We are in the midst of another period of agricultural revolution in the face of growing global demand for our oldest commodity: food.

Since the 1960s, the global supply of arable land per capita has decreased by half due to rapid population growth and urbanization. With neither trend showing any sign of letting up, the expansion of the global middle class (and their waistlines) during this century will only ratchet up pressure on global food supplies. Currently 28% of the world population consumes more than 3,000 calories per day. That figure is expected to grow to 52% by 2050.

To meet this need, global food production must increase by 70%. But with arable land already limited, 90% of that growth in production will have to be achieved by increasing yields. The Green Revolution of the 50s and 60s sought to do just that, by harnessing new technologies and agricultural expertise— high-yielding cereals, new fertilizers, irrigation methods, and mechanization – in the face of rapidly increasing demand. The beneficial effects on crop yields of this technological era have, however, long since faded. Indeed, their environmental costs are only now being fully counted.

Today’s focus has moved toward precision agriculture: the creation of a fully connected ecosystem designed to cope with increased demand, by using digitization and other technical improvements to achieve higher degree of precision from tillage to harvesting. This method increases profits, reduces inputs and protects the environment. In the US alone, farm operating profit for precision-agriculture adopters is $66 higher per acre than non-adopters, creating an addressable market of $240bn.

While demand for agricultural products is set to grow by 1.1% p.a. between 2005 and 2050 (roughly in line with expected global GDP growth), there are a number of opportunities open to investors to take advantage of new technologies involved in precision agriculture. From seeding and fertilizing, to precision irrigation and digital field monitoring, as well as exciting developments in hydroponics (using nutrients in water instead of soil, which bode well for verticalized urban farming experiments), the sector is likely to see major advances in the coming years.

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