Public Live: Bull Case for AgTech and Food Innovation as an Investment

AgTech and Food Innovation is an area that is growing quickly. With new opportunities on the horizon, what does the future hold? During a recent Public Live audio show, business journalist Kinsey Grant sat down with Andrew Little, a research analyