Technical due diligence for agricultural investment projects
The viability of any agricultural investment project mainly depends on two factors: the market and the production technical and operational capabilities. The first factor can be estimated but not controlled. However, an adequate technical evaluation allows establishing the lowest risk scenarios for the objectives pursued.
We analyze each project in the greatest detail to achieve a profitable, sustainable investment with minimal risks
At AGQ Labs, given our technological capacity and agronomic experience in more than 25 countries, we are specialists in this type of technical audits. These are some of the most important points where we focus our activity:
Detailed evaluation of each technical process
The project is studied by analyzing each process that may influence to some extent, as well as the synergistic relationships between them. High detail in the evaluation is crucial to fit the overall model. The study can be done on a newly implanted project, in the process of transformation or innovation and optimization.
Feasible scenarios approach
Each project can be approached from several options, with different investments, costs, income, and associated risks. The approach of different technical scenarios allows a more effective decision making.
Risk minimization solution
Whatever the chosen scenario, in agricultural projects there is always a significant risk derived from the heterogeneity of the sector (climate, pests, genetics, market, etc.) Although it is not always easy or feasible to eliminate all risks, it is possible to propose the best strategies that significantly minimize them.
Detail technical evaluations
An adequate technical evaluation involves a detailed study of each factor that may directly or indirectly influence the viability of the project.
Main points of interest in technical evaluation:
The correct choice and adaptation of the farm or cultivation facilities is one of the most basic factors for the viability of the project, since it limits the possible work scenarios in the short, medium and long term.
- Geographic situation
- Orography, distribution, surface
- Boundary analysis: Existence of possible risks from neighboring activities
- Climate history: Radiation, temperature, frost, rainfall, wind, controlled environments
Water and crop resources
On rare occasions you can choose the irrigation water or the soil, however, each crop requires specific conditions that require the implementation of important corrections, whether they are specific or maintenance. It is not strange to also find situations where adaptation has such a high cost that it would make the project unviable, so this is often one of the most important points in any evaluation.
- Physicochemical and biological evaluation of substrates, soils, and irrigation waters
- Georeferenced farm mapping with identification of limiting factors
- Evaluation of hydroponic systems or growing beds: structure, aeration, compaction, moisture retention, drainage, degradation, etc.
- Land and water improvement
The choice of the crop or variety is highly influenced by the market, but its correct development also depends on:
- Cultivation system: organic, conventional, plantation frame
- Plant origin: nursery of provenance, seedlings, seeds, cuttings, transport
- Plantation: plantation process on the farm
Irrigation is one of the agricultural processes that is carried out most frequently, quickly and directly affecting the state of the plant. Having a suitable system for the characteristics of the farm and the crop minimizes great risks and allows to maintain homogeneity in the productions.
- Irrigation methodology suitability, dripper, sprinkler, flood, pivot
- Irrigation head dimension and equipment
- Sectorization and evaluation according to geographic mapping of hydraulic properties of the soil
Environmental control systems
Within the cultivation strategies it may be necessary to choose certain infrastructures that allow modifying the microclimate of the farm, either to minimize risks (frost, hail, wind, excessive radiation) or to achieve productive advantages (cultivate in adverse times, advance harvest to seek best market prices). They represent a significant investment cost, so their study is vital to identify possible scenarios.
- Structure type, greenhouse, tunnel, mesh
- Protection materials, shadow effect
- Ventilation and microclimatic control systems
Irrigation, nutrition and pest control plan
Although it is an aspect more of maintenance than investment, it is important to have adequate planning that is consistent with the rest of the variables. On the one hand, it will guarantee to get the maximum potential from the crop, avoiding production losses and on the other, it represents a constant expense that, if done incorrectly, can even be detrimental to the project.
- Temporary planning, adapted to seasonality and age
- Type of fertilizers and phytosanitary products
- Frequency and dose of applications
- Irrigation water modifications
In each crop it may be different and require specific facilities, but in all of them it is a delicate and vitally important point. This process can bring out the maximum potential of the project, or it can nullify it by making the final product unmarketable.
- Necessary facilities
- Harvesting type, manual, mechanized
- Cold chain and times between processes
- Postharvest quality control
Internal control systems
Every agricultural project must have a self-control plan for its most frequent planned technical processes. Operational methodologies must be available that allow obtaining a real vision of the state of the crop in order to make the best adaptive decisions.
- Nutrition control
- Irrigation control
- Plants control
Technification and knowledge of human resources
In today’s agriculture the modernization of processes is increasingly important to ensure long-term sustainability. Crops are located in areas very different from their origins, facing a multitude of variables that must be adapted, and which are not always predictable. Technification has been the key that has allowed this evolution and, although it is largely based on new systems and equipment, the knowledge of the team in charge is essential to direct the project in the best scenario and adapt to possible unforeseen fluctuations.
- Technical feasibility analysis of each evaluated process
- Report of possible scenarios or alternatives
- Cost and risk assessment
- Corrective or adaptive measures report