The Need For A New Agricultural Revolution
Farming is the central technology that has allowed human civilizations to thrive. In the modern era, it has become more mechanized and industrialized and is a distant concern for most of the population. Only 2% of the US population works in farms and ranches today. On average, one U.S. farm feeds 169 people annually in the U.S. and abroad.
Industrial farming freed up labor for industries and services and to feed an ever-growing global population. But it also comes with a wide array of issues:
- Decline in food nutritional value.
- Pollution of water resources and food chain by pesticides, herbicides, and fertilizers.
- Damage to the ecosystem, from insect population to global biodiversity.
- Erosion of soil, threatening arable lands and farmlands’ fertility.
- Greenhouse emissions, with 22% global emissions from agriculture, forestry, and other land use.
It is becoming increasingly clear that the Green Revolution, while alleviating the 1970s fear of global famines, needs an upgrade to tackle these problems. Luckily, the trend of bigger tractors, bigger farms, and more chemicals is being reversed by progress in biotech, robotics, software, and even space technology.
Robots And Drones
Maybe the upcoming largest change in farming practice is the emergence of farming robots and drones. This sudden arrival of new machinery on the farm is due to a few technological leap in recent years:
- Cheaper sensors and mechanical parts, reducing costs.
- Machine vision, allowing the robots to actually see the crops.
- Batteries, increasing the stamina of the systems.
- AI, making them semi-autonomous and probably soon fully autonomous.
This can help replace a lot of labor that cannot be mechanized with bigger, heavier tractors, like fruit picking, weeding, removal of insects, etc.
Source: Corteva
The smaller size of farming robots and their AI-powered autonomy can create new farming methods as well.
For example, the laser can be used to “zap” weeds instead of removing them mechanically. Or herbicide can be sprayed on individual plants identified with machine vision, instead of the whole field.
Large flying drones can also be used for farm operations, from carrying heavy charges like fertilizer bags and harvest (especially in mountainous terrains) to even artificially pollinating corn fields.
You can read more details about this technology, its applications and leading companies in this field in “Investors Should Take Note: Robotics Is Taking Over Farming”.
Data
Farming is becoming increasingly a data-driven business. Instead of relying on the experience and instinct of individual farmers, data can now drive the decision-making on irrigation, chemical uses, etc.
A key element here is multi-spectral imaging or the synthetic image of crops in multiple light wavelengths. It helps identify what segment of a field needs water, is attacked by a disease, and can anticipate future crop yields.
Source: Nebraska CornBoard
These images are most of the time generated from above, either through a long-range drone or satellite. They can be complemented by in-field sensors measuring nutrients in the soil or its moisture content.
Software / AI
Farms are also increasingly using software to manage their day-to-day operations. This includes data like multi-spectral images but also day-to-day operations handled by ERP software, like payroll, schedule, machine maintenance, billing, etc.
Source: AgriERP
The more data on the farm are available and centralized, the more AI analysis can help. For example, the combination of weather forecasts, crop data, and machinery available can help optimize the schedule for harvest season.
It could do many other things, for example, detecting leaks in irrigation systems, optimizing fertilizer and pesticide use, monitoring livestock location and health, automating the sorting of the harvest, etc.
Genetic Engineering
While farming practices have stayed unchanged for a long time, humans have always worked hard at developing new crop varieties that were superior in one way or another: more productive, more resistant, more nutritious, etc.
Traditionally, this could only be done at a very slow pace, and using only naturally occurring mutations. Even most of the recent methods to develop new varieties relied mostly on selected random (induced) mutations.
Modern biotechnology has changed our approach. While controversial, GMO crops are likely to be a central tool of future medicine, especially as we move away from the first generation designed around the usage of chemical pesticides and herbicides.
Instead, newer generations of GMO crops will be able to:
- Resist the effect of climate instability by using less water, resisting intense heat, drought, etc.
- Handle higher levels of salinity, allowing cultivation in slightly saline water, a particular concern for rice cultivation and heavily irrigated fields.
- Resist pests and diseases with modified genes instead of just producing toxins like 1stgeneration GMOs.
Lastly, in “Engineered Plant Microbiomes – Protecting Crops with Bacteria”, we also discussed how GMOs could be engineered to nurture a better and richer bacteria ecosystem in the soil, which in turn would help make the crops more resistant and more productive.
De Novo Domestication
Most of the plants we consume were initially wild plants that got domesticated. This was done in just a handful of locations, which strongly indicates that probably quite a few other plants could be domesticated.
Source: International Journal of Molecular Sciences
So a new option is emerging, called “de novo domestication.” The idea is that instead of taking high-yield modern crops and trying to make them as resistant as wild weeds, why not take already resistant wild weeds and make them as productive as modern crops?
