Investment Opportunities in Agriculture
Interview to Francisco Javier Martínez López, General Director of AGBAR AGRICULTURE S.A.U
AGBAR AGRICULTURE is the “front” of the VEOLIA group in Iberia for farmers and irrigators, bringing all the group’s capabilities in a language aligned with the sector, with a large portfolio of solutions and the knowledge and experience necessary to tackle any project with total guarantee.
Who is AGBAR AGRICULTURE and what role do they play?
AGBAR AGRICULTURE is a company within the VEOLIA group (a global leader in optimized management of water, energy, and waste resources), with a team of agronomists with extensive experience in the agricultural sector. They specialize in high-value woody crops, offering comprehensive solutions to produce more and better, at a lower cost and in a more sustainable way.
Although AGBAR AGRICULTURE has been in the agricultural sector for over 7 years, it was in 2023 that a strong push was decided, due to the synergistic opportunity VEOLIA sees between its three global strategic pillars (water, energy, and waste), and agriculture.
What is the business model?
AGBAR AGRICULTURE accompanies and advises producers and agricultural entrepreneurs to face the challenges of the sector and improve the profitability of their farms through a wide range of solutions supported by sustainability. It presents two main business lines; one focused on high-value woody crops, and another on irrigation communities.
The solutions aimed at high-value woody crops form a comprehensive solution called HECUS (HIGH EFFICIENCY CULTIVATION SYSTEM). These solutions include:
- Execution and implementation of comprehensive agricultural projects (finding the appropriate farm, optimal crop/variety, soil movement and preparation, irrigation and fertigation project, digitalization, even operation and maintenance).
- Audits of land and agricultural farms.
- Feasibility studies of agricultural projects (climate and soil studies, crop and variety, long-term water availability).
- Sustainability solutions (water and carbon footprints, biodiversity spaces, vegetative covers, energy savings).
- Solutions for the use of reclaimed water.
- Digitalization of farms.
- Agronomic advice on crops.
The business model is based on comprehensive support from the inception of an agricultural investment project, assisting in all phases of design and implementation; but above all, ensuring that the project meets the business plan established at the beginning, providing technical support in its operation and management.
What are the objectives of AGBAR AGRICULTURE?
In which business models do you see the greatest opportunities in agriculture?
Currently, there are different interesting business models in agriculture in Iberia. We must work with certain limitations, mainly due to climate change, which is causing concern about water availability and thermal variation, making a company like AGBAR AGRICULTURE play an important role in mitigating its effects.
There are areas where, despite lower water availability, with a good project, using technology and knowledge, very interesting projects can be developed. We see an interesting model in nuts, for which the location of the projects must be very well studied, taking into account potential climatic and soil risks, and above all, focusing the business plan very well on water availability today and in the future.
Specifically, for nuts, we focus mainly on ensuring water supply throughout the project’s life.
Therefore, we believe that we must think about what is to come, rather than what we have, to have a better guarantee of success. We all know that labor availability is a current issue that will be even greater in the future. Therefore, we propose fully mechanized models, with smaller environmental footprints (as they will be a requirement and selection filter for crops), more efficient models, and less dependent on the use of pesticides and fertilizers, considering that there will be fewer and they are very expensive. We need models that require the fruit to be in the field for the shortest possible time.
Given all these conditions, we can conclude that hedge almonds are a great alternative that fits very well with the pursued objectives.
How is the process of starting an agricultural project?
The start of a good project begins with a good feasibility study, from finding an appropriate farm in terms of climate and soil, to the chosen crop-variety, through the study of its operation. And all this within a business plan, which will give us the green light or not for the decision of the next phase.
I want to emphasize that we must be conservative and realistic when designing business plans. This is how we do it at AGBAR AGRICULTURE. We like to put ourselves in the investor’s shoes and be aware of whether that project can really be profitable and sustainable or not, as we assume subsequent responsibility, accompanying the investor in the operation.
Once we have all this clear, we move on to the implementation of the project. Here it is crucial to surround yourself with good professionals, and in our case, we also work with experienced, serious, and prestigious collaborating companies. We seek projects that aim for profitability, but taking care of OPEX, because that is what will really make the difference when harvest or input prices vary. Our business card is the value of a brand, which we take care of with all the consequences through quality and fully guaranteed projects.
Once the project is underway, another equally or more important phase begins, which is operations, where we also have a lot to say. It is well known that the sector lacks experienced and guaranteed technicians, and I believe that companies like ours accompany these investments to the end, to close their cycle successfully.
Carbon Footprints, Sustainability: How do you do it?
Environmental sustainability is present in all our projects as it is part of the company’s DNA. We calculate the carbon footprint and water footprint to measure the impact of our projects, and we are even starting to calculate the nitrogen footprint. This way, we can improve the footprints and measure sustainability. Some companies within the VEOLIA group have the capabilities for their calculation. Additionally, we collaborate with research centers and universities to stay up-to-date on certifications and regulations. Specifically, for the carbon footprint, we have been calculating and supporting clients in certifications for some time, as well as in compensation with forestation of forests. Now the challenge is, once the market in agriculture is regulated by the ministry, expected for 2024, to have an additional source of income for farms through this route.
The reality in agriculture so far is that we have measured to know how efficient our management was, how vegetative covers affected, different cultivation systems, etc., and thus at least provide a differentiated value to the products coming from these farms backed by data. At AGBAR AGRICULTURE, we not only provide the calculation, support in certification, or obtain positive credits, but we also propose measures to compensate for those footprints.
What success stories can you share?
We have many references with good profitability and adjusted costs. We are obtaining very interesting yields in almonds with low water allocations thanks to a well-studied farm, optimized design, appropriate technology, correct plant materials, and of course, management with highly experienced technicians. This is really a challenge.
I also wanted to mention our experience in reclaimed water, as it is a great alternative for Spanish agriculture, and I believe we are obliged to use any water source. We have been working for many years within the group on this project, guaranteeing its quality and assurance for use in agriculture in various areas of Spain. We have experts in water management on the team, and we are facilitating its use to farmers, complying with all required regulations.
