Agriculture second to energy transition as ‘fastest growing’ sustainable investment theme

Investment has gravitated upstream as managers respond to an overcrowded and volatile consumer market, according to Campbell Lutyens's Toby Barnes.

Food and agriculture is the “next largest and fastest growing” sustainable investment strategy behind the energy transition, according to Campbell Lutyens’s associate Toby Barnes.

Barnes is the lead author of the placement agent and consultant’s latest report, which maps funds totalling $60 billion in AUM to build a picture of the current state of sustainable food and agriculture private markets investment.

Most of this growth is now concentrated towards the top of the value chain, as managers respond to an overcrowded consumer market prone to cyclicality, according to the report.

“Until about 2022, a lot of the focus and spotlight has been on things like alternative proteins and cultivate meats,” Barnes told New Private Markets. “Now we’re seeing LP and GP’s attention shift further upstream and that’s where we’re seeing the concentration of capital.”

In recent months, several managers have launched sustainable agriculture strategies focussed on upstream investment opportunities, which encompasses traditional farming, bio energy, farm software and non-traditional farming systems, among other areas. These include Folium Capital, which is seeking $500 million for its combined agriculture and timber strategy, as well as MAPFRE’s €100 million biomethane fund.  In particular, the firm’s research showed a growing interest in “farming financial services and the Agri marketplace space”, according to Barnes.


Despite the growing interest in the asset class, there are still “idiosyncratic risks and barriers to entry” that pose a challenge for both managers and investors.

“A number of strategies don’t fit nicely into [LP’s] buckets,” Barnes explained. “They fit somewhere between what LPs would consider real assets and what they would consider PE, buyout or venture. So they don’t fit nicely if LPs have hard return hurdles. That can make marketing strategies a little bit more difficult for GPs or the internal approval process a bit more challenging for LPs.”

The market is also populated by a number of managers without a proven track record in agriculture. The result is that “LPs have to be asking themselves to what extent is the strategy of each individual manager actually scalable and giving them the potential to deploy at scale within this market.”

However, Barnes said that this creates an opportunity for GPs with genuine expertise: “The longer-term winners, those will be the funds that can integrate unique or specialist market knowledge within the investment strategy. That’s helping their portfolio companies deal with commodity price volatility, particularly when you have things like supply chain shocks such as the Ukraine war really affecting input prices for fertiliser, for example.”