Source: International Journal of Molecular Sciences
We discussed in detail this idea in “Advancing Agriculture with AI and Genetic Engineering – The Future of Cultivation“, including how it could be combined with multi-spectral imaging so that farming robots could zap all the weeds without the modified “tag”.
New Types Of Food
Another option to improve farming is to create new types of food products. For example, we covered in “Using CRISPR-Cas9 to Gene Hack Edible Mycelium Into Meat Substitutes” how fungi can be genetically modified to look and taste like meat while being even healthier.
Over time, adding more nutrients, like in the Golden Rice project, or improving taste could be a great way to boost farming productivity.
New Farming Method
While technology-focused approaches, like robotic, data/AI-driven, or GMOs are going to be part of the future of farming, this is not all. The more we understand the complexity of our ecosystems, and the interactions between all its components, the more we realize how to make better farms as well.
This is at the center of a silent revolution in agriculture, covered by many labels like permaculture, regenerative agriculture, biodynamic farming, etc.
Permaculture & Regenerative Agriculture
Initially, more of a counter-movement rejecting modern farming methods, permaculture has evolved into a respected scientific field and demonstrated its ability to create more ecologically friendly farms that are also profitable and productive.
The idea is to integrate together the effect of healthy soils on plant survival, the synergies between different plant species, predators of crop pests, the carbon content of soils, etc.
Source: Good Earth Design
Many labels similar to the better-known “organic farming” labels are now popping up for regenerative agriculture.
This method makes for a more complex farm design, integrating into one system trees, bushes, hedges, and ponds on top of rows of crops. The method is very productive, but in most cases, it can be tricky to integrate with the giant tractors of modern industrial agriculture.
Fortunately, it is a lot easier to deploy by leveraging the trends of electrification, robotics, and drones. And as it is more complex, a data-driven approach tends to perform well with regenerative agriculture as well.
Agroforestry, Carbon Farming And Biochar
The carbon emissions of agriculture are often a concern. And the more we understand the cycle of carbon, the more it is clear that soils are a key part, and that keeping carbon locked in soils rich in organic matter can be one of the most efficient methods for carbon capture.
Modern agriculture, with deep plowing and naked soils, tends to deplete the soils of their carbon content. This not only releases CO2 but also reduces the soil’s ability to retain water and nutrients, leading to an increased need for costly irrigation and fertilizers.
So “carbon farming” is a new trend, where farmers are working the land in a way that leads to carbon being captured instead of released.
The first method is agroforestry, where crops or farm animals are grown in tandem with a row of trees. This way, the tree provides shadow, moisture, fallen leaves, and carbon capture while the crops are still cultivated. After several decades, the trees can provide an additional income in the form of timber.
Source: Vi Agroforestry
Second comes carbon farming. In general, every farming practice that adds organic matter to the soil contributes to carbon capture. Many countries and economic blocs, including the EU, are now providing incentives for carbon farming ” to enhance carbon sequestration and storage in forests and soils, as well as reduce greenhouse gas emissions from soils.”
Source: Stop Waste
Lastly, a new technology is now being explored by scientists, amateurs, and farmers: biochar. This is when organic matter like crop residues or wood a burned through pyrolysis. Instead of burning fully to ash, this leaves a very porous charcoal residue.
This form of solid carbon is very stable and can stay unchanged for thousands of years. It also provide harbor for beneficial bacteria and fungi. Biochar is starting to be used at large scale, for example by golf courses to reduce irrigation needs by 30%.
Source: Driving The Green
Renewable Energies
Farms are progressively adopting renewable energy, especially solar and wind. In 2022, a total of 153,101 US farms and ranches used renewable energy-producing systems, compared to 57,299 in 2012, a 167% increase over 10 years.
These solar installations can also be integrated with crops instead of covering prime farmland, a technique called agrivoltaics, which we explained in “Agrivoltaics To Merge “Real” Farms With Solar Farms.”
Farmers are also starting to incorporate methane digesters to recycle farming waste into biogas, especially in ranches producing massive amounts of animal waste.
Another new energy source is geothermy, which we covered in more detail in “Geothermal And Passive Greenhouses – Reducing Farming Carbon Emissions”.
Zero-Carbon Fertilizers
Among the main fertilizers, phosphorus and potassium (the P and K in NPK fertilizers) are natural elements that are mined. So ultimately, for these fertilizers to be carbon neutral, it will require that the mining operations are themselves electrified and use green energy to produce the required power.
Nitrogen fertilizer is another story, as it is currently produced mostly from natural gas or other fossil fuels. Or to be exact, fossil fuels are powering the chemical reactions that turn atmospheric N2 into ammonia.
Luckily, a whole supply chain to produce green ammonia is developing. This could include decentralizing ammonia production from modular systems, like the offering of FuelPositive Corporation and AmmPower Corp. we presented in “The Other Hydrogen Fuel – Top 5 Green Ammonia Stocks”.
