Agriculture as an alternative investment : the status quo and future perspectives

Under the pressure of climate and social changes, agriculture is called to play a fundamental role in the world food challenge of the next few decades. A severe reduction of arable land and water scarcity combined with a growing food demand, changes in the dietary preferences in many countries and, more recently, a growing threat to food security and logistics from supply chains interruptions and global trade fragmentation, all require the implementation of processes, techniques, and innovations able to increase productivity and make a better use of scarce resources. Against this backdrop, a growing number of investors and asset managers have started looking at agriculture as an interesting investment theme to exploit the long-term strategic opportunities emerging from technological innovation and social changes. The industry is undergoing a process of transformation driven, on the one hand, by the emergence of new data and technologies that promise enhancing process efficiency and improve yields and, on the other hand, by an increased attention on the GHG emissions of agricultural processes and the impact of farmland on climate change, water and land scarcity. All these factors call for a radical rethinking of many agriculture business models. This book provides a detailed overview and analysis of those new technologies with the greatest potential to disrupt agriculture products and processes by improving productivity and the management of food loss and waste, making a more efficient and sustainable use of resources and enhancing food security. Then, it discusses the implications for investors and asset managers, starting with an assessment of the status quo of agriculture investing and providing a thorough description of the agriculture asset class with an emphasis on its distinctive characteristics and the innovations in the technological processes used in agriculture and farming with the greatest potential to obtain long-term sustainable returns. Foreword 6 Foreword 8 Introduction 10 References 15 Contents 16 Chapter 1: Megatrends Affecting Agribusiness: From Challenges to Opportunities 18 1.1 Introduction 18 1.2 An Overview of Megatrends 21 1.2.1 Identifying Key Megatrends 21 1.2.2 What Will Affect Business in the Next Five to Ten Years? 22 1.2.3 Megatrends in the PESTLE Analysis 24 1.2.4 The Driving Forces 25 1.3 Megatrends and Challenges in the Agribusiness Industry 30 1.3.1 Delving into Megatrends and Challenges in Agribusiness 30 1.3.2 Agribusiness Megatrends 31 Growing Demand and Changing Dietary Preferences 32 Climate Change and Natural Resources Scarcity 33 Technological Innovation and Hyperconnectivity 33 Integration of Global Trade 34 1.3.3 Agribusiness Industry Challenges 34 Improvement of Agriculture Productivity and Food Loss and Waste Reduction 35 Efficient Use of Resources and Enhancement of Ecosystem Services 35 Improvement of Public Nutrition and Health 36 Better Distribution of Value Along the Supply Chain 36 1.4 Innovation Trajectories in the Agribusiness Sector 37 1.4.1 Spotting Agribusiness Technological Innovations 37 1.4.2 Renewable Energy in Agriculture 41 Bioenergy Production 42 Intelligent Agrivoltaics 42 Solar Desalination for Irrigation 43 1.4.3 Chemistry and Biotechnology 43 New Breeding Techniques for Plants 44 New Breeding Techniques for Livestock 44 New Breeding Techniques for Fish 44 1.4.4 Novel Farming Systems 45 Vertical Farming 45 Insect Farming 46 Algae Farming 47 1.4.5 Innovative Aquaculture 47 1.4.6 Agritech 48 1.4.7 Alternative Proteins 49 Cultivated Meat 49 Fermentation-Derived Proteins 50 Plant-Based Meat 50 1.4.8 Food Safety and Traceability 51 Food Preservation Technologies 51 Smart Packaging: Active, Intelligent, and Connected 52 Smart Traceability 52 1.4.9 E-commerce 53 Food Delivery Ecosystems 53 1.5 Conclusion 54 References 55 Megatrends Analysis: Literary Sources 55 Agribusiness Megatrends and Challenges Analysis Literary Sources 56 Technological Innovations Analysis Literary Sources 56 Other References 58 Chapter 2: Innovation Trends in the Agribusiness Supply Chain 62 2.1 Introduction 62 2.2 The Agribusiness Innovation Landscape: Who Is Innovating and Why? 64 2.2.1 Dissecting Technological Innovations in the Agribusiness Industry 64 2.2.2 Distribution of Technological Innovations Along the Supply Chain 65 2.2.3 Matching Innovations and Industry Challenges 75 2.3 Technical and Business Development of Agribusiness Innovations and Implications for Investors 77 2.3.1 Assessing the Potential of Technological Innovations 77 2.3.2 The Status of Technological Innovations in the Industry 79 2.3.3 Looking Forward: Perspectives Ten Years from Now 85 2.4 Conclusion 88 References 88 Chapter 3: Agriculture as an Asset Class in the Alternative Investments Space 90 3.1 Introduction 90 3.2 Agriculture Investing 92 3.2.1 Agriculture as an Asset Class 93 3.2.2 A Taxonomy of Agriculture Investors 95 3.2.3 A Map of Fundraising and Investment in the Agriculture Asset Class 97 3.3 Can Agriculture Become an Asset Class in the Infrastructure Space? 99 3.3.1 The Status Quo at the Intersection Between Agriculture and Infrastructure Asset Classes 99 Asset Managers 100 Investors 104 Transactions and Target Companies 108 3.4 Conclusion 114 References 115 Conclusions 117