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Nutrition: investing in the future of food

Nutrition: investing in the future of food

January 2018

Help prevent and cure disease with nutrition1

Our Nutrition strategy invests in companies that are developing solutions to help secure the world’s future food supply. These solutions include innovations to improve productivity in farming, increase efficiency in food transportation and processing, and maximise the nutritional content of the food we eat.

1. Farming

Continued improvements in agricultural practices, such as using land more efficiently, will be essential to produce the required quantity and quality of food over the years to come.
Smart farming
New technology is creating 'connected farms', helping to maximise productivity through precise analysis, monitoring and crop management.
Examples of smart farming include variable-rate seeding, IT-based crop scouting, variable-rate fertilizer spreaders and real-time yield monitors.

Source: Pictet Asset Management

Yet this must not come at the cost of sustainability. Soil, for instance, is an essential resource for 95 per cent of the food that we produce. But today, 33 per cent of soil has been degraded, and this is not easily reversible: it can take up to 1,000 years to produce just 2–3cm of fertile top soil2.

Dealing with this will be a major challenge, but it also represents an opportunity for companies able to provide solutions, such as precision monitoring tools enabling the accurate application of fertilisers to correct soil imbalances. At the same time, rising incomes in the developing world are boosting demand for higher nutrient-content food products such as animal protein, which tend to require significantly more critical resources to produce them.

Better farming machinery and food production systems are essential and our strategy supports ongoing technological innovation in this area. Investing in companies that adopt best-practice farming techniques will lead to increased efficiency, less waste and lower costs due to economies of scale.

2. Transformation and distribution

Delivering high quality nutrition where it is needed is critical in a world where consumer eating habits are dramatically changing.
Every year, food loss amounts to an estimated economic cost of USD 750 billion. – Food and Agriculture Organization

Today, 50% of time spent eating in the US is dedicated to snacking, making it challenging to maintain a balanced diet.

From food producers to distributors, all the way through to the consumer, all will have a role to play. And nowhere is change more necessary than when it comes to increasing efficiency to reduce waste.

With food losses occurring during harvest, processing, transport and storage, there are many opportunities for companies to increase efficiency. Innovations include anti-microbial packaging that helps to prevent damage during transport and maintain food safety, while innovative sensors on food packaging can help avoid confusion about ‘use-by dates’, reducing the vast amount of food thrown away by consumers.

3. Food

Advances in farming productivity and food distribution have disproportionately focused on producing calories, with little regard for quality. This has led to increased consumption of processed food, with unintended consequences – most notably the excess consumption of sugar, widely regarded as a major cause of the increase in global obesity levels.
Around 20% of the global population suffer from a poor diet. – Food and Agriculture Organization
Global hunger, poor nutrition and obesity are costing the world trillions of dollars in health costs and lost productivity. Nutrient loss is not just averted through better efficiency in the supply chain, but also through fortifying foods with nutrients, improving awareness through better labels and even modernizing food safety regulations. In both developed and emerging countries, a greater focus on health is changing consumer and regulatory attitudes towards improving the nutritional content of food. Companies involved in this transition through the development of high-quality food products, whether that be through better ingredients, reformulation, testing, quality control or certification, are all set to benefit from the growing global focus on health, sourcing and treatment of food.

Food for thought

Our Nutrition strategy takes a wholly positive approach, aiming to benefit from solutions, not problems – we do not invest in commodities or speculate in shortages in food. Rather, we focus on companies involved in helping to secure the world’s future food supply and that therefore represent sustainable long-term opportunities for investors.