It might even one day be an important part of the equation to replace fossil fuels as a fuel source as well, as we investigated in “Decarbonizing Global Shipping Lanes Through Green Ammonia”
and maybe power farming equipment as well.
Alternatively, nitrogen could be added to soil directly by specially engineered microbes.
Soil-Less Farming
Farming is quickly evolving, and not only by caring better for soils or incorporating new technology. Some methods are now looking to remove entirely the need for fields and soil to produce food.
This can be done in urban farms, a new trend looking to bring food production closer to consumption centers, which we explored in “Scaling Urban Agriculture to Bring Many Benefits”.
Vertical Farming
One way to do farming in cities is vertical farming, where artificial light and indoor greenhouses look to replace traditional farming entirely.
This is a promising idea, which, however, might need to be optimized to be competitive with traditional farming.
You can learn more about it in “A Deep Dive into Vertical Farming and its Global Impact”, as well as “5 Best Vertical Farming Companies” & “Top 10 Indoor Agriculture Companies”.
Most indoor and vertical farming methods rely on hydroponics, where the nutrients needed by the plants are not provided by soil but by flowing water. We explained how it works in “Hydroponics – Everything You Need to Know”.
Even more advanced methods remove even the water, limiting the cultivation to a mist of aerosol, a method called aeroponics.
Another step further is to combine the raising of fish with the cultivation of crops, using the fish dropping as fertilizer and the plants as water purification systems, a concept called aquaponics.
Finally, some novel forms of food can be cultivated, such as microalgae, which are rich in proteins and antioxidants and can then be used to make food supplements or incorporated into drinks.
Farming For Renewable Materials & Energy
Biofuels
Farming could also become not just about food but about replacing many non-renewable materials with naturally grown alternatives.
For now, this has been done through the first generations of biofuels. In the future, farming algae for biofuel might be a new farming business model.
Biomaterials
Many materials are today either made from non-renewable sources or are toxic in one way or another. New biotechnology might make possible more natural and healthier alternatives.
This is even more true for bioplastic, with many companies leading the charge in making our addiction to plastic a much smaller issue.
Another material with large promises is wood. While Timber and forestry is already a massive industry worth $1.16T in 2024, improved genetics could boost wood production and carbon capture.
Source: Modern Agriculture
Wood might be a much more potent material than expected. Researchers are discovering alkaline conditions, high temperatures, and biopolymers can turn wood into “augmented wood which can have the strength of steel and a rigidity 23 times greater than concrete”.
Investing In Farming
There are many possible ways to invest in food and biomaterial production. And this is a major sector, with $9.09T in revenues globally.
This is also a very fragmented sector, with most of the farming activity done by relatively small companies, family businesses, etc. Overall, farming is rarely vertically integrated, with different companies supplying the input at different stages of the value chain: equipment, seeds, chemicals, labor, processing, reselling & marketing, etc.
You can invest in food-related companies through many brokers, and you can find here, on securities.io, our recommendations for the best brokers in the USA, Canada, Australia, the UK, as well as many other countries.
If you are not interested in investing in one particular company, you can also look into biotech ETFs like the Global X AgTech & Food Innovation ETF (KROP), the iShares MSCI Agriculture Producers ETF (VEGI), or the VanEck Agribusiness ETF (MOO), which will provide more diversified exposure to capitalize on the vital food production industry.
Food Production & Farming Innovation Company
Corteva, Inc. (CTVA -0.1%)
Corteva is a global leader in farming technology, especially chemicals and seeds. It is also very active in new farming technology like robotics.
With $17.2B in net sales in 2023, 22,500+ employees, and 10,000,000+ customers, the company is among the largest in its sector, together with out of the US competitors Bayer and Syngenta.
Overall, and maybe reflective of a deeper trend of reduced consumption and increased competition, the sales for chemicals (pesticides, herbicides, etc.) have been down in 2024, while seed sales grew.
Source: Corteva
In a deeper look, the core business of Corteva in seed is in corn and soybean, making up the bulk of the company revenue in this segment. Most notably, Corteva’s “Enlist E3” soybean, with resistance to 3 herbicides (2,4-D choline, glyphosate, and glufosinate), has grown from below 5% in 2019 to make up >65% of the US market.
Source: Corteva
In crop protection/chemical, more than half of the sales were for herbicides, with the rest mostly composed of insecticides and fungicides.
Source: Corteva
Corteva has built its current business around traditional industrial farming, which is still a very profitable activity that sustains the current R&D budget.
However, we are also looking forward to the future of farming, which we discussed in this article. Notably, Corteva has been working on:
Corteva is also actively looking into the future growing demand for green biofuels and specialty proteins, each with a $10B-$30B addressable market by 2035.
Source: Corteva
So overall, while Corteva is a giant of the “old” industrial farming methods, it is also clearly aware of the changes in the sector and positioning itself to become an equally large and successful company adapted to quickly changing agricultural practices.
