L’investimento sostenibile per un mondo che cambia

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Talking heads – Nessuna formula magica per migliorare la sicurezza alimentare

Agne RackauskaiteDaniel Morris
27/02/2023 · 9 Min

Negli ultimi anni, insieme alla sicurezza energetica, anche quella alimentare ha acquisito sempre più importanza fra consumatori e governi. Oltre alle interruzioni della catena di approvvigionamento e a condizioni climatiche estreme, la guerra in Ucraina ha concorso ad aumentare le tensioni. La sicurezza alimentare non riguarda solo la coltivazione, la produzione e la lavorazione dei cibi, ma anche l’accesso a un’alimentazione sicura e nutriente.

In questo podcast Talking heads, il Gestore di portafoglio Agne Rackauskaite e il Chief Market Strategist Daniel Morris discutono delle possibili risposte al problema della sicurezza alimentare. Fra queste si annoverano un maggiore protezionismo alimentare sotto forma di restrizioni all’esportazione, il near-shoring e re-shoring, gli investimenti pubblici nell’agrotecnologia e la necessità di incentivi per ridurre le perdite nella catena di fornitura e gli sprechi alimentari.

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Daniel Morris: Hello and welcome to the BNP Paribas Asset Managements Talking heads podcast. Every week, Talking Heads will bring you in-depth insights and analysis through the lens of sustainability on the topics that really matter to investors. In this episode, we’ll be discussing food security. I’m Daniel Morris, chief market strategist, and I’m joined by Agne Rackauskaite, portfolio manager at IMPAX Asset Management. Welcome back, Agne, and thanks for joining me.

Agne Rackauskaite: Hi, Daniel. Thank you very much and it’s really good to be back.

Daniel Morris: There has been a massive impact from the war in Ukraine on economies, markets and commodity prices. We’re all dealing with higher inflation. Central banks are struggling to slow down growth to get inflation back down to target. There is an increased focus on energy security. In all of this, we may lose sight of another big impact: the reduction in food exports, particularly from Ukraine, but also from Russia, and the effect that had on agricultural prices. That’s still a pertinent topic. Could you tell us why, besides energy security, food security has been in the news lately? Why is that still so important?

Agne Rackauskaite: I see food security in the news almost every day. If you live in the UK, for example, you probably will have seen the recent headlines on shortages of fresh fruit and vegetables where some supermarkets have announced that they’ll be putting limits on how many cucumbers and tomatoes you can buy, for example. This is predominantly because growers have been forced to stop running their greenhouses because of high energy costs. The broader topic of food security has been rising in importance for a number of years. We’ve had several different factors converge which have exacerbated the problem. Starting with Covid. This highlighted certain fragilities of the food and agriculture supply chain, followed by the war in Ukraine which disrupted the production and flow of commodities, not just the grains and oilseeds, but inputs like fertilisers, animal feed and fuel. On top of that, you’ve got increasingly extreme weather events which have been affecting crop yields.

If we unpick each one of these in turn, when Covid first emerged, many slaughterhouses and meat processing plants were forced to shut because they became Covid hotspots. We saw this all over the globe, although the impact was most severe in the US. This happened for a few reasons. The environments are closed, they’re bio secure – the air is recirculated. It’s a perfect environment for a virus to spread. The processing of pork and cattle is not very mechanised, which means that you have long production lines which are crowded with people standing shoulder to shoulder. Again, just that perfect environment for the spread of a virus. At the peak, utilisation rates across the industry were down 35 to 40% and all of this led to shortages of products on supermarket shelves.

More recently, the war in Ukraine has been leading to shortages of crops and agricultural inputs because Russia and Ukraine are major exporters of grains like wheat and corn, as well as oilseeds and fertiliser. As well as shortages of grains, we’ve seen lower crop yields across the globe because of the lower application of fertilisers. At the peak, fertiliser prices were up about 200% compared to pre-Covid levels. The impact of the fertiliser price spikes is being felt to this day. Last summer when prices were peaking, producers that could afford it were stockpiling, whereas producers in lower income regions were actually forced to go without. According to Bloomberg, even though prices are now down 50% versus last year’s peak, farmers in East Asia and Africa are still more exposed compared to producers in North America, China or India.

