The Global Food Crisis Will Likely Get Worse, But Investing In This Asset Class Can Help

If you turn on the evening news, the subject of inflation is the first thing on everyone’s mind when it comes to the economy. Those worries are well founded, considering the latest reports have inflation at 8.5%, the highest rate in 40 years. Some of the most notable price increases affecting consumers have been real estate, gasoline and food.

However, inflation isn’t the only thing putting upward pressure on food prices. Staples like rice, wheat and corn have all gotten more expensive because of a global supply crunch. While some of this strain can be attributed to geopolitical factors like the war in Ukraine, some less-talked-about issues are putting a more permanent strain on supply.

Growing Food Demands

The growth of the global middle class worldwide in the last several decades has been unprecedented. While that’s a good thing economically, this newly minted global middle class is adopting a healthier diet that requires more agricultural production.

Fruits and nuts are in higher demand than ever before, and the increasing consumption of meat means a rising demand for crops like corn and oat to feed the livestock. In fact, it can take as much as six pounds of food crops to produce just one pound of beef.

Between the growth of the overall global population and the middle class, the United Nations estimates that food production will need to double by 2050 to meet demand. 

Shrinking Farmland Supply

Meeting the global food demand isn’t a matter of simply opening new farms because the amount of arable farmland in the U.S. is shrinking at a steady pace. As suburban areas are expanding, farmland is being converted into new developments for housing and commercial uses.

According to the U.S. Department of Agriculture, the United States lost over 1.3 million acres of farmland in 2021 alone. In fact, the U.S. has lost almost 14 million acres of farmland since 2014. The irony here is that all the things that make land great for farming — moderate climate, access to water and transportation hubs — make it great for housing development.

As the middle class and the global population as a whole grows, the farmland needed to feed them is increasingly being repurposed to house them.

When you add geopolitical- and COVID-19-related supply chain disruptions and climate change, you have a perfect recipe for both surging food prices and a global food shortage. While the middle class struggles to keep up with rising food prices, the situation for those living below the poverty line is even more dire.

The Food and Agriculture Organization of the United Nations estimates nearly 1 billion people around the world go hungry, and as many as 3 billion more lack access to high quality, healthy food. Many predict these numbers will grow in the next year as the food shortage crisis continues. 

How Farmland Investors Are Helping

The good news is that investors can help. That may sound like a bit of an ironic twist since investors are often blamed for driving up the prices of global commodities. But in the case of the global food crisis, investors can contribute in a positive way while still earning an attractive return.

Every acre of farmland an investor buys is another acre that won’t be bulldozed or cleared for development. Better still, investors will be banking on a commodity that’s constantly growing in demand. Investors who haven’t already added farmland to their portfolio may want to consider doing so.

Not all farming operations are the same. Sustainability is a key factor in the long-term value of farmland and the ability to meet the growing demands for food crops.

FarmTogether is an online investment manager that allows investors to become equity partners with farming operations in responsible, sustainable agricultural ventures. The platform’s founders are committed to creating profitable partnerships between investors and sustainable farming projects.

FarmTogether's acreage is enrolled and certified annually through the Leading Harvest Sustainability Standard, verifying that 100% of its portfolio is being managed sustainably through outcomes-based evidence and third-party audits.

Investors on the platform can participate directly in specific offerings through its crowdfunding channel or invest in the Sustainable Farmland Fund, which has a diverse portfolio of institutional-grade sustainable farmland. 

Accredited investors can learn more about investing in this asset class and its impact on the future of the global food supply through FarmTogether’s website.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice

Photo by Melissa Askew on Unsplash