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Investing in food

The challenge of feeding more people, sustainably

photo of avocados on the tree
The world’s population is set to increase. 2023 8B, 2030 8.5B, 2050 9.7B

Agriculture—one of the oldest forms of human economic activity—continues to play a critical role in our increasingly urbanized world. It accounts for about 4% of global gross domestic product, the World Bank says, and an even bigger share in some economies. Agricultural transformation—advances in farming practices and yields—is a critical step to economic development and wider prosperity for many countries.

As a rapidly changing climate tests farmers across the globe, they’re being called upon to feed more people with fewer resources. In less than 30 years, the global population is expected to increase by almost 2 billion. Meanwhile, the amount of land available to expand agriculture has peaked, according to an analysis of three global land studies from Our World in Data.

Meeting this challenge will require the effort of many, from farmers and food processors to governments and consumers. Investors can play a significant role, too, by deploying capital at scale to support sustainability, efficiency, and innovation in the sector.

In this report, we highlight targeted investments to support agriculture, along with profiles of some of the investments Ontario Teachers’ has made in the space. But first, here’s a look at how investment in agriculture is increasing as the sector faces four big headwinds.

The (oldest) new asset class

Institutional investors are deploying more capital in key farming regions from Australia to the Americas to Europe. In the U.S. alone, the number of farm properties owned by large institutional investors has more than tripled in 15 years, according to an index that tracks farmland investment.

Agricultural assets offer diversification and inflation protection. Food-product sales provide regular returns, and food prices tend to increase in an inflationary environment. Farmland also holds the potential of significant long-term capital appreciation. It’s a finite resource, and efforts to preserve biodiversity and limit deforestation will make it scarcer. While government restrictions on foreign ownership of farmland pose an issue in some markets, global agriculture is an increasingly attractive investment.


Compound annual growth of global farmland values over 20 years

*Based on average value of crop or arable land in US$ per hectare in 15 countries

Source: Savills

Agriculture is evolving to adapt to 4 big challenges

  • hand with dollar sign
    Climate change
    Droughts, wildfires, flooding, and other extreme weather events are increasing as the climate changes. These events are set to occur with greater magnitude and more frequency, the United Nations’ Intergovernmental Panel on Climate Change predicts. Extreme weather is a major threat in the form of lost crops and livestock. Farmers are adopting measures to help mitigate the impact of extreme weather. They include introducing more climate-resilient crops and relying on precision farming tools to determine when to irrigate plants.
  • dollar sign
    Sustainability pressures
    Farmers are under enormous pressure to reduce their environmental impact. Agricultural production contributes 11% of global greenhouse gas emissions, according to the Center for Climate and Energy Solutions. Agriculture also places high demands on freshwater resources and is a major cause of biodiversity loss. To improve their sustainability, farmers are turning to regenerative farming practices such as cover cropping, which reduces soil erosion and nutrient runoff while boosting soil moisture. Some are participating in carbon credit markets—essentially programs that pay them to sequester more carbon in the soil.
  • exclamation mark
    Labour challenges
    Labour challenges are prevalent across agriculture, as the sector grapples with a shrinking workforce, managing temporary (often migrant) workers, and a requirement to develop new skills essential to modern farming. What’s more, many farmers are aging. In Canada and the U.S., the average age of a farm operator is over 55; in Japan it’s a decade older. The sector is turning to automation and other technologies to fill labour gaps. It also continues to invest in skills development to expand the capabilities of workers.
  • exclamation mark
    Economic constraints
    Farmers occupy part of a vast food value chain that includes agricultural input suppliers, commodity traders, food processors, and food retailers. They’re sometimes described as price-takers due to their relative lack of control over their own costs and the price that agricultural commodities fetch. In recent years, due to the pandemic and geopolitical conflict, farmers have been hit hard by supply-chain constraints and rising costs for inputs like fertilizer and diesel fuel. Some farmers are turning to alternative soil nutrients or investing in more energy-efficient machinery. But lowering usage of fertilizer or fuel is often not an option.

Ontario Teachers’ has built a robust and diversified portfolio of about 130,000 acres of farmland around the world, with a focus on assets that are more likely to be resilient in a changing climate. These assets offer strong inflation protection and therefore will help us pay pensions over the long term. We’re working to improve the sustainability and returns associated with this growing portfolio.

Christopher Metrakos
Senior Managing Director, Natural Resources, Ontario Teachers’ Pension Plan
Portrait photo of Christopher Metrakos

Four ways in which investment can support agriculture

Ensuring the world produces enough healthy food—in a sustainable manner—will require changes in how we grow and harvest, transport, process and consume food. Success will require efforts from government, industry, and people. Investors can play a part by making targeted investments to support sustainable food production. Here, we highlight four strategies: investing in innovation, investing in regenerative agriculture, investing in healthy foods, and investing in people.

