Agriculture, an essential industry at the backbone of our society, is undergoing immense global stress. Pressing issues such as climate change, depleted resources, and soil erosion – to name a few – are negatively impacting the industry as we know it. And while not all parts of the world will feel the effects to the same magnitude, the world’s overall food security is in jeopardy. As a result, agriculture demands both study and action to successfully combat the full effects of climate change.
In this post, we’ll dive into the main threats the agricultural industry is facing on a global scale, as well as highlight ways in which you can invest in agriculture to help American farmers prepare for the challenges ahead.
One of the most well-known threats to the global agriculture industry is, of course, climate change. Time Magazine covers the issue, stating that a “recent IPCC report predicted a 2 to 6 percent decline in global crop yields every decade going forward...potentially millions of acres phasing out annually — due to drought, heat, flooding, superstorms, weather volatility, shifting seasons, insect infestations and other symptoms of a warming planet.”
Statistics like these plant the seed for future devastation: the collapse of food systems. The shifting of weather patterns is causing adverse effects for crop growth – from heat waves to an overabundance of rain – resulting in food supply disruptions.
These changes in climate affect various regions of the world differently, but the adverse effects appear on a global scale. What’s more, because of climate change, farmers face stricter restrictions on what practices they can use. The UK's Government Office for Science, for example, in their 2011 report on The Future of Food and Farming, stated that “policies for climate change mitigation will also have a very significant effect on the food system – the challenge of feeding a larger global population must be met while delivering a steep reduction in greenhouse gas emissions.”
Responding to the water crisis
Another growing threat to agriculture is resource scarcity, with water being at the forefront of the issue. Climate change has affected water availability by increasing water demand while shrinking the available water supply. Since rising temperatures lead to greater evaporation, the atmosphere’s capacity to hold water increases, resulting in an imbalance between heavy rainfall in some areas and extreme dryness in others. If temperatures continue to rise at these faster rates, ensuring that food crops and livestock continue to thrive will, in turn, require a larger water supply – especially in areas affected by a lack of regular precipitation that are subjected to droughts. According to the EPA, this shifting balance between water supply and demand is one of the greatest challenges for farmers, ranchers, and agricultural communities as they strive to meet consumers’ needs.
And what’s more, the water scarcity issue doesn’t just create droughts.. The areas affected by excess rainfall suffer from another issue: poorer water quality. As precipitation increases, existing systems that make up the water infrastructure – that the agriculture industry heavily relies on to operate – become overwhelmed. More rain results in more runoff, and more runoff results in an increased amount of things like “sediment, nutrients, pollutants, trash, animal waste” polluting our water supply and making it unusable or even potentially unsafe without proper treatment.
For farmers in both dry and wet areas, maintaining a proper water supply means ever-growing costs: whether it’s the increased financial stress of treating the polluted water supply or offsetting the effects of a drought. That said, a recent report presented by Nuveen points out an interesting trend that highlights how farmland investing can help – as well as potentially lead to increased returns. The report notes that “as water becomes increasingly scarce, farmland with sustainable water resources, including surface and groundwater, should see enhanced valuations.” Investing directly into agricultural land, in turn, creates a potentially compelling opportunity as these projections indicate relatively stable returns in the near future since climate change, unfortunately, will remain a threat for time to come.
Land is another resource that is becoming increasingly scarce and putting a strain on the agricultural industry. As the population grows, there are a number of reasons why land availability is negatively impacted, foremostly a result of the fight for industrialization, urbanization, and housing versus agricultural growth. While some argue that increased urbanization poses a threat to agricultural growth, some studies indicate that the threat is a bit more complex.
At a glance, urbanization is usually considered a threat to agricultural growth: as urban expansion increases at the expense of agricultural land, we generally see a loss of physical resources when it comes to agricultural growth.
The scientific journal, “Philosophical Transactions of the Royal Society B: Biological Sciences,” explores this issue on a more intricate level, however, concluding that urbanization might have some positive effects. The journal notes that “urban demand for agricultural products has great importance for rural incomes,” and that ultimately, “agricultural producers and rural consumers also rely on urban-based enterprises for a wide range of goods and services—including access to markets.” So, the relationship is arguably synergistic – and in order to account for this, we might once again look towards farmland investing.
Without a doubt, as climate change continues to ravage many of our existing systems and infrastructures, agricultural enterprises that seek success must find ways to adapt. Those who do so will find new ways to disrupt both agriculture and urban demand in ways that benefit both producer-consumer, as well as rural populations. In short, agricultural investing that goes directly towards farms can help them with climate change mitigation, as well as adaptation to new systems and technologies that will continue to change the agricultural industry.
Invasive species were on everyone’s minds earlier this year with the infamous Murder Hornet reports, but species like these have been posing a threat to agriculture and native species across the globe for much longer than most realize.
A report published in the Proceedings of the National Academy of Sciences of the United States of America explains that due to the increase in worldwide trade, species have been able to spread across the globe to regions where they would normally be absent and wreak havoc upon the native species – like bees. As globalization increases, this can have costly effects, with the report quoting an estimated annual $40 billion valuation linked directly to “crop and forest production losses from invasive insects and pathogens” in the United States alone. Additional costs, thus, continue to stack up as farmers constantly need to invest in new pesticides to combat the new species that threaten crops.
With foreign bodies come foreign pathogens: as the demands placed on the agriculture industry grow so too does the risk of the disease spreading amongst crops and livestock. An article in Food Security explains that the prevalence of transboundary animal diseases is a result of these illnesses being highly contagious.
The negative effects of urbanization particularly come into play here: the study notes that urbanization increases, “small-scale, backyard animal production in cities, where there is bound to be contact between humans and animals.” These changes in ecosystems directly affect livestock populations, as infections can spread worldwide via “international travel and through trade in animals, animal products, and foodstuffs, threatening livestock production.”
And, as animal production becomes larger-scale to meet global demands, so too does the potential devastation an outbreak of disease can cause. Farmers need to increasingly account for these illnesses and set up food safety systems for both livestock and workers who handle and process meat. Thus, we face a direct threat to the economic health of the global livestock sector, with both farmers’ livelihoods and consumers’ food security becoming affected. To stay equipped for these costly risks, farmers will need additional financial support – especially during trying times such as the COVID-19 pandemic.
While all the threats the agricultural industry is facing are daunting, potential solutions do exist. Technology, in particular, continues to lead at the forefront of agricultural innovation, and with it comes greater accessibility to participating in the agricultural industry directly. By enacting new policies, new practices, and new technologies, agricultural enterprises can mitigate losses and offset costs caused by climate change – and these costly steps towards mitigation create opportunities for farmland investment to go a long way. Helping agricultural businesses afford new solutions – such as water treatment systems and protective gear for meat plant workers – allows them to adapt to these challenges more efficiently and even offset future health crises.
Investing in agriculture today directly helps farmers ready themselves for these changes and stay ahead of the technological curve. FarmTogether allows you to directly invest in handpicked, vetted farmland from trusted businesses, as well as purchase farmland for your clients.
The FarmTogether team believes that there is a new era coming to American farming. With our current farmers aging, there will be a new generation operating and owning much of our farmland. Market trends and sustainability requirements will reward the farms with the capital to make this transition smoothly.
At FarmTogether, we consider it our mission to channel funding for these upgrades and transitions. Our investors in turn share in the rewards with cash income, capital appreciation, a balanced portfolio, and the satisfaction of helping to preserve the best of our rural land and communities.
FarmTogether also offers extensive monitoring and reporting on your investment, keeping you up to date on your farmland’s performance. By investing in the highest-quality farmland, you can meaningfully support American agriculture as it continuously faces global threats – both economic and natural.
Disclaimer: FarmTogether is not a registered broker-dealer, investment adviser or investment manager. FarmTogether does not provide tax, legal or investment advice. This material has been prepared for informational and educational purposes only. You should consult your own tax, legal and investment advisors before engaging in any transaction.