Giving Compass' Take:
- This report from Arabella Advisors offers guidance on how investors can drive a good food system by investing in a sustainable supply chain and sustainable farming.
- How can investments in sustainable farming fit within an ESG portfolio?
- Read more about investing in local, organic farming.
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As Americans’ desire for healthier, more sustainable food options increases, the good food
marketplace is rapidly maturing, creating opportunities for interested investors to drive social,
environmental, and financial returns by helping to build a stronger good food supply chain.
At Arabella, we believe that the recipe for a Good Food system has three essential ingredients:
- A culture that demands good food
- An infrastructure that supplies good food to meet that demand
- A policy environment that enables a good food system to take root
Developing the infrastructure to supply good food will require more than philanthropy alone can deliver. Most of the solutions we need must come from private-sector commitments—specifically, from
investments in companies across the food supply chain that can bring more sustainable, healthy, and affordable food to market. Already, entrepreneurs and innovators are hard at work developing solutions designed to meet the good food market demands of the future. Below, we identify current opportunities across five areas of the good food supply chain—places where we believe capital investments can yield both compelling investment returns and meaningful impact in expanding the supply of good food.
Today’s agriculture too often uses synthetic chemicals and industrial products that compromise soil fertility, biodiversity, and food’s nutritional benefits. Currently, 38 percent of arable land worldwide is degraded by poor natural resource management.
Investing in sustainably managed farmland can help drive a shift toward more holistic and regenerative approaches to food production, even as it produces strong financial returns.
THE CURRENT OPPORTUNITIES
As an investment, domestic farmland has appreciated approximately five percent annually for the past decade. The stability and strength of farmland investing, coupled with skyrocketing demand for organic produce, have accelerated the growth of new organic farms and the conversion of existing farms to organic. Capital infusions by impact investors can bring economies of scale to organic farming, creating better incentives for restorative farming practices. Alternatively, they can provide concessionary capital to create a cushion as farmers convert to organic farming.
Demand for sustainably raised livestock in the United States is rising exponentially, as organic, grass-fed, and pasture raised livestock tends to be more nutritious, humane, and environmentally friendly. By supporting farms committed to sustainable livestock production, impact investors can help shift the market and bring scale to these businesses.
Read the full article about sustainable farming at Arabella Advisors.