George Bravante on Agricultural Investing and The Top 5 Markets to Target

Brian welcomes George Bravante, a private equity investor focused on acquiring and operating farming assets in the Central Valley of California. In this episode, George talks about the region's importance for the US food supply and the Sigma Law passed in 2014 that regulates sustainability and has led to restrictions on some farmers. He believes that despite these restrictions, there is potential for consolidation and monetization of this opportunity set through investments in citrus crops. George also discusses his commitment to caring for his partners' money from his upbringing in a lower-middle-class family. Finally, he outlines how certain factors such as tariffs, crop abundance, inflation, consumer demand, and organic food affect the agricultural industry. 

[00:01 - 08:18] Opening Segment

• 50% of the US's food comes from California, including the Central Valley and Salinas Area
• Climate change is impacting production in Florida, which used to be a significant engine for US agriculture
• California passed the Sigma law in 2014, giving the state the right to regulate sustainability
• California provides half the produce in the country, and this may go down due to Sigma law

[08:19 - 15:49] California Farmers Face Crisis as Infrastructure is Destroyed and Water Supply Decreases

• George shares how infrastructure is being destroyed due to soil settling
• The investment strategy is to buy ranches and focus on citrus
• Targeting 8-12 year return with Sigma will value

[14:50 - 24:10] A 16-18% Return Over 10 Years with a Vertically Integrated Strategy

• The competition landscape is institutional equity getting into the space
• The industry will consolidate as far as the eye can see
• The importance of being committed to taking care of your partner's money

[24:11 - 32:20] Exploring the Benefits of California's Central Valley Production Hub

• Central Valley of California is a unique place to grow produce due to its climate and water supply
• The rise of the middle class in Southeast Asia has led to an expectation of 24/7 availability of fruits and vegetables
• Agriculture is seen as an inflation hedge, but prices have been hurt by Covid and shipping costs
• Organic sales have fallen due to people not willing to pay the premium during tough times

[32:21 - 33:32] Closing Segment

• Final words
• Connect with George through the links below

Quotes:

"Agriculture is a very cashflow intensive business. It doesn't trade on cap rates. It trades per acre, so it's inefficient. And the reason is that one guy's better than the guy next to him." - George Bravante

Connect with George!

Website: https://bravantefarmcapital.com/ 

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