Biotechnology to Maximize Agribusiness Returns

Technological innovations that optimize farming practices and yields are becoming an increasingly important part of the agribusiness industry. Biotechnology allows farmers to optimize resource usage, employ land optimally, increase yields, and harvest in a timely fashion. Unfortunately, most biotechnological tools are currently too expensive for farmers in many emerging regions. However, technological advances undoubtedly represent the future of the growing agribusiness industry. It is estimated that 38% of the world’s land is employed in agriculture and this number is not expected to grow substantially in the coming years. Furthermore, because of the geographic limitation to the expansion of agricultural land, the number of arable hectares available per person worldwide have been decreasing steadily. Currently, this number stands at less than 0.2 hectares per human being, which is substantially less than 0.4 per person in 1960. The challenge and opportunity presented by the need to increase crop yields within the existing farmland is driving large investments into agricultural biotech.

Biotechnology to Maximize Agribusiness Returns

Over the last 10 years, biotechnology has experienced tremendous growth and has attracted all sorts of capital investments. The newest developments in this field allow farmers to better distribute resources within the terrain where they are planting similar crops as well as optimize crop rotation between different crops. For instance, several sections within the same farm may be devoted to corn, but each of the distinct sections has specific characteristics that need to be taken into consideration. These characteristics include humidity, temperature, sunlight exposure, and soil moisture. Biotechnology allows each section within a farm, even those cultivated with the same crops, to receive the necessary amount of water and fertilizers without wasting resources. The collection of data through technological instruments allows farmers to give each row or tree individual attention based on their biological needs.

It is not surprising that different terrains or sections within the same farm require varying degrees of resources. However, it used to be harder for farmers to determine which soil needs more water and which crop requires less fertilizer. Nowadays, data collection and analytics lead to increased crop yields and account for substantial economic savings. Recent innovators in the biotechnology industry include Verizon and the French firm ITK, who have developed sophisticated data gathering modules and forecasting models for agricultural projects. As private equity and venture capital investors are looking into investing in farmland real estate and agribusiness projects, the potential to increase efficiency and profitability is an essential element to consider. In this regard, biotechnology represents unbound potential for both traditional farmers and new investors in the agribusiness industry.

The understanding of farmland characteristics provided by biotechnology has led some institutional investors to completely change the landscape of their investments. TIAA-CREF, a large farmland investor in the United States, transformed a California vineyard into strawberry and avocado fields after conducting soil and environment studies. Likewise, the Climate Corporation, a high-tech company specializing in weather insurance and futures contracts for farmers, was bought for US$930 million by an agribusiness industry giant. As the last decade has demonstrated, biotechnology will play a major role in the development of the agribusiness industry against the backdrop of 9.1 billion people to feed by 2050. Furthermore, biotechnology itself represents a promising subsector within agribusiness, particularly for investors aiming to reduce operational costs.

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