This article is from the latest Good Investment Review, which you can download free here.
WE HAVE A PROBLEM!
We need to produce more food for a growing population, but continuing to produce food in the way we do currently may not be sustainable. Food production is a major contributor to greenhouse gas emissions and biodiversity loss.
However, the amount of food we are producing will not be enough to meet global demand as emerging market economies develop, the population increases and more people around the world see their incomes rise. It is a big challenge, perhaps one of the biggest that we face collectively. However, finding innovative solutions to global challenges can be profitable. Baillie Gifford’s impact strategy, Positive Change, was established to do just that.
The world stands at a critical juncture. To meet the food demands of a projected 9.73 billion people by 2050, global food production must increase by up to 70 per cent from a 2007 base. However, this daunting task is compounded by climate change, urban sprawl, and soil degradation, which threaten to reduce the amount of arable land available for farming.
The problem is clear: We need to do more with less and find ways to reduce the negative impacts of agriculture, which contributes up to 15 per cent of global greenhouse gas emissions. Large-scale farming is often highlighted as a big part of the problem with negative environmental consequences that putting food on our tables produces.
However, large-scale agriculture seems unavoidable if we are to feed a large and growing global population. Large-scale agriculture produces approximately 70 per cent of food consumed globally and is reportedly responsible for up to 10 per cent of global greenhouse emissions as well as significant biodiversity loss. Making large-scale agriculture better must be a priority and doing so will have tangible benefits.
Innovative companies are stepping up and pioneering solutions that promise to revolutionise food production. Deere is one such innovative company. Most people associate Deere, a nearly 200-year-old company, with big green tractors. However, this is a company driving a very modern approach to producing food that offers one solution to the problem posed by the need to provide more food for a growing global population without destroying the environment on which we depend to feed ourselves.
Deere has been at the forefront of precision agricultural technology, focusing on automation, remote sensing, and the integration of machine learning with computer vision. These technologies enable selective spraying of individual crops, significantly increasing yields while reducing the environmental harm associated with chemical inputs.
Deere’s See & Spray technology uses cameras and machine learning to target herbicide solely on weeds, rather than the entire field. In 2023, this technology was used on over one million acres of land, saving approximately eight million gallons of herbicide. Its technology can reduce fertiliser use by 60 per cent, and through its connected operations centre and analytics offering, it can provide insights that help farmers manage soil health as well as reduce the carbon emissions of their activities. This is the future of farming. With the need for higher yields and lower input costs, Deere has a role to play in facilitating food production at a scale that can meet all our needs.
The journey towards feeding the world more sustainably is fraught with challenges, but it also presents significant opportunities. By some estimates, this is a market opportunity worth $10 billion (£7.9 billion) in 2024, but it could be worth three times as much within the next ten years, driven by the push towards more sustainable farming practices, growing demand in emerging markets, technological advancements that enable autonomous vehicles, and more effective real-time analytics.
Companies like Deere are leading the way with innovative solutions that promise to increase food production and enhance environmental sustainability, potentially generating attractive returns for investors. As we look to the future, the role of such companies in addressing the global food challenge will be crucial. By investing in these pioneers, we not only contribute to solving one of the most pressing issues of our time but also position ourselves to reap the rewards of a more sustainable and prosperous world.
Risk warning: this article should not be seen as advice. The value of investments can go down as well as up, and your capital is at risk.