The African Development Bank estimated that the drop in fertiliser use is going to lead to a 20% drop in food production in that region. Climate change is another major, almost existential, threat. Climatic shocks and extreme weather are double what they used to be 20 years ago. This has all meant that in many geographies, agricultural regions have either changed or shrunk altogether, ultimately leading to lower yields for farmers. I’ll finish by saying that, yes, food security is an increasing concern. It’s more in the news now. It’s being driven by more extreme weather as well as disruptions brought about by Covid and the war in Ukraine.

Daniel Morris: We should think about what some of the ways are that we can address this. What are some of the implications for how we go about producing food?

Agne Rackauskaite: Let’s take a step back and talk about what we mean by food security. The World Bank has a helpful definition. It highlights that it’s not just about having sufficient access to food, but also ensuring that the food is both safe and nutritious. This is important to remember, because simply increasing production of food through conventional methods isn’t necessarily the answer. We’ve got to think more holistically. I don’t think that there is a silver bullet or some sort of a solution to tackle both broad access to food while at the same time solving the problem of quality and nutrient content, which, by the way, has been on a long-term decline. The Food and Agriculture Organization recently published a report on the state of food security and nutrition for 2022, and the data is quite bleak. The report suggests that during the pandemic, the number of people unable to afford a healthy diet rose by 112 million to almost 3.1 billion, basically reflecting the impact of rising food prices. This was mainly felt by people in Asia as well as Africa. The previous year’s report highlighted some possible solutions to transforming agricultural food systems to make them more resilient to external shocks.

The reality proved more difficult: with global economic growth for 2022 revised down, the resources to invest in agricultural food systems were more limited. Government support for food and agriculture accounts for about USD 630 billion per year. The support mostly concentrates on staple foods as well as dairy and other animal proteins, especially in high-income countries. Rice, sugar and meats are the most incentivised worldwide, whereas fruits and vegetables are less supported. In some countries, they’re even penalised. In summary, the implications of the war in Ukraine and more extreme climate events continue to disrupt food and agricultural systems, leading millions more people around the globe to be food insecure.

Daniel Morris: What are some of the responses that you expect either from governments or individuals or companies? What do you expect can happen now?

Agne Rackauskaite: Food security is of a particular concern to countries which are heavily dependent on imports for both their food as well as agricultural inputs such as fertiliser and feed. The response that we’ve seen from governments so far is rising food protectionism. I expect that that will continue and possibly even increase. In the weeks following Russia’s invasion of Ukraine last February, several countries introduced export restrictions on feed and food products. At the peak in May, almost 17% of global food and feed exports was affected by these measures. For example, we saw Indonesia ban exports of palm oil to increase supplies domestically and to protect domestic consumers from inflation. Indonesia represents about 50% of global demand for palm oil, so the impact was significant. India followed suit and restricted exports of sugar and wheat. Although these measures are short term in nature, they can have long-lasting impacts on buying behaviour.

As well as protectionism, we’re seeing trends towards near-shoring and reshoring. Now, that may work well for some wealthier countries. It’s not going to work, for example, for the majority of people in Africa. They don’t have the climate or the resources for large-scale domestic production. There have been some small-scale examples. Some countries in the Middle East have begun investing in technologies like precision fermentation to become less dependent on imports. Another example is Singapore, which has begun to invest in cultured meat. In 2020, Singapore became the first country in the world to authorise the sale of lab-grown meat. Lab-grown meat, otherwise known as cell-based meat, is grown in a bioreactor and is produced from actual animal cells. The benefits are that it doesn’t require animals to be killed. It’s less environmentally damaging and doesn’t require the use of antibiotics. It also is able to offer better food security. So, for a country like Singapore, a small nation that imports about 90% of its food, investments in agritech are key to ensuring food security. In sum, after the major disruptions that we’ve seen to agricultural food systems, governments have responded by introducing export bans on staple food commodities to protect their domestic consumers. Other responses that we’ve seen include governments investing in technologies to become less dependent on imports.

Daniel Morris: Looking at this from the point of view of an investor, these challenges are going to be creating opportunities. Where do you see the opportunities as companies try to come up with solutions to the problems that you listed?

