August 24, 2016

IAF Ventures, an investment manager for limited partnerships in agriculture, has added to its IAF Ventures P.E. Ag portfolio with the acquisition of the forage assets of FSI Cube and Pellet through its IAF 30 Limited Partnership. Financial terms of the deal were not disclosed, however, it was noted in a company statement that the deal is a “multi-million dollar private transaction”.

Under its investment strategy, IAF aims to make agricultural investments through which it can leverage crop insurance and other U.S. Department of Agriculture (USDA) risk management programs to secure investment principal.

“Forage is an agro-industrial segment ripe for technology improvements and business consolidation,” said Jon-Michael Nahon, Managing Partner at IAF Ventures LLC. “This acquisition will enable IAF Partnerships in general, and IAF 30 LP in particular, to integrate and develop synergies in its forage investments sector.”

The bulk of the acquired FSI assets will be integrated into Forage Global LLC – a newly formed company that will serve as a platform for the future operational expansion of FSI’s Stanfield, Arizona facility, and for the future acquisition of “thousands of acres of farmland in the Southwest including California, Arizona, and New Mexico,” according to IAF.

Other global players have made recent moves to make acquisitions and consolidations within the forage space.

In July of this year, Farmland Partners entered into an agreement to acquire 2,400 acres of land in Florida for $9.4 million with the goal of investing a further $6.5 million into the conversion of the current timber plantation into a row crop operation for the production of forage crops for the local dairy industry.

One month earlier, in June, Land O’Lakes announced it was strengthening its forage capabilities through an agreement to acquire agricultural biotech company Ceres Inc. in a deal valued at $17.5 million.

In response to downward economic conditions in the Brazilian ethanol space, last year, Ceres redirected its business away from ethanol and toward the production and commercialization of forage crops that offer improved yields, nutrition, and energy.

“Our shift away from bioenergy and Brazil and into forages has been highly successful to date, and is culminating now in this proposed merger transaction …,”said Richard Hamilton, chief executive officer and president, Ceres.

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Lynda Kiernan