6 Positive Trends for Agriculture Business in 2022
If there is one industry that is on the verge of innovation, it is the agricultural business. Food is a vital enterprise in the country. Many farms are turning to new innovations to grow and harvest their crops while still focusing on protecting the environment. These farmers are looking towards the future to find viable ways to produce healthier and bigger yields with less space and resources. Consumers are also driving the industry to discover new methods to produce food with a focus on sustainability. Here is a look at some of the positives that you can expect to see in the agricultural industry for the upcoming year.
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The Challenges Facing Agriculture in 2022 and Beyond
The agriculture industry has faced its share of challenges in the past year. Since the COVID-19 pandemic, there has been a focus on labor shortage. Many workers were left without jobs during the crisis when agriculture businesses had to shut down for a short period of time. Even after these farms resumed operations, some workers did not return. As a result, the harvest of certain crops has been affected. Even getting their yields to the market has been an issue for many agricultural businesses. Truckers who drive the harvest to processing plants or other facilities have been in short supply, leading to another challenge that farmers must face in the upcoming year.
Climate change is also leading to more problems in the agricultural industry. Weather-related events have caused farmers to lose their crops over the past years. Extreme heat and storms in the Midwest devastated farmers last year. There are also concerns about shrinking land for crops. While many farms rotate their crops to help rejuvenate the soil, many farms are running out of space to plant more viable plants.
Along with that, there is always the issue of food safety at the forefront of both the farmers' and consumers' minds. Food traceability has always been a challenge. Now more than ever, consumers want to know that their food is safe from any potential recalls.
However, there is some good news. Technology is moving the agricultural business into the future. Here are a few of the positive trends that you can expect for 2022 and beyond.
Related: How to Make Money With a Farm or Land
#1: Sustainability Is A Number One Concern
With the drive to produce more sustainable products, agribusiness has been affected in many positive ways. However, when it comes time to define what "sustainability" means, it has been a challenge for many businesses. For crop growers, sustainability involves growing as much product with fewer inputs, shifting from chemical to organic pesticides, and using sustainable soil management practices.
Sustainability is a concern for many, leading to rapid changes in the agribusiness. There have been advances in biotechnology to help lead the way towards more sustainable agriculture by allowing farmers to optimize the traits of animal products or crops. Produce, organic crop, and animal protein growers have used more sustainable practices for better yields.
This positive approach to sustainability is vital to all parties, including consumers and investors. Growers see the value in preserving the soil's long-term health while boosting the productivity of the land. Many consumer-facing companies are demonstrating a pro-sustainability approach to the agriculture business to meet the needs of consumers' expectations.
Even investors have been more focused on sustainability over the years. If the land is not profitable or the yields cannot be met, then those investment opportunities can be lost. Investors want to commit to an investment that will yield high returns for years to come, and that can only be done when those farms or crops are focused on sustainability.
#2: Growing Demand For Eco-Friendly Meat Alternatives
Meat consumption on climate change is a big issue. Livestock farming makes for more than 15 percent of global greenhouse gas emissions. Along with that, forests must be cleared to support and grow animal feed products. In many situations, carbon dioxide is released, and that creates more harmful emissions in the air. Agriculture is also the largest consumer of freshwater around the globe, making up about 30 percent of consumption in the production of animal products. In addition to that, there are also concerns with what to do with the animal waste created by these yields.
With consumers becoming more aware of these problems with meat production, they are turning to meat alternatives. Many alternatives are healthier than those traditional meat options. There have been recalls of chicken, beef, and pork products in the past. In some cases, those meats contain bacteria that can lead to serious diseases for the consumer. Plus, consumers have concerns with the use of antibiotics and other chemicals used in meat production.
For many of these reasons, more people are turning to meat alternatives. Meat alternatives have gone from the fringe of society to the mainstream. More big-name fast food companies are offering meatless products on their menu. As a result of that, there has been a renewed focus on producing crops that are vital to these products, such as soybeans, mushrooms, peas, and lupines. These meat alternatives often mimic the smell, taste, feel, and look of meat but without the sustainability and health concerns with real meat.
Related: What You Need to Know Before Investing in Row Crops and Permanent Crops
#3: Crowdfunding Models for Flexible Financing
For investors who want some flexible financing options, it might be time to think about crowdfunding. The investor is a limited partner with crowdfunding, while the farm retains the land and works as an active partner. The farm makes decisions about what to grow, what crops to plant, and where to sell their products.
