Feeding a growing global population requires innovation in food and agricultural technologies. We must re-think old paradigms and invest in solutions that not only boost agricultural productivity and food’s nutritional value but also reduce negative impacts on the planet. As part of our “Promise of Progress” series, I discussed these issues with Hanneke Faber, President of Nutrition at Unilever; Marc Oshima, Co-founder of AeroFarms; Anne Simpson, Head of Sustainability at Franklin Templeton; and Patrick Vizzone, Head of Agri-Food at Franklin Templeton Asia Pacific Alternatives. Here are my top takeaways:
- Food production’s broad societal impacts. According to Anne, food security is one of the top issues for global human wellbeing. Hanneke mentioned that at current depletion rates of fertile soil, we may only have 50 years of harvests left without major changes. And Patrick pointed out that diet-related issues are driving 80% of healthcare costs in the United States, mainly attributed to a food system designed post World War II to deliver calorie dense and shelf stable products. Marc’s company is addressing this concern by growing micronutrient rich veggies, using data- and precision-driven farming methods. Hanneke and Unilever are focusing on regenerative agriculture—agricultural practices that improve soil health and decrease emissions and water use.
- Localization is critical to improving supply chains. AeroFarms builds vertical farms directly in communities, reducing transportation costs, spoilage and waste. According to Marc, they produce up to 390 times greater productivity per square foot, while using up to 95% less water and no pesticides. Specifically, traditional fields produce two to three harvests of leafy greens per year, as opposed to 26 harvests in vertical farms. Recently, Unilever realized only 27% of the ingredients in food they sold in Africa was grown in Africa. Through local sourcing, they increased it to more than 60%. Localization improves supply chain resilience, improves community food security and is often less expensive. Patrick believes we are essentially seeing a rewiring of trade flows to be shorter, localized, more regionalized, less risky, and not purely built on cost projections.
- Private and public capital partnership is necessary. Patrick confirmed food production innovation follows a similar investment path to other industries. However, going forward, governments, endowments and foundations have a critical role to play, particularly in risk mitigation in developing countries. These sectors must create supportive environments within the food ecosystem. Anne mentioned that clear measures and standards are needed for investors to make better informed decisions on the impact companies have on the environment.
- Taste AND health are key. Hanneke knows it’s critical that food product design not only wins on taste, but also on health benefits and the health of the planet. Marc takes a similar approach with their arugula, which contains 100% more vitamin C than field-grown varieties. Its rich flavor and attractive packaging promote it as the “the new popcorn!”
Sustainable investment in food is about taking care of people, taking care of the planet, and creating a shared prosperity through investment opportunities that take natural capital into account. This trifecta leads to the investment opportunities we need to find as fiduciaries. To hear the complete conversation, sign up for the on-demand webinar HERE.
WHAT ARE THE RISKS?
All investments involve risks, including possible loss of principal. The value of investments can go down as well as up, and investors may not get back the full amount invested. Any companies and/or case studies referenced herein are used solely for illustrative purposes; any investment may or may not be currently held by any portfolio advised by Franklin Templeton. The information provided is not a recommendation or individual investment advice for any particular security, strategy, or investment product and is not an indication of the trading intent of any Franklin Templeton managed portfolio. Franklin Templeton and our Specialist Investment Managers have certain environmental, sustainability and governance (ESG) goals or capabilities; however, not all strategies are managed to “ESG” oriented objectives.
Important Legal Information
This material is intended to be of general interest only and should not be construed as individual investment advice or a recommendation or solicitation to buy, sell or hold any security or to adopt any investment strategy. It does not constitute legal or tax advice. This material may not be reproduced, distributed or published without prior written permission from Franklin Templeton.
The views expressed are those of the investment manager and the comments, opinions and analyses are rendered as at publication date and may change without notice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole. The information provided in this material is not intended as a complete analysis of every material fact regarding any country, region or market. There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance. All investments involve risks, including possible loss of principal.
Any research and analysis contained in this material has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Data from third party sources may have been used in the preparation of this material and Franklin Templeton (“FT”) has not independently verified, validated or audited such data. Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. The mention of any individual securities should neither constitute nor be construed as a recommendation to purchase, hold or sell any securities, and the information provided regarding such individual securities (if any) is not a sufficient basis upon which to make an investment decision. FT accepts no liability whatsoever for any loss arising from use of this information and reliance upon the comments, opinions and analyses in the material is at the sole discretion of the user.
Products, services and information may not be available in all jurisdictions and are offered outside the U.S. by other FT affiliates and/or their distributors as local laws and regulation permits. Please consult your own financial professional or Franklin Templeton institutional contact for further information on availability of products and services in your jurisdiction.
Issued in the U.S. by Franklin Distributors, LLC, One Franklin Parkway, San Mateo, California 94403-1906, (800) DIAL BEN/342-5236, franklintempleton.com – Franklin Distributors, LLC, member FINRA/SIPC, is the principal distributor of Franklin Templeton U.S. registered products, which are not FDIC insured; may lose value; and are not bank guaranteed and are available only in jurisdictions where an offer or solicitation of such products is permitted under applicable laws and regulation.