The importance of investing in agriculture

Global agriculture accumulates almost three decades of underinvestment while facing the major challenge of feeding more and better the growing world population.


Devdiscourse News Desk | Updated: 04-04-2018 22:17 IST | Created: 04-04-2018 22:15 IST
The importance of investing in agriculture
The number of agricultural hectares per capita has been reduced remarkably in recent times from 0.35 hectares per person at the end of the 60s, to 0.19 hectares at present. (Image Credit: Pixabay)

Despite not always occupying a prominent media space such as technology or renewable energy, agriculture is one of the clearest and strongest investment trends for investors in the long term. It is a strategic and defensive sector, the most important global industry in terms of employment, highly fragmented and poorly organized and with a large margin for its capitalization and professionalization in many areas.

Global agriculture accumulates almost three decades of underinvestment while facing the major challenge of feeding more and better the growing world population with the existence of notable limitations.

All in all, the great driver of the commitment to agriculture is the demography and the remarkable socio-economic changes that the bulk of the Asian continent is experiencing. The world population is estimated at around 7,000 million and is expected to exceed the threshold of 9,000 in 2050 when the United Nations estimates that about 3/4 of the population live in Asia.

This growth means producing an average of 80 million additional people each year. In addition, the rapid economic growth of many emerging countries is changing caloric patterns, making them richer and more sophisticated so that not only will there be more mouths to feed, but we will want to eat better, more varied and with higher quality products.

Changes in diet and agricultural demand

This scenario of strong growth on the demand side is combined with significant restrictions on the supply side. In sum, the area of land available for agriculture is limited, being difficult to expand by being subject to climate discipline, land conditions and available water as 70 percent of the world's water consumption is for agricultural use (World Economic Forum).

The number of agricultural hectares per capita has been reduced remarkably in recent times from 0.35 hectares per person at the end of the 60s, to 0.19 hectares at present. The increase of urban areas or the growing environmental awareness are other elements that condition production tremendously. In the year 2000, for example, the ratio of urban areas to agricultural areas was 3.5 percent, and it is estimated that it reaches 7 percent in 2050, as per El Tribuno.

On the other hand, the levers of change and engine of the sector are also many. Although in many developing countries there is still much room for improvement in productivity ratios in terms of better cultivation techniques, use of better pesticides and fertilizers, higher ratio of field machining or more efficient irrigation systems, in the set of developed countries these improvements, in some cases, have entered a stagnation phase and it is urgent to look for new formulas to continue growing the yield of the crops.

The digital monitoring of crops, precision agriculture, the use of robots, drones, and other improvements in the field of machinery, in the agricultural sector or the incipient genetic revolution, among other elements, make up what Dr. Klaus Schwab has called the Fourth Industrial Revolution, and make up some of the fields of research and development and an important part from the solution to the great challenge of feeding more and better a more populated and prosperous planet. 

In addition to these levers aimed at increasing production, part of the improvements will also come from advances in management.

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According to El Tribuno, this strong demand makes agriculture in general a sector with a great potential for growth, the key to the development of the global economy as a whole and key to the correct resolution of other major global challenges such as environmental impact control or the access of drinking water. 

Therefore, investment in agriculture is not an unavoidable task to respond to the most basic challenge of humanity, but it stands as one of the clearest and potentially most profitable mega trends for the coming decades.

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