Food for thought: A sustainable take on agricultural investing
Creating a resilient food system
Agricultural techniques have changed dramatically over the past 50 years, particularly in more developed nations.
Investing in the future of food
The market for sustainable food ingredients has been increasing rapidly in developed markets along with soaring demand for plant-based proteins. The global plant-based protein market is estimated to reach $35.5bn in 2024.
Considering a typical plant-based burger uses up to 95% less water and land, generates 90% fewer GHGs and requires 46% less energy than a normal beef burger, this can only be a good thing for the environment.
Indoor vertical farming is also booming, especially in urban areas, with the potential to promote more local production and offering up to 300 times more yield than conventional outdoor farms.
Fund managers overestimate social and environmental impact
Precision farming offers huge potential. Agri-robots, AI and big data, satellite positioning, drones, weather prediction and soil testing all offer the potential to enhance yields and reduce environmental impacts.
The food waste management sector is steadily growing and is anticipated to expand at a compound annual growth rate of 5% between 2019 and 2025.
For investors, the opportunities are clear and we hold several companies across our funds that we believe are well placed to contribute and benefit from this transition, such as Vitasoy, the Hong Kong listed maker of over 300 plant-based products.
Two of our favourite Danish companies, Novozymes and CHR Hansen are also playing a significant role in improving global food and agricultural practices.
Novozymes is the global leader in producing natural enzymes and microorganisms that are used in the food and agriculture industries, helping to increase crop yields, reduce the need for agro-chemicals and improve animal health as well as extracting protein from plants.
CHR Hansen, another global leader in manufacturing microbes and enzymes, helps to improve the yield, taste, nutritional value and shelf life of a wide range of foods, while at the same time reducing the need for artificial additives and preservatives.
The future of sustainable agriculture offers a myriad of investment opportunities that can benefit investors, and at the same time, help to support and promote a more sustainable and resilient food system.
Lorna Logan is an investment analyst at Stewart Investors
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