Investing in the healthy and sustainable nutrition of the world
Our food systems today are very complex, globally organized and, unfortunately, often not very efficient: the production of food already takes up about 40 percent of the usable land area and 70 percent of the world’s fresh water consumption. This is a major factor in pressures on biodiversity and accounts for more than one-third of global greenhouse gas emissions. At the same time, inefficient production and processing methods, long global supply chains cause an enormous amount of food waste: about one third of the food produced is not consumed but lost along the value chain.
All this seems all the more dramatic given that demand for food is currently expected to increase by up to 60 percent by 2050 due to demographic developments, the growth of the world’s population and changes in dietary habits.
From a social and health perspective, our current food systems also lead to serious challenges: While about 2 billion people suffer from overweight or even obesity, another 2 billion do not have sufficient access to food and suffer from hunger. Worldwide, about 20% of all deaths today are due to poor, unhealthy or inadequate nutrition.
There is a need for sustainable change in relation to our food systems that will help improve the quality and sustainability of food. The goal of this should be to reduce the environmental footprint and food waste, and increase the quality and sustainability of healthy food for all people. Accordingly, based on scientific evidence, many parts of today’s food value chain are not included in our definition of the future of food: e.g., the food chain of the future. Agricultural chemicals and synthetic fertilizers, farm animal antibiotics, fast food restaurants, beef, alcoholic and carbonated beverages, or even confectionery.
However, as in the area of sustainable energy transition, this will require enormous investments over years and decades from the public and private sides, which could also represent interesting investment opportunities from a financial and sustainable perspective.
One promising future segment, for example, is agricultural engineering technologies that make it possible to improve crop yields with less resource input. For example, livestock production can be made more efficient by adopting better diagnostic and preventive measures for animal health, such as vitamins, eubiotics, enzymes, and vaccines that improve feed intake and yield while reducing the use of antibiotics relevant to human medicine.
Food waste solutions, or the circular economy, is about reducing food waste, which currently amounts to an incredible 1.3 billion tons per year worldwide. Better logistics, better distribution networks and better food safety are needed to reduce the waste mountain. All of this can be improved through technology.
Then there is the production of healthy food itself. For example, an acute problem for food manufacturers is how to make food more nutritious, more affordable and, ideally, more sustainable.
joined Pictet Asset Management in Frankfurt as a Senior Investment Advisor in December 2019. In this function, he is available as a contact person for product-specific issues, but also for asset allocation and sustainability topics. Previously, Simon Frank worked for more than 10 years as a portfolio manager and fund selector in the multi-asset / fund-of-funds sector at DWS and Allianz Global Investors, among others. He holds a degree in business administration (University of Bayreuth and University of Warwick), and is a CFA and CAIA charterholder.