Food presents significant investment opportunity but needs to be done responsibly

From

Damian Graham

The ability to influence the long-term sustainability of food supply chains and support the health of the planet, has driven First State Super’s interest the food and agricultural sector, according to Chief Investment Officer Damian Graham.

Speaking this week in Sydney, Mr Graham said issues relating to production, utilisation and wastage would become increasingly critical as global food demand was predicted to grow by more than 10 per cent each decade over the next 30 years.

First State Super has approximately A$1 billion invested in the agriculture sector. Some of the more recent investments include the sale and leaseback of land for almond production along the Murray River and the ownership of facilities to support poultry production on a rent by area basis.

To date, much of the focus on food investments has been based on the growth of the Asian middle class and subsequent increased demand, but Mr Graham said this needed to be complemented by the long-term supply-side considerations such as environmental impact and sustainability.

“When we’re thinking about our job as a responsible investor, we’re really thinking about having a positive impact on society and the communities in which our members retire,” Mr Graham said.

Mr Graham outlined four key issues impacting the future of food:

  • Food utilisation: if we waste less we can produce less – this would have significant global benefits from an environmental and resource perspective.
  • Food production: using technology to improve productivity and make processes more efficient, environmentally friendly and faster. For example, the potential for technology to be used to optimise seed, water and fertiliser usage.
  • Food substitution: developing more sustainably grown substitutes such as plant protein-based meat substitutes right through to the ‘clean meats’ grown in labs.
  • Food distribution and storage: the food supply chain currently uses significant refrigerants, a cause of climate emissions. Also, there are significant inefficiencies in logistics across countries which drive significant wastage.

“Addressing these issues are important for investment decisions and for the future of food supplies across the globe,” Mr Graham said. “Innovations such as ‘clean meats’, ‘just in time’ food delivery and ‘super glass houses’ will be important developments driven by investment in technology.”

“Through our investments in food and agriculture, we are seeking to continue to optimise the efficiency of production around energy, water and other inputs to help meet increased global demand in a more sustainable way; while continuing to meet our obligation to provide our members with the best possible investment returns.”

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