"A sustainable agriculture is one which depletes neither the people nor the land." (Wendell Barry)
Food provides nutrients that furnish us with energy for activity, growth, and all the functions of the body such as breathing, digesting food and keeping warm. Nutrients give us the resources for the growth and repair of the body, and for maintaining a healthy immune system. There are seven main kinds of nutrients: carbohydrates, fats, dietary fiber, minerals, proteins, vitamins, and water.
Food doesn’t just impact our health and physical functioning, it has huge repercussions on the environment. According to the WWF, food is at the centre of many environmental issues, as it is a substantial contributor to climate change and is accountable for almost 60% of global biodiversity loss.
Thomas Malthus wrote, “famine seems to be the last, the most dreadful resource of nature. The power of population is so superior to the power of the earth to produce subsistence for man, that premature death must in some shape or other visit the human race. Gigantic inevitable famine stalks in the rear, and with one mighty blow levels the population with the food of the world.” (Thomas Malthus, 1798. An Essay on the Principle of Population. Chapter IV). The Malthusian Population Theory proposes that living standards are determined by the size of the population.
So, was Malthus right?
According to the UN, sadly extreme hunger and malnutrition remain a huge obstruction to development in many countries. There are 821 million people estimated to be chronically undernourished (as of 2017), this is often a direct result of environmental degradation, drought, and biodiversity loss. Over 90 million children under five are perilously underweight, and lack of nourishment and severe food insecurity look to be increasing in almost all regions of Africa and South America.
However, the UN Sustainable Development Goals aim to end all forms of hunger and malnutrition by 2030. They want to make sure all people, and particularly children, have sufficient and nutritious food all year round. This is prescribed in Goal 2 of the UN Sustainable Development goals, which is ‘Zero Hunger'. To achieve this goal the UN advises that we need to promote sustainable agriculture, support small-scale farmers, and equal /fair access to land, technology, and markets. By 2030, the UN outlines that we must facilitate sustainable food production systems and implement robust agricultural practices that increase productivity whilst helping to maintain ecosystems. We also need to develop agriculture so that it has a stronger capacity to adapt to climate change, extreme weather, drought, flooding, and other disasters and that can increasingly improve land and soil quality.
As well as Goal 2 & Goal 12 of the UN Sustainable Development Goals are: ‘Responsible Consumption and Production’. This goal stresses that we need to urgently lower our ecological footprint by altering the way we produce and consume goods and resources, to achieve economic growth and sustainable development. According to the UN, agriculture is the principal user of water globally, and irrigation now monopolises close to 70 percent of all freshwater for human use. The efficient management of our shared natural resources, and the way we dispose of waste and pollutants, are important to achieve this goal. Stimulating industries, businesses, and consumers to recycle and reduce waste is important, as is supporting developing countries to move towards more sustainable patterns of consumption by 2030. The UN states that halving the per capita of global food waste at the retailer and consumer levels is imperative for generating more proficient production and supply chains. This can help with food security, and transfer us to a more resource-efficient economy.
As sustainable investors, we are looking for investments that contribute to the targets set out in the sustainable development goals. In the SRI and Sustainable Models, we hold the Climate Assets Fund, one of the themes of this fund is food. It invests in companies providing solutions to the food supply/demand imbalance problem, such as those involved in grain production and harvesting, food testing, food processing measurement & control, and high-tech agriculture supplies.
One of the top holdings of the Climate Assets Fund is Halma, a global group of life-saving technology companies. Titled ‘Britain's Most Admired Company in 2020’, they provide innovative solutions to many of the key problems facing the world today. One of Halma’s main efforts is supporting the environment by improving food and water quality, and monitoring air pollution. Part of their achievements in this area is ‘Reducing food waste from farm to fork’. Halma report that one-third of the food that the world produces is currently wasted, leading to needless stress on scarce resources, as well as lost revenue. In the US alone, food waste costs the country approximately $218bn a year. Goal 12 identifies food waste as one of the major sustainability challenges the world faces. Major retailers and their supply chain partners have teamed up in a coalition called Champions 12.3 which is devoted to rousing action to achieve this goal.
The logistics involved in getting fruit and vegetables from the grower to the retailer at their optimal freshness is complex. This is compounded by seasonal variations in quality, and changing environmental and weather conditions. Due to this, the fresh produce industry is struggling to precisely calculate shelf life, and retailers are forced to dispose of fruit and vegetables worth hundreds of millions of pounds into landfills. Not only is the environmental and social impact of food waste enormous, but it also results in the industry losing 10-40% of its profits. Within one of Halma’s digital growth engines is One-third, a food technology start-up. One-third uses optical technology to examine inside fresh produce without damaging it. By combining this information with images and other significant environmental data and machine learning, and artificial intelligence algorithm is then used which establishes the internal quality of the produce. This delivers key information like remaining shelf life, taste, and other quality measures. The One-third cloud-based data platform allows the supply chain to rapidly share this information, so that immediate action can be taken, thus reducing food waste in the process. One-third and Ocean Insight have developed this innovative technology to solve the problem of food waste, which helps to grow a safer, cleaner, healthier future for everyone.
In the sustainable models, we hold the Pictet Nutrition fund, which primarily targets companies that improve quality, access to, and sustainability of food production. One of its biggest holdings is Royal DSM, which is a global, purpose-led, science-based company active in nutrition, health, and sustainable living. As a science-based supplier of vitamins, carotenoids, and nutritional lipids, Royal DSM is fortifying and supplementing the diets of people in the most needed areas, like Africa, Asia, and Latin America. They offer a broad range of nutritional resolutions to address the precise nutritional requirements of a variety of the world’s most at-risk populations. One of these solutions is micronutrient powders. These powders are designed for infants and children over six months of age to enhance the micronutrient content of their diet. Thus addressing an extensive range of physical and cognitive developmental needs that have far-reaching consequences. For example in Malawi in East Africa, according to the Global Forum on Food Security and Nutrition, some 60% of its adults (4.5 million people) suffered from stunting as a child. Around two-thirds of these people earn their living from manual labour, however, they can’t fulfill their economic and earning potential because of this physical affliction, this represents an estimated $67 million loss to the economy.
Royal DSM also wants to provide all forms of proteins produced with the maximum sustainability standards. Based on environmental science, combined with expertise in human and animal nutrition, they are able to produce sustainable proteins, including plant-based, meat, eggs, and fish. For all forms of proteins, they are working on reducing greenhouse gas emissions, limiting nitrogen and phosphorous emissions, while keeping the highest nutritional standards and ensuring good livelihoods.
Part of their work includes the development of plant-based foods that taste great. People are increasingly on the lookout for healthier food while not wanting to compromise on taste, as taste remains the key decisive factor. Royal DSM aims to create an enjoyable taste experience with their ‘taste modulator’. Manufacturers can add this to their foods that are low in sugar, salt, or saturated fat or that have additional fibers or plant proteins, whilst maintaining taste and flavour.
The demand for animal protein however is likely to continue to rise over time. This ever-increasing need for animal protein, which is already placing a significant burden on the planet’s finite natural resources, will take food systems well beyond what the planet can provide.
Cows provide high-quality protein, micronutrients, and essential fatty acids and dairy cows also support the livelihood and food security of more than a billion people around the world. One significant issue is that cows generate methane, a greenhouse gas that is harmful to the planet. Nearly 60% of emissions created globally during milk production come in the form of enteric methane. A single dairy cow can generate three tons of CO2 equivalent every year. Royal DSM aims to reduce these emissions to reduce climate change. They have created a feed additive for cows (and sheep, goats, and deer) researched and developed over 10 years. Just a quarter of a teaspoon of this additive per cow per day suppresses the enzyme that triggers methane production and consistently reduces enteric methane emission by approximately 30%. Its effect is immediate and is safely broken down in the cow’s digestive system. The feed additive, therefore, contributes to a significant and immediate reduction of the environmental footprint of beef and dairy products.
So, we can prove that Malthus got it wrong.
As sustainable investors, we are part of the solution that is urgently needed to ensure enough food for all, and the preservation of our natural world. Rather than population, it is the unequal distribution of resources that is causing hunger and malnutrition. Malthus did not foresee the advancement of science and innovation, and how this could lead to sustainable solutions to equitably feeding the world, managing growing populations, and restoring and conserving our ecosystems.
‘If we're to build a future where people and nature thrive, we need to reconsider the food we eat and how it's produced.’ (WWF).