1. Investing in agricultural innovation

Agriculture has a long history of innovation that enabled the growth of cities and freed up people to pursue other occupations. In the past century, developments including the light gas-powered tractor, synthetic fertilizer, and drip irrigation have driven remarkable efficiencies in farming. Now, new technologies deliver data directly to farmers’ mobile devices, enhancing their real-time decision-making. Agricultural inputs are being derived from living organisms to protect or strengthen crops in a more sustainable manner. Due to innovations like these, the agritech and foodtech markets are booming, and despite a dip from 2021, investment in startups in these areas totaled almost US$30 billion in 2022, according to AgFunder.

Continuous investment in agricultural innovation will be critical if we are to feed a growing global population while safeguarding more of the world’s finite resources.

Cran Chile

Thriving on a history of innovation

Cranberries are native to North America, and the U.S. and Canada dominate global production. By pioneering the production of cranberries in large rectangular fields and harvesting the nutrient-rich fruits using proprietary mobile bridges, Cran Chile used some out-of-the box thinking to become a cranberry giant. Learn more about Cran Chile’s history of innovation and how it continues to prioritize new ideas.

Read the case study


2. Investing in regenerative agriculture

Regenerative agriculture is the umbrella term for a set of principles centered on farming in harmony with nature. It aims to reduce farming’s impact on the environment and bolster a farm’s resilience to changing environmental conditions.

Conventional agriculture relies heavily on outside inputs and lots of horsepower. While this has produced a bounty of food, it’s hard on soil and exacerbates erosion and loss of biodiversity. Regenerative agriculture leans on practices such as cover cropping and less tillage to improve soil health. Healthier soils absorb more water and carbon and are more productive even as they are more resilient to erosion and drought. Regenerative agriculture is still in its infancy, but adoption is increasing, with both governments and global food companies investing billions.


De-risking the transition to regenerative agriculture

For farmers, changing core farm-management practices can feel too risky, even if there’s a need to evolve as extreme weather events multiply and sustainability pressures increase. Vayda aims to address this challenge by de-risking the transition to a more sustainable way of farming. Learn more about how Vayda is working to show that regenerative agriculture can improve production and profitability.

Read the case study


A conversation with Tim Lee

The CEO of AustOn, an investment platform that manages Ontario Teachers’ Australian agriculture assets, shares insights on the challenges facing the sector and the benefits of large-scale investment in farming.

Read the Q&A

3. Investing in healthy foods

In survey after survey, consumers say they try to eat healthy foods and limit sugar and processed foods. Many follow plant-centered diets. Food and beverage makers and restaurant chains have responded with a plethora of healthy eating options.

Eating healthy is a key goal for millions. For others, it’s a luxury. While the world had made progress in reducing hunger since 1990, the Food and Agriculture Organization of the United Nations says more than 700 million people face food insecurity, or lack of access to safe and nutritious food. And even in places where food security is less of a problem, the cost of healthier food options is a concern.

For big investors, helping to meeting rising consumer demand for healthy food is a way to make a positive social contribution as they generate returns.


Expanding production of a Mediterranean staple

Olive oil ranks just 9th among the most consumed vegetable oils globally, but producers expect consumption to increase due to growing awareness of olive oil’s health benefits. One of those producers in Aggraria, which operates olive tree plantations in the Iberian Peninsula. Learn about how Aggraria is benefiting from its proximity to Europe’s largest agriculture reservoir and its focus on super-high-density orchards.

Read the case study


4. Investing in the people that make agriculture work

The developed world’s agricultural labour challenges have many causes. They include increasing urbanization and an aging population, including a large cohort of farm operators on the cusp of retirement. There are also high barriers to entering into agriculture, notably steep costs for land and capital equipment. While productivity improvements and innovation have enabled fewer people to produce more food than before, there is a chronic shortfall of agricultural labour across many countries. Another challenge lies in training the agriculture workforce to work with the new technologies—and reams of data—on which farming increasingly depends.

Ensuring that all countries have a stable agricultural labour force is a complex issue. Investors can play a role by working to build and retain talent in the sector. They also have the responsibility to ensure that the workers who perform the physical labour of harvesting enjoy safe working conditions.


Placing employee stability at the core of farming

Apples are big business in Washington State, which accounts for almost two-thirds of U.S. apple production. Harvesting that fruit is very labour intensive. FirstFruits Farms, a major vertically integrated grower of apples and cherries in Washington, has undertaken several initiatives to attract and retain workers. Learn more about FirstFruits’ efforts to create a positive working environment.

Read the case study


This is a critical time for the agriculture sector

Climate change threatens not only crops and livestock but also established farming methods. Many farm operators are aging out of the sector. And food producers are under pressure to demonstrate they are using critical resources like water wisely. Yet the world continues to need more and better food. New technologies and farming approaches hold promise to help the sector address these concerns, but the challenge is significant. And meeting it will require the attention and participation of a host of stakeholders, from governments and food companies to consumers. In the report, we’ve highlighted the role investors can play in supporting agriculture’s evolution.

At Ontario Teachers’ Pension Plan, investing in agriculture is just one of the ways in which we are deploying our capital to make a lasting, real-world impact as we create value for our members.

A snapshot of Ontario Teachers’ food portfolio

Our food portfolio is managed by Ontario Teachers’ Natural Resources team.

Aroona Farms

Jasper Farms

Pomona Valley


Explore the full report for more insights

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