Agne Rackauskaite: Unfortunately, there’s no easy solution. The good news is that there are lots of different solutions along all parts of the food and agricultural value chain to help address this really important issue. There are a few interesting technology opportunities, but their overall impact can be limited. Take vertical farming. Vertical farming is a novel solution. It’s very promising for certain categories of small crops, for example herbs and leafy greens. For large-scale farming like grains, there isn’t as much promise. When you consider the economics to achieve impact on a larger scale, it’s often best to look for simpler solutions. One area where we can have significant impact is on supply chains and logistics. For example, grain handling equipment and cold chain storage as well as precision agriculture technology which can help farmers with decisions like when to irrigate or when to harvest. It can also help them with flood detection. It essentially helps to lower spoilage of crops on farms. By reducing these losses in the supply chain, we’re ensuring that more food reaches the end-consumer.

That takes me to another important point: food waste. This is a major challenge that should be addressed when we’re thinking about solutions to food security. About a third of all food that we produce is wasted. This could be crops rotting on farms. It could be food that is damaged during transportation or thrown away by supermarkets or consumers. We’re all consuming a lot more fresh food and a lot more food on the go. Those types of food are more perishable and tend to have a shorter shelf life, which leads to higher wastage rates. The good news is that there are plenty of opportunities to reduce food waste. There are solutions in natural food ingredients which help to extend shelf life of highly perishable foods.

We’re about to publish an article on this topic which will be accessible on Viewpoint soon. Finally, food security isn’t just about improving access and affordability. Nutritional content is important. Here it gets trickier because producing better quality, more sustainable food is more expensive and farmers need to be incentivised to ensure that farming practices become more sustainable. That means that prices for food would need to go up. It’s easy for us to sit here and talk about paying more for more sustainable food when we can afford it. The challenge is ensuring that we’re able to produce more nutritious food at scale. For that transition to accelerate, I believe we’ll need to see government incentives. The question now is, can governments keep sustainability on the agenda when their priority is to make sure that the poor populations are able to afford staple foods? The solutions to food insecurity are not straightforward. There are interesting novel solutions, but to achieve impact, it’s best to focus on established solutions like logistics.

Daniel Morris: Thank you very much for joining me.

Agne Rackauskaite: Thank you, Daniel. It’s always a pleasure.


Si prega di notare che gli articoli possono contenere termini tecnici. Per questo motivo potrebbero non essere adatti ad un lettore senza esperienza professionale in materia di investimenti. Qualsiasi opinione qui espressa è quella degli autori alla data di pubblicazione, si basa sulle informazioni disponibili e può essere modificata senza preavviso. I singoli team di gestione del portafoglio possono avere opinioni diverse e prendere decisioni di investimento diverse per i diversi clienti. Il valore degli investimenti e il rendimento da essi generato possono aumentare o diminuire ed è possibile che gli investitori non recuperino l’importo originariamente investito. I rendimenti passati non sono indicativi di quelli futuri. L’investimento nei mercati emergenti o in settori specializzati o ristretti può presentare una volatilità superiore alla media, a causa di una forte concentrazione, di maggiori incertezze dovuta alla minore quantità di informazioni disponibili, alla minore liquidità o alla maggiore sensibilità ai cambiamenti delle condizioni di mercato (sociali, politiche ed economiche). Alcuni mercati emergenti offrono meno sicurezza della maggior parte dei mercati sviluppati internazionali. Per questo motivo, i servizi per le operazioni di portafoglio, la liquidazione e la conservazione per conto dei fondi investiti nei mercati emergenti possono comportare maggiori rischi.
Rischio d’investimento legato a fattori ambientali, sociali e di governance (ESG): la mancanza di definizioni ed etichette comuni o armonizzate che integrino i criteri ESG e di sostenibilità a livello della UE può comportare approcci diversi da parte dei gestori nella definizione degli obiettivi ESG. Ciò significa anche che potrebbe essere difficile confrontare le strategie che integrano i criteri ESG e di sostenibilità, nella misura in cui la selezione e le ponderazioni applicate per selezionare gli investimenti si basano su metriche con lo stesso nome ma significati sottostanti diversi. Nel valutare un titolo in base ai criteri ESG e di sostenibilità, il Gestore degli investimenti può anche utilizzare fonti di dati di fornitori esterni di ricerche ESG. Data la natura in evoluzione del panorama ESG, queste fonti di dati possono risultare al momento incomplete, imprecise o non disponibili. L’applicazione di standard di condotta aziendale responsabile nel processo di investimento può comportare l’esclusione di titoli di determinati emittenti. Di conseguenza, la performance (del Comparto) può talvolta essere migliore o peggiore di quella di fondi affini che non applicano tali standard.

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