According to recent research, arable land is disappearing from the globe at a catastrophic rate. With the world population expected to grow by two billion over the next 25 years, dramatically increasing the need for food production, investing in sustainable agriculture is becoming more and more urgent.
Heading toward Crisis
According to a study conducted at the University of Sheffield’s Grantham Centre for Sustainable Futures in Britain, around 33% of the world’s “adequate or high-quality food-producing land” has been lost in the last 40 years due to the use of chemical fertilizers, frequent plowing, and climate change.
“You think of the dust bowl of the 1930s in North America and then you realize we are moving towards that situation if we don’t do something,” said Duncan Cameron, a professor of soil biology at the university.
The loss of arable land is contributing to grim predictions of possible future food shortages, particularly in developing countries. In conjunction with the expected growth rates of the global population, the World Economic Forum projects that by 2050, demand for food will increase 70%. Feeding this expanded population nutritiously and sustainably will require substantial improvements to the global food system—one that provides livelihoods for farmers as well as nutritious products for consumers.
All that said, it’s not an entirely negative picture. Progress in sustainable agriculture is enabling many countries to significantly increase their food production while ensuring that the land it’s grown on remains usable for generations to come.
History shows that advances in agriculture can save lives. During the 1960s, agricultural innovation saved India from a projected famine in what was dubbed the “Green Revolution”. When American agronomist Norman Borlaug combined a new variety of rice that had been developed by international researchers with irrigation and fertilizer, the yield was significantly greater than normal rice varieties. Having averted starvation, India has gone on to become a major rice exporter thanks to advancements made by its own research.
Though the methods and effects of the Green Revolution are not without criticism, its dramatic results have spurred those interested in making high-impact investments to consider sustainable agriculture. According to the Global Impact Investing Network (GIIN), 63% of surveyed investors say they are allocating to investments with a food and agriculture focus, greater than any other sector represented.
One example is a $3 billion global agricultural fund launched by financial services company TIAA-CREF and its investment management division Nuveen. The fund, which is the company’s second in this field, will invest in farmland in North America, South America, and Australia. Not only does the fund support sustainable farming goals, but it also may diversify the investment portfolio.
Nuveen employs five guidelines to ensure that its allocations to agriculture remain consistent with impact goals: they promote environmental stability, respect labor and human rights, respect existing land and resource rights, uphold high business and ethical standards, and produce regular reports on progress toward implementing the guidelines. This combination of ESG factors increases the impact of such investments.
“Responsible investors have a critical role to play in deploying sustainable solutions to these challenges that do not harm the environment, or add stress to already compromised ecosystems,” stated Nuveen. “We must look to technological advances in farming practices, efficient equipment, and other means that will provide farmland managers and producers with tools to confront these challenges and increase crop yields using fewer resources.”