The Challenges of Growing an Agribusiness

This is Tim Hammerich of the Ag Information Network with your Farm of the Future Report.

Whether you’re on the farm or in agribusiness, expansion in this industry is not easy. Jim Taylor of Forage Capital Partners says after his years of investing in agricultural companies, he’s learned that paper returns don’t always pan out in the real world.

Taylor... " It's very difficult to build a plant for a new process. So, you know, when you're building a production facility to do something that's novel, it's really hard to know how long and how much it's going to cost to commission it because no one's, there's no book, no one's done it before. And so, you know, the biggest lesson that we've learned across a handful of investments is don't embark on a capital expansion unless you've got way more money than you need."

Taylor says the Canadian companies he invests in also often struggle to expand to the US.

Taylor... "You know, we often look at a business and think, okay, you know, the Canadian market is so big, and then we need to gain access south of the border. The cost of doing business and the competitiveness in all sectors, you know, in the United States is just orders of magnitude higher. And so it's difficult to cross the border when we haven't done enough work or understood the competitive dynamics south of the border and have tried to expand too quickly. You know, those, those deals have been tough."

That's Jim Taylor of Forage Capital Partners.