Agribusiness: Cultivating Agribusiness Growth
While worldwide demand for foodstuffs is high and investment needs are great, the fact remains that agricultural investments are risky business— especially in the developing world. Food price volatility has economic, social, and political implications. The path to establishing a successful agribusiness venture could be a difficult one. Unclear or incomplete laws on property ownership may affect profit. Restrictions on revenue repatriation could disrupt a project’s finances, adding to the imbalance between foreign-denominated debt and locally denominated revenue. Threats such as revolution or terrorism add an additional layer of uncertainty, potentially derailing even the most promising of investments. Combined, such political risks contribute to the high cost of capital. In fact, some lenders might not be willing to extend credit at all in the absence of political risk insurance policies.