August 22, 2018

Investing in What We Need: Food/Agriculture

Food is as critical to human survival as water, and sustaining an expanding population will require exponentially more efficient food production and sourcing. The United Nations estimates that the current global population of 7.3 billion people will grow to 9.7 billion by 2050. Life expectancy has also increased significantly among poorer countries and is expected to continue trending upward. What all of this means, of course, is that we have a growing number of mouths to feed. It’s estimated that agricultural productivity will need to rise by at least 60% to meet the needs of the global population by 2050.1 Production in developing countries, where population growth will be highest, will need to nearly double.2

Global agricultural capacity is facing several major challenges to increasing productivity, including land overuse, water scarcity, and soil degradation. Opening up additional forest or rainforest land for farming could cause long-term environmental damage; farming is already the largest driver of deforestation and a major cause of greenhouse gas production. “Agriculture is among the greatest contributors to global warming, emitting more greenhouse gases than all our cars, trucks, trains, and airplanes combined” says National Geographic.3 It’s estimated that 25 to 35 percent of global greenhouse gases are produced from agriculture.4 Add to that diet-related diseases in populations exposed to agricultural toxins and fast food, and the need for new solutions becomes evident.

A number of experts agree that increasing productivity, building sustainable farming methods, and developing long-term solutions to our food needs are possible. For investors, there are opportunities across the spectrum from small-scale local food systems to large-scale supply chains in the food/agriculture space. These are a few of the themes we are examining:

  • Developing sustainable seafood practices
  • Acquiring farmland and ensuring it is managed sustainably
  • Increasing yields on less productive farmland
  • Developing high-tech, precision farming systems
  • Repurposing farmland away from oversupplied crops and into undersupplied crops
  • Developing technology that can help us use resources more efficiently
  • Increasing the efficiency of food distribution and use, reducing waste
  • Agricultural techniques to help minimize reliance on external inputs like pesticides and fertilizers
  • Innovative agricultural techniques and technology to improve the efficiency and output of farmland

Food and agriculture are central to Arnerich Massena’s thematic investments in “what we need.” The demand in this area is growing rapidly, and it’s exciting to find solutions that can bring us closer to meeting the world’s nutritional needs.

Arnerich Massena has been focusing research on thematic impact investments in the areas of water, resource efficiency, agriculture, and life sciences – all of which we categorize as “what we need,” which we believe are going to become ever more central as the future unfolds.

Ask us about the current opportunities we are investigating – read our recent blog posts about water, resource efficiency, and life sciences – and the potential they present for investors.

 

1 “Growth in crop yields inadequate to feed the world by  2050- research” by Fiona Harvey; The Guardian; June 20,   2013;  https://www.theguardian.com/environment/2013/jun/20/crop-yeilds-world-population 

2 “Global agriculture towards 2050” How to Feed the World High-level Expert Forum; October 2009; http://www.fao.org/fileadmin/templates/wsfs/docs/Issues_papers/HLEF2050_Global_Agriculture.pdf

3 “A Five-Step Plan to Feed the World” by Jonathan Foley; National Geographic; https://www.nationalgeographic.com/foodfeatures/feeding-9-billion/

4 “Investing in Sustainable Agriculture” by Kendall Morgan PhD; Elsevier; July 7, 2016; https://www.elsevier.com/atlas/story/resources/investing-in-sustainable-agriculture