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By 2050, we will need to increase global crop production by 70% to feed a larger population with increasing food demands. At this rate, farmers will need to produce more food than they have in the last 250 years combined to keep up with global demand.
In order to think about the problem, let’s first review the different pieces of demand and then think about how much arable land the world has available to grow the necessary crops.
Increasing Meat Production Requires Higher Grain Production
Cereal crops, aka grain crops, make up more than 50% of the global daily caloric intake, and therefore, they make up one of the largest commodity markets in the world. Cereal plants are things like corn, rice, wheat, and soybeans, all of which produce an edible grain for both humans and livestock.
As you can imagine, a rather large portion of the projected crop production increase will be for direct consumption. However, the majority will be used for feed as the global demand for more protein and higher quality food sources is expected to rise by over 130%.
Rising Income Levels Lead to Higher Demand for Protein
Historically, we have seen that as a country grows their GDP and income levels rise, so does the demand for proteins such as chicken, pork, and beef.
While this market is mostly saturated in developed countries, the majority of future income growth per capita and population increase is expected to come from developing countries. As you can see, it takes a considerable amount of grain to produce one pound of meat. A 6 to 1 ratio in the case of beef!
The impact of increased demand for cereal crops has already been felt via long-term rising commodity prices, but global demand for these commodities and the land on which they are produced will become increasingly important.
Decreasing Arable Land
In the US, like most other countries, the amount of arable land has actually decreased. Basic economics would suggest that, as the supply of land decreases and the demand for food increases, the value of the land will increase in price. After all, they’re not making any more land!
Beyond the obviously favorable supply/demand characteristics for investors, we must also be highly conscious of how we are using the land we have. For these reasons, progressive farmers and agtech companies are constantly innovating with new technologies that help them maintain soil quality, improve planting efficiency and increase their overall yields in a sustainable manner.
What Happens Next?
The world will need all of this and more to produce all the food that we need by 2050. At the center of all new investments in agriculture is one central question:
Will we continue to be able to feed our growing population with limited natural resources?
Two of the most important keys to success will be protecting arable land against some unnecessary types of sprawling real estate development and innovating in order to increase crop yields on the ground we have remaining.
Today, farmland owners have opportunities to partner with progressive farmers and profit from helping to solve a global-scale problem. Individuals can preserve farmland by investing in it and keeping it in production. Further, farmers and agriculture companies are finding new and innovative ways to meet future demand every day.
The opportunity for partnership in innovation should be both life-changing and lucrative for those making a difference in the right places.
We believe the future of agriculture looks bright.
Note: The information above is not intended as investment advice. Data in the charts above is sourced from the FAO and NCBI. Additional calculations and analysis performed by AcreTrader. Past performance is no guarantee of future results. For additional risk disclosures regarding farmland investing and the risks of investing on AcreTrader, please see individual farm offering pages as well as our terms and conditions.