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Natural forces

Future farming: feeding the world

Future food-supply solutions might involve eating insects and building farms in skyscrapers…

Ian Bailey
Director, Rural Research, Savills

ibailey@savills.com

To feed the world, we need to grasp that it’s all about resources – from soil and water to capital and expertise.

We know that across the globe there is less land per person to grow food. Since 1961, the area of arable land available per person has halved from around 0.4 hectares to 0.2 hectares. Innovation is required to ensure these hectares are used sustainably to maximise production without depleting their value for future generations.

Efficient and effective infrastructure runs in tandem. Poor storage and other inadequate farm infrastructure will lead to average post-harvest losses of 15% to 20% for cereals, higher for perishable goods. Increased global trade creates its own problems, with disruptive hazards giving rise to an increase in ‘chokepoint’ risks. The three key ones are weather, security and conflict, and political.

Here are a few examples of possible food supply solutions:

 

Mapping innovation

Precision agriculture using GPS for farm planning, field mapping, variable rate applications and yield mapping. These enable measurable, targeted resource use.

 

Urban/vertical farming

An indoor farm in Antarctica; floating farms that bring food production closer to cities; vertical farms that can be integrated into skyscrapers or shipping containers.

 

Alternative proteins

Should we be eating insects? Ten kilograms of grain yields about 5kg of cricket meat compared with 400g of beef, 1kg of pork or 2kg of chicken. Crickets aren’t thirsty, either: 500ml of water produces 450g of cricket meat, compared with around 2,000 litres of water per 450g of beef.

 

Big data

Improved measuring and innovation in data analytics will help the understanding of resource risk and also reduce waste.

 

Increased yields

Improved understanding of crop genetics and other scientific advances will help increase agricultural efficiency.

 

Africa and its water management

Sub-Saharan Africa has almost double the volume of agricultural land of China, and almost six times that of the EU. The potential for an increase in crop yield is significant. Water scarcity is not a limiting factor: Africa uses only 2% of its renewable water resources; the global average is 5%. What’s vital is the infrastructure (irrigation) to deliver it to a crop at the right time to ensure dry-season success.

Africa offers a compelling investment market. It is not for the faint-hearted; the risks can be substantial, but for the well informed there is an opportunity to acquire large productive farms that are likely to significantly increase in capital value over time.

 

Where to invest in farmland

Agricultural commodities and assets are now truly global markets. Investors can spread their portfolio across countries and regions, soil types, climates and enterprises, enabling the ironing out of market volatility with the option to spread risk and maximise returns; or they can hone in on specific markets. Examples of current specific opportunities can be classified into three types:

 

1. Core

In the US Corn Belt, investment risk is low, ideal for the private investor. Farmland markets are accessible and transparent.

 

2. Value added

Denmark offers high-quality farmland coupled with excellent farm management, good access to markets and a world-class food-processing industry. Significant price correction also creates opportunities to invest for generous capital growth and a rewarding income yield.

 

3. Opportunistic

Romania is a market with high-quality farmland at reasonable prices relative to the mature markets in Western Europe, including the UK.