Technology revolution
needed to feed the world sustainably, UBS finds
The current agricultural system is unsustainable, warns a new report by UBS
Global Wealth Management's Chief Investment Office
Innovations such as the world's largest vertical farm – 130 thousand square
feet – which is due to open in Dubai by the end of 2019, are at the core of a
food revolution Technology should not be viewed as the enemy of natural food, report
stresses
According to the
UN, food production globally accounts for 40 percent of land use, 30 percent of
greenhouse gas emissions, and 70 percent of freshwater consumption. About 2 billion extra people will live on
the planet by 2050 – up from just under eight billion today – and global demand
for food is expected to increase by roughly 60 percent. At the same time,
roughly one billion people will enter the middle class.
With resources dwindling, the challenge of
how to feed a growing, urbanizing population without further damaging the earth
is intensifying. While growing food sustainably to meet
this demand will be one of the greatest challenges, the world is on the cusp of
a new agricultural revolution, says UBS CIO in its latest report. According to
the study, the way food is farmed, shipped, and consumed will be driven by innovations like vertical farming, laboratory-grown
food, and algae aquaculture. The components of the Fourth Industrial Revolution
such as Big Data, the Internet of Things, and artificial intelligence are being
integrated throughout the agriculture supply chain.
"The concept
of vertical farming, for instance, has the advantage of requiring 95-99 percent
less water compared to traditional methods. In regions where water scarcity is
common, such as in the UAE, this is an obvious advantage. In addition, we
believe it presents a genuine opportunity for investors who wish to invest in
more sustainable food production" said Wayne Gordon, Editor in Chief of
the report and commodities analyst at UBS Global Wealth Management.
Until recently,
agriculture lagged all other industries in terms of disruption. Digital
penetration in the field was just 0.3% in 2018 compared to 2.5% for financials
and close to 12% for retail. But this figure is set to spike – investment in
agriculture-related technology hit USD 16.9bn last year, up 43% from 2017,
according to AgFunder. For the agriculture industry as a whole, UBS CIO sees
the technology segment jumping from a market size of USD 135bn today to around
USD 700bn by 2030, representing a 15% compound annual growth rate.
At the same time, technology should not be
viewed as the "enemy" of natural, abundant and affordable food, find
UBS CIO. Raising agricultural productivity, safeguarding environmental health,
and satisfying evolving consumer preferences can be achieved by applying new
technologies.
"Several trends have moved food and
agriculture up the broader sustainable
living agenda. Governments are increasingly paying more attention to the United
Nations’ 17 Sustainable Development Goals (SDGs) and the Paris Climate Change accord, which clearly indicates an emerging awareness that societies need to change and become more sustainable,"
said James Purcell, Head of Sustainable and Impact Investing at UBS Global
Wealth Management.