In many cases, the farmer or landowner might not have the solid financial health to go through traditional financing methods. They often do not have the desired mix of equity and debt to ask for a loan. That is where crowdfunding can help. By bringing in equity investments through crowdfunding, the farmer can reduce their risk of foreclosure during any of those periods of commodity downturn. Crowdfunding is an attractive option for investors, especially for those crops that many take a few years to produce, such as tree crops. The farmer can concentrate on growing their harvest, while the investors have a future profitable yield that will produce for years to come.
#4: Consolidation of Multiple Sectors
Another type of investment opportunity for investors is the consolidation of smaller farms. While this is not a new trend for 2021, it is an investment option that is accelerating. Over the past few years, agricultural commodity prices in some sectors have been weak. With that, those larger farms are at an advantage over smaller ones. Most of these advantages are tied to operating costs. For example, buying seeds can be done in bulk at a lower rate. Larger farms can afford those higher costs for bulk items, but the smaller farmers might not have the cash to purchase at those prices. Those bigger farms can trim their operating costs with that buying power, while smaller operations will struggle with higher costs.
Many investors might think that consolation of smaller farms will lead to few investment opportunities, but the opposite is true with crowdfunding. With consolidation, there are more investment opportunities with this type of funding model. Plus, many of those farms are offered at a lower initial cost. There is no need to invest larger amounts of money into smaller farms when they can be consolidated into one opportunity. This trend is one way that the current crowdfunding movement creates a wide range of options for investors.
#5: Boosting Yields With Smart Technology
The agricultural business is working smarter, not harder, to produce bountiful harvests. Technology is bridging the gap between scarce agricultural resources and rising food demand. Plus, it is helping to reduce labor, which can stop the sharp price increases for food. According to the US Department of Agriculture, labor for crops like tomatoes, spinach, peaches, and lettuce, account for 50% of the production cost. For that reason, robotics are being developed to pick fruits and vegetables, reducing the amount of labor for the harvest. Some machines are capable of harvesting the same quality in less time.
Innovative technologies have the potential to boost the yields of those crops. With smart apps and sensors, farmers can monitor their crops while regulating the amount of pesticide and fertilizers used on the products. Also, sensors are being used to monitor the weather, so no wasted water is used on the crops. With these monitoring devices, farms can map, view, and record their moisture data and crop yield in real-time, providing insight into the health of the crops.
Drones are even assisting farmers in producing better yields at harvest time. Instead of taking time to check on the crops physically, drones are outfitted with cameras to monitor the fields. If there happens to be an issue, then the farmer can inspect the area for any problems. All these new technologies allow the farmer to collect real-time data and spot any issues that can threaten the harvest. This smart technology plays a crucial role in protecting the agriculture business for the future.
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#6: The Popularity of Vertical Farming
Vertical growing is one way to cultivate vegetables and fruits indoors on vertical standing structures. With this process, the crops are grown under controlled environmental conditions. Since there are issues with limited farming space, this could be the wave of the future. There is no need for large farms, and the external conditions are all monitored. Along with that, the yield will have the optimal amount of nutrients for a healthy and more bountiful harvest.
Vertical growing requires about 70% less water than land-based farms, and there is an excellent salable yield for the season. Many of these farms do not use pesticides on their crops, making them the perfect choice for those investing in organic farms. The long-term outlook of vertical farms is rising. These farms can create an ample supply of food from anywhere in the world. There will be a higher yield to meet market demands in the future. With traditional farms, there is always a risk that the crops can be affected by pests, droughts, or other weather-related events. That is not a problem with vertical farms. Once these systems are installed, investors are also guaranteed the best yield for their investment. Investors are turning to vertical farms despite the initial costs because there is a profitable return on investments.
The agriculture industry is focused on the future. Technology is helping farmers to grow better harvests. Plus, many consumers are helping to push these businesses to more sustainable ways to farm. New technology, like vertical growers, can produce better yields than those traditional land-based farms. They also reduce the need for harmful pesticides and other chemicals.
Other forms of technology like drones, apps, and sensors help make it far more efficient and prevent potential damage to crops. Let's not forget that even investing in the agricultural business has changed. In the past, farmers went to a brick-and-mortar bank for a loan. Now with crowdfunding, they can get the needed funding while investors have opportunities to own a farm without running it. All these measures are helping to push the agricultural industry into the future. Not only are they concentrating on healthier yields for consumers, but the technology is helping to make the agriculture business a more sustainable business for future generations.
Are you interested in owning or investing in farmland or other parts of the agriculture business? Contact Land Income to learn more about their different investment opportunities.