Investing in the healthy and sustainable nutrition of the world

Our food systems today are very complex, globally orga­ni­zed and, unfort­u­na­tely, often not very effi­ci­ent: the produc­tion of food alre­ady takes up about 40 percent of the usable land area and 70 percent of the world’s fresh water consump­tion. This is a major factor in pres­su­res on biodi­ver­sity and accounts for more than one-third of global green­house gas emis­si­ons. At the same time, inef­fi­ci­ent produc­tion and proces­sing methods, long global supply chains cause an enorm­ous amount of food waste: about one third of the food produ­ced is not consu­med but lost along the value chain.

All this seems all the more drama­tic given that demand for food is curr­ently expec­ted to increase by up to 60 percent by 2050 due to demo­gra­phic deve­lo­p­ments, the growth of the world’s popu­la­tion and chan­ges in dietary habits.

From a social and health perspec­tive, our current food systems also lead to serious chal­lenges: While about 2 billion people suffer from over­weight or even obesity, another 2 billion do not have suffi­ci­ent access to food and suffer from hunger. World­wide, about 20% of all deaths today are due to poor, unhe­althy or inade­quate nutrition.

There is a need for sustainable change in rela­tion to our food systems that will help improve the quality and sustaina­bi­lity of food. The goal of this should be to reduce the envi­ron­men­tal foot­print and food waste, and increase the quality and sustaina­bi­lity of healthy food for all people. Accor­din­gly, based on scien­ti­fic evidence, many parts of today’s food value chain are not included in our defi­ni­tion of the future of food: e.g., the food chain of the future. Agri­cul­tu­ral chemi­cals and synthe­tic ferti­li­zers, farm animal anti­bio­tics, fast food restau­rants, beef, alco­ho­lic and carbo­na­ted bever­a­ges, or even confectionery.

Howe­ver, as in the area of sustainable energy tran­si­tion, this will require enorm­ous invest­ments over years and deca­des from the public and private sides, which could also repre­sent inte­res­t­ing invest­ment oppor­tu­ni­ties from a finan­cial and sustainable perspective.

One promi­sing future segment, for exam­ple, is agri­cul­tu­ral engi­nee­ring tech­no­lo­gies that make it possi­ble to improve crop yields with less resource input. For exam­ple, live­stock produc­tion can be made more effi­ci­ent by adop­ting better diagno­stic and preven­tive measu­res for animal health, such as vitamins, eubio­tics, enzy­mes, and vacci­nes that improve feed intake and yield while redu­cing the use of anti­bio­tics rele­vant to human medicine.

Food waste solu­ti­ons, or the circu­lar economy, is about redu­cing food waste, which curr­ently amounts to an incre­di­ble 1.3 billion tons per year world­wide. Better logi­stics, better distri­bu­tion networks and better food safety are needed to reduce the waste moun­tain. All of this can be impro­ved through technology.

Then there is the produc­tion of healthy food itself. For exam­ple, an acute problem for food manu­fac­tu­r­ers is how to make food more nutri­tious, more afforda­ble and, ideally, more sustainable.

Simon Frank joined Pictet Asset Manage­ment in Frank­furt as a Senior Invest­ment Advi­sor in Decem­ber 2019. In this func­tion, he is available as a cont­act person for product-speci­fic issues, but also for asset allo­ca­tion and sustaina­bi­lity topics. Previously, Simon Frank worked for more than 10 years as a port­fo­lio mana­ger and fund selec­tor in the multi-asset / fund-of-funds sector at DWS and Alli­anz Global Inves­tors, among others. He holds a degree in busi­ness admi­nis­tra­tion (Univer­sity of Bayreuth and Univer­sity of Warwick), and is a CFA and CAIA charterholder.
sfrank@pictet.com