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The Need for a New Paradigm
Over the last century, the global food system has achieved extraordinary productivity, enabling population growth and economic development. However, this achievement has come at a high cost. Today’s intensive agricultural practices contribute significantly to greenhouse gas emissions, water depletion, deforestation, and soil degradation. As a result, the current model threatens the long-term viability of food production and fails to address the core issue of nutrition distribution.
Our food system operates on a delicate balance between productivity and sustainability, and it is now at a breaking point. Food is Investable argues for an optimized approach—producing food within the planet’s boundaries rather than maximizing yield at any cost. This “productivity versus sustainability” challenge demands a new paradigm where food systems are both resilient and regenerative. By transitioning to practices prioritizing resource efficiency and ecological integrity, the global agrifood sector can ensure food security, reduce health risks, and maintain a stable environment.
The Barriers to Investment
Why is agrifood under-invested despite its potential? The report identifies several significant barriers.
- Regulatory complexity and government interventionism
- Long innovation cycles compared to many other industries
- Financing challenges, e.g., for capacity build-up
- Relatively poor historical track record of exits
The Rise of Impact Investing in Agrifood
Despite these barriers, the agrifood sector is becoming increasingly attractive, particularly for impact investors. The alignment between agrifood’s potential for environmental and social impact with the growing emphasis on ESG (Environmental, Social, and Governance) investment criteria presents a compelling opportunity. Investors are starting to recognize agrifood’s ability to generate both financial and ESG benefits, as it directly addresses issues like food security, biodiversity, and emissions reduction.
The report identifies four key factors that are making the sector more attractive to investors:
- Technological Maturity: Disruptive technologies like biological crop protection, plant-based proteins, solid-state fermentation, CRISPR, and vertical farming have reached a level of maturity that reduces investment risk. Today, most farmers in the U.S. and Europe have adopted or are planning to adopt such technologies, signaling a readiness to embrace change.
- Policy Support: Policies like the EU Green Deal push the agrifood sector towards sustainability. These regulations include ambitious targets such as reducing pesticide and fertilizer use and restoring degraded ecosystems, creating a conducive environment for investors to support sustainable practices.
- Valuation Adjustments: Valuations in the sector have stabilized since their 2021 peak, creating more realistic pricing for investment. With less competition for deals, investors can access high-quality opportunities without overpaying.
- Enhanced ESG Appeal: The agrifood sector offers a superior value proposition for ESG investors. Its direct impact on environmental and social outcomes makes it an ideal sector for those seeking both profit and purpose.
The Treasure Map: A Guide for Agrifood Investment
To assist investors in navigating the agrifood landscape, the report presents the “Treasure Map,” a high-level guide categorizing investment opportunities across four themes: Healthy Soils, Sustainable Proteins and Fats, Sustainable Supply Chains, and Healthy Diets. This map is intended as a strategic entry point for investors, helping them identify areas where they can find relevant investments based on many criteria, including:
- Number of available investment targets in the space
- Historic track record of companies and investors focused on the space
- Technology maturity
- Market size and growth outlook (expected evolution of demand, indication of supportive trends, regulatory landscape, etc.)
- Economic viability (unit economics, capital needs, etc.) for scaling scenarios
- Potential positive impact.
While the Treasure Map is a valuable starting point, it is not exhaustive. As technologies and societal demands evolve, so will investment opportunities in the agrifood sector. Investors are encouraged to stay flexible and adaptive to new trends and emerging market needs.
A Call to Action
The agrifood sector is at a unique crossroads of necessity and opportunity. With the right capital allocation, we can reimagine a food system that meets global nutritional needs and respects ecological boundaries. Food is Investable offers a roadmap for those interested in investing in the agrifood sector’s transformation.
The journey toward a sustainable and resilient food system requires commitment and collaboration from both private and public stakeholders. For investors, the rewards are substantial—not only in terms of financial returns but also in creating a legacy of lasting impact. The food system transformation is a challenge, but it’s also one of the greatest opportunities of our time. The report is a call for action, urging investors to take the leap and be part of this critical evolution for a sustainable future.
Download the report here, and contact investable@refood.co to discuss the report or specific segments.
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