Village Farms International has been transitioning over the past years to expand their cannabis business and take a larger foothold in the North American market. A large agriculture farming company with years of experience and the technology in producing produce at a very low cost in a greenhouse setting.
Village Farms International has ambitious goals about their place in the cannabis industry in North America. As well as feel like they are positioned well for more rapid growth as the time comes.
Currently the biggest limiting factor for Village Farms International is the legislation within the US. Not only are cannabis products still not legal in every state this also leads to the issue of interstate trading and transportation of cannabis products. One concern is this has led to an increased price of farmable land in certain states where growing, cultivating, and selling of cannabis is legal. A large portion of the farmable land in these states have already been swallowed up by various companies in the industry, including Village Farms International and its subsidiaries. This is limiting to the growth of Village Farms International as well as the rest of the cannabis industry. Village Farms International specifically have enormous amount of farmland prepared and ready to grow in the state of Texas. Somewhere cannabis hasn’t fully been legalized yet. The good news is that currently governments in the US and Texas have been pushing not only the full legalization of cannabis within the state but also to allow interstate production and transporting of cannabis. When Village Farms International is able to start using this land for cannabis production they will have the access to ample resources at their fingertips to grow with in the industry and compete with more specialized cannabis companies.
Current competitive advantage that Village Farms International has over many agriculture companies as well as cannabis companies is the technology and expertise, they have in efficient greenhouse production. They have got to a standard where they produce their tomatoes, bell peppers and other vegetable produce at an industry leading efficiency. They use 86% less water as well as they are able to produce 20 to 30 times more yield per acre than the industry average. This is due to their expertise in production in greenhouses rather than production of field produce. Not to mention that they are able to do while keeping costs very low.
This expertise in greenhouse environment coupled with their business diversification between cannabis, farm produce, and clean energy differs them from single cannabis companies as well as agriculture companies.
Past year News and Sentiment
In the past year Village Farms International has been positioning themselves more and more in the cannabis sector. They operate a large portion of their cannabis production through their subsidiary Pure Sun Farms which they have now acquired 100% of the subsidiary. They also have exercised warrants in Altum which is a company in Australia who are prevalent in the emerging Asia-Pacific market. They have also secured over the last year positioned themselves as larger suppliers to The European market specifically in the Netherlands. All these acquisitions have come at a short-term cost for the long-term gain where a world-wide cannabis market may soon emerge. Where Village Farms International will have then a stake in multiple markets in the world either through direct production or investment in these mentioned business ventures.
More Recent News and Sentiment
Due to the poor performance of their cannabis operations in the last quarter, their stock fell. However, it’s been expressed that the poor performance was largely due to the continued lockdowns and stay at home orders in Canada, specifically in Ontario which is their largest market for their cannabis products. However similarly to reopening stocks, the increasing number of vaccines, and positivity of decreasing covid cases highlights positivity towards the future of the company as well as the performance of their cannabis operations. Not only might can we expect performance to return back to pre-pandemic levels but also surpassing these levels due to the future positive outlook of the company’s cash flows.