economies, contributing to 23% of sub-Saharan Africa's GDP and employing more than 60% of its population. 1. Challenges in Financing Agricultural Trade a. Limited Access to Credit: One of the biggest challenges facing African farmers and agribusinesses is the lack of access to credit. Financial institutions often view agriculture as a high-risk sector due to factors like unpredictable weather, volatile commodity prices, and insufficient collateral. As a result, only 6% of total commercial lending in Africa goes to the agricultural sector. b. Lack of Financial Infrastructure: Many rural areas, where agriculture is most concentrated, have limited access to formal banking and financial services. With 57% of Africans unbanked, smallholder farmers are often forced to rely on informal sources of financing, which can be unreliable and expensive. c. Climate Risks: Africa’s agriculture is heavily dependent on rain-fed farming, making it vulnerable to climate change. Droughts, floods, and other climate-related events can devastate crops and reduce the ability of farmers to repay loans, increasing the risk profile for lenders. 2. Opportunities in Financing Agricultural Trade a. Digital Financial Services: The rise of mobile banking and digital financial services offers a promising solution to the financing gap. Platforms like M-Pesa in Kenya and EcoCash in Zimbabwe allow farmers to access loans, insurance, and payments via their mobile phones. According to the World Bank, 38% of adults in sub-Saharan Africa now use mobile money, providing a platform for innovative financing solutions for the agricultural sector. b. Agricultural Value Chain Financing: This model involves providing financing to all actors along the agricultural value chain, including input suppliers, processors, and exporters. Value chain financing reduces risks for financial institutions by leveraging the relationships between these actors, ensuring that loans are used efficiently and repaid. c. Blended Finance: Blended finance, which involves combining public and private capital to reduce investment risks, is becoming an increasingly popular approach to financing agricultural trade in Africa. In 2020, the African Development Bank (AfDB) launched the Africa Agriculture Transformation Fund (AATF), which mobilizes public funds to attract private investment in agriculture. This fund aims to raise $500 million to support agricultural value chains, boost productivity, and promote exports. Conclusion Financing agricultural trade in Africa presents both challenges and opportunities. While limited access to credit, underdeveloped financial infrastructure, and climate risks hinder the sector’s growth, innovative solutions like digital financial services, value chain financing, and blended finance offer hope for the future.

In the fancy offices of Bangalore and Gurgaon, "convenience" is the ultimate product. We’ve become obsessed with shaving minutes off grocery deliveries or outsourcing our chores. Naturally, many VCs look at rural India and think: "If urbanites pay for time, farmers will too." But after years in the ecosystem, I’ve realized this is a fundamental misunderstanding of the rural economy. Rural India doesn't need "servant innovation"—apps designed to do for farmers what they can already do themselves. It needs service innovation—access to life-changing technology that is currently stuck behind a massive paywall of upfront costs. The urban "Quick Commerce" model works because time is our scarcest resource. But in a rural setting, the household economy is built on "labor-for-self." A farmer doesn’t view a trip to the local market or hauling a manual sprayer as an "inefficiency" to be outsourced at a premium; it’s part of the routine and culture. When we try to sell "convenience" to a farmer, we are selling a luxury. Farmers aren't looking for a "servant" to fetch their inputs; they are looking for leverage to increase their yields without taking on the crushing weight of a loan. The real barrier in Indian agriculture isn't a lack of ambition—it’s the price tag. A solar irrigation system can cost upwards of ₹3-4 Lakhs. For a smallholder farmer with two acres, that’s not an investment; it’s an impossibility. If you look at any village, you’ll see that "rental" is already the heartbeat of the farm. Nobody owns a harvester; they rent it. The most successful tools used at scale today—from tractors to brush cutters—are those available on a per-hour or per-acre basis. Yet, while q-commerce companies raise billions, these rental models—the ones that actually solve the capital problem—rarely get the funding they need to scale. At Oorja, we aren't just selling equipment; we are providing Solar-Irrigation-as-a-Service. We realized that a farmer doesn’t need to own a solar pump; they just need affordable water. By removing the upfront cost, we’ve brought clean, reliable irrigation to over 50,000 farmers. * Zero debt: No loans, no interest. * Pay-per-use: They pay only for the water they use, season after season, crop after crop. * Shared Risk: We own and maintain the tech; the farmer focuses on the harvest. This model lowers irrigation costs by 20-60% compared to polluting diesel pumps. It’s not a one-time transaction; it’s a long-term partnership with the land. That's the power of 'Pay-per-use". As COO, my goal is to scale this brand of "Service Innovation." We need to stop pitching "convenience" to people whose primary challenge is "capital." The future of rural India lies in access to technology, not ownership. Rural India is ready for the future—let's build the service models that actually fit the culture of the land. #AgriTech #ServiceInnovation #RuralIndia #ClimateAction #Oorja #SustainableFarming

Why investors are not attracted to your agribusiness. This may sound harsh, but it is a conversation the sector needs to have. Many agribusinesses believe the biggest challenge is lack of funding, in reality, the bigger challenge is lack of investment readiness. Investors are not only looking for potential, they are looking for structure, discipline, scalability, and confidence. Here is why many agribusinesses fail to attract serious capital: 1. The business model is unclear If investors cannot quickly understand how the business generates revenue, they lose interest. 2. There is no proven market Products without consistent buyers are difficult to finance. 3. Financial records are weak or nonexistent Poor bookkeeping destroys credibility faster than most founders realize. 4. The business depends too much on the founder Investors look for systems, teams, and operational structure. 5. The projections are unrealistic Overpromising often signals inexperience rather than ambition. 6. There is no clear competitive advantage Why should this business succeed over others already in the market? 7. Risk management is missing Agriculture is already high risk. Investors want businesses that anticipate challenges and plan ahead. 8. The business is not scalable A good small business is not automatically an investable business. 9. Founders are seeking funding too early Sometimes the business still needs validation before external capital makes sense. 10. Passion is replacing strategy Passion matters, but investors fund execution. The truth is, investors are not searching for perfect businesses, they are searching for businesses that are prepared, structured, and capable of growth. #GrowthThroughIntention #AgribusinessFinance #Agribusinessgrowth

Why Banks Hesitate to Fund Young Agricultural Entrepreneurs: Banks see farming as high-risk business. Period. Young farmers lack collateral, have minimal credit history, and often carry student debt that disqualifies them from additional loans. Agriculture's vulnerability to weather, market volatility, and delayed returns makes traditional bankers nervous. The brutal truth? Banks prefer established farms with proven track records and tangible assets. Long loan approval processes, rigid terms, and high interest rates further discourage youth entry. While 62% of young Black farmers are crushed by student debt, banks continue prioritizing sectors with faster, more predictable returns. The system wasn't designed for agricultural innovation—it was designed to protect capital. Young farmers aren't just fighting weather and markets; they're fighting a financial system that views their dreams as "too risky." The land needs fresh hands. But fresh hands need fair access to capital. #AgricultureFinancing #YouthInAgriculture #FarmingBarriers

Agriculture will not be transformed as long as it continues to be dominated by poor farmers who lack the capacity to invest. Smallholder farmers often struggle to afford essential equipment such as irrigation kits, tractors, improved seeds, and modern storage facilities. Without capital, it is difficult to adopt new technologies, access mechanization, or implement climate-smart practices. Many small-scale farmers also lack direct engagement with policymakers who design agricultural policies, which limits their influence on decisions that affect their livelihoods. For agriculture to truly transform, there must be serious investment in the sector. Wealthier investors and commercially oriented farmers can inject capital, adopt modern technologies, and scale production efficiently. However, transformation should not exclude smallholder farmers — instead, they need financial support, access to credit, subsidies, training, and stronger representation in policy discussions. Agriculture will only be saved and modernized when investment, policy support, and farmer empowerment come together.

Friends often tell me: “𝐈 𝐰𝐚𝐧𝐭 𝐭𝐨 𝐢𝐧𝐯𝐞𝐬𝐭 𝐢𝐧 𝐟𝐚𝐫𝐦𝐢𝐧𝐠— that’s where the next billionaires will come from!”. As a farmer, my answer surprises them: “𝐁𝐞 𝐜𝐚𝐫𝐞𝐟𝐮𝐥— it’s harder than it looks.” Agriculture is beautiful, fulfilling, and full of potential. But I’ve also seen far (!) more farms collapse than succeed. It demands patience, resilience, and a stomach for cash-flow rollercoasters.😑 Here are some lessons I share from my own experience (and from many farmers around me): 1️⃣ Think twice before jumping in. Real estate near the city might actually fit you better. 2️⃣ If you do farm, see it as a generational play. Quick returns are rare. 3️⃣ Start with at least $20,000 (excluding land). Boreholes, soil prep, and doing things right cost real money. 4️⃣ Management is everything. Poor management = guaranteed pain. 5️⃣ Running costs (diesel, electricity, staff, water) drain you before the crops even grow. And the reality check: Investors don’t back farming entities unless they’re already profitable, with 5+ years of audited accounts and 7-digit revenues. That tells us something about risk?! 👉 I’m not here to discourage anyone. I just want new investors to avoid the painful mistakes many of us have made. 💡It’s not for the faint-hearted — but for those who prepare, it can change lives.

Many farmers say investors don’t support agriculture in Ghana… But after sitting through the Investor Lightning Pitch session at the Mastercard Foundation Nkabom Collaboration by Densu Associates and AGI today… I realized something painful. 👀💔 Some farmers are not losing funding opportunities because agriculture is bad… They are losing opportunities because they are not investor-ready. Yes, I said it. Today, finance companies were openly explaining how they provide SME financing, including small loans with little or no collateral. But one thing kept coming up: Structure. Records. Cash flow. Business plans. Professionalism. Organization. The days of “I just want to farm” are ending. Agriculture is serious business now. 🌾🔥 Investors are looking for farmers who think like CEOs, not just producers. Truth be told… many hardworking farmers are still operating without proper records, systems or clear business strategy. And that is silently blocking them from accessing capital. If Ghana truly wants to create jobs through agriculture, then SMEs must be financed aggressively. But farmers too must become investment-ready. Question: Do you think Ghanaian farmers are truly prepared for investment opportunities and big financing? 🤔👇 Mastercard Foundation Densu Associates