Investments with impact
Strong global fundamentals
The global population is expected to exceed nine billion by 2050. Diets will also change as people increasingly eat more protein. It will be an enormous challenge to meet the forecast demand. In the next 40 years, the agricultural sector will need to double agricultural production. Research has recently estimated that 70-100% more farmland will be needed in 2050 if we do not increase production per hectare on existing farmland.
Huge need for investments
Following years of underinvestment there is now a huge need for investments in the agricultural sector to meet the ongoing growth in global demand. The Food and Agricultural Organisation of the United Nations estimates that net investments in global agriculture must top USD 83 billion per year, up roughly 50% from current levels, to meet future demand.
Attractive asset class
The advantage for investors is that rural resources and agricultural production offer exposure to a tangible asset class and reduce the risk of inflation. Investments in this asset class generate:
- attractive risk-adjusted returns
- low or negative correlation to other financial assets
- portfolio diversification
Many institutional investors are looking for responsible and sustainable investments, as they believe that financial and social returns can be compatible objectives. They intend their investments to have a positive impact and improve environmental and social conditions as well as corporate governance.
Investing in agricultural production is probably one of the most tangible ways of accomplishing these investment goals. Investing in enabling famers to grow and optimise their potential agricultural production will create long-term real economic value, will add to global food security and aid local rural development. Aligning the interests of all stakeholders is essential when investing in agriculture.