The destiny of Italian agriculture may be transformed by two trends. The first is a growing interest in the sector by Finance; second, young people are losing interest in becoming farmers, so generational transition risks breaking down. In fact, the total number of farms in this country has dropped by 30% in the past ten years, and today more than half of all farmers are over 60. That means in the coming years, a huge number of farms - and farmland - could end up on the block.
These two stories seem to converge in a common conclusion: “They all lived happily ever after.” Where Finance meets – and marries – Agriculture. But there are obstacles along the way to the altar, and the happy ending is anything but guaranteed.
Growing interest
International pension and insurance funds, which are always on the hunt for safe, long-term investments where they can allocate portions of their assets under management: these are typical investors in the ag sector. Specifically, these funds invest in farmland that not only keeps its value, but also offers stable, albeit modest, returns. But this tendency, quite common in the US and the UK, hasn’t really taken hold in Italy. The strategy is to invest in farmland and then rent it to farmers, but in a fragmented sector like Italian agriculture, it’s hard to match fertile land with farm families looking to rent. Interest in this possibility peaked during the pandemic, but later waned again.
A potentially more lucrative strategy, once again more common outside of Italy, is to invest not only in the land, but in the farming activity as well. In this case, investment funds get involved in farm management by selecting or planting high value-added crops, for the most part. In Italy ideal candidates are exotic fruit, olives, almonds, and citrus fruit. At the moment, the leading player in this arena is IDeA Agro, a private equity fund dedicated to investments in agriculture, founded by the De Agostini family. Other investors are following their lead.
Wanted: farm managers
The real challenge here is finding the experts who have the right skills sets to manage these investments. What’s missing is the go-between, the “matchmaker” who knows how to “tie the knot,” marrying agriculture and finance: the farm manager. As happens when funds invest in industrial activities, they want to put a professional they trust in charge of the farm they’re investing in. The farm manager is just such a professional, skilled in agronomics and business, capable of handling the entire production chain, from choosing the right crop to commercializing the harvest. While this role is common in other countries, in Italy agricultural entrepreneurs typically come from farming families, and agronomists mainly work as technical consultants rather than managers.
New opportunities
Agrivoltaics and bioenergy are further whetting investor appetite. But by law, investments in these sectors are no longer allowed unless part of the land is being farmed, creating an inevitable synergy between agriculture and energy. According to current regulations, at least 70% of the land must be used for farming, and the remaining 30% earmarked for agrivoltaics. But here too, without qualified professionals, investors may not be able to fully exploit these opportunities.
What we risk losing
Interest from the finance sector might represent a great opportunity to revitalize Italian agriculture. Big financial players would not only bring with them a more advanced managerial culture, they are also obliged to meet ESG standards. What’s more, pressure from their investors is pushing them inescapably in the direction of sustainable management, guaranteeing healthy, long-term development for the ag sector.
But this potential can only be realized if we can find qualified farm managers. On the Italian landscape, this role will necessarily be filled by next-gen agronomists. With the proper training, will they be able to develop the managerial and entrepreneurial skills they need? If the answer is yes, Italian agriculture will come out of all this reinvigorated and more competitive than ever. But if it’s no, farmland set to go up for sale over the next few years will have no buyers, and the sector will continue losing ground.
