In an urgent bid to address the agriculture sector’s carbon footprint, while balancing the needs of feeding the global population, a wave of innovative solutions and technologies are quickly emerging.
Two billion more people to feed between now and 2050
With population growth showing no signs of abating, the race is on to meet the demand for food without adding to the already significant emissions footprint of the global Agricultural sector.
Breakthrough solutions across the agricultural value chain are attracting significant investment, with initiatives focused on decreasing food waste, making the most of already scarce resources and advancing innovation in sustainable agriculture. In the US alone, sustainable agriculture has attracted US$2.4 trillion in assets under management.1
Decarbonising global food systems
The urgency to reduce emissions is laid bare by the enormity of the sector’s growing emissions profile. Emissions from global food systems equate to around one-third of the worldwide total, and of this, almost 40% comes from agricultural production. Direct emissions from cattle and dairy are collectively greater than any single country, excluding China.2
The chart below depicts the number of kilograms of carbon dioxide equivalent (CO2e) needed to produce a single kilogram of food by category. While beef is incredibly emissions-intensive, this issue and others like it are being tackled by agricultural innovation and changing practices. Meanwhile, increased production of alternative proteins, greater availability of fresh produce and changing diets to reduce meat consumption are helping to address the total emissions related to food production.
Chart 1: GHG intensity of various foods, (kg of CO2e per kg of protein)
Source: McKinsey & Company, Agriculture and climate change, Reducing emissions through improved farming practices. April 2020. Data: Greenhouse gas emissions from pig and chicken supply chains: A global life cycle assessment, Food and Agriculture Organization of the United Nations (FAQ). Rome; Greenhouse gas emissions from ruminant supply chains: A global life cycle assessment, Food and Agriculture Organization of the United Nations (FAQ) Rome; McKinsey analysis.
Without any material changes to current practices, agricultural emissions are predicted to increase by 15-20% by 2050 due to a swelling global population and per capita growth in food consumption of between 8-12%.3
Reimagining agricultural practices
Reducing food system emissions will require change on various fronts. When it comes to agriculture specifically, optimising the animal feed mix, crop rotation strategies, and improving fertilising practices are just a few ways that can help.
Additionally, an explosion of new ‘agtech’ innovations are already making a material difference, including:
- Better plant genetics to increase crop resilience.
- Using big data, IoT and AI technology to monitor soil moisture and nutrient composition.
- The use of drones to deliver precision fertiliser or pesticide programs.
- Robotics to aid crop harvesting.
The value of global ‘agtech’ is expanding rapidly. Valued at US$9.11 billion in 2020, it is expected to reach US$32.50 billion by 2027.4
Invest in the transition to net zero
Our new active ETF, the Janus Henderson Net Zero Transition Resources Active ETF (Managed Fund) (ASX:JZRO) offers access to this multi-trillion dollar investment thematic. It can invest in companies worldwide that are enabling the transition to a net zero carbon emission future, including those within the sustainable agriculture sector.
1. Farming for the Future, PWC. March 2022.
2. Agriculture and Climate Change, McKinsey.
3. The future of food and agriculture – FAO, United Nations.
4. Agtech market review – Global Banking and Finance Review.
For important product information and disclosures such as PDS and TMD, please visit: https://www.janushenderson.com/en-au/investor/product/net-zero-transition-resources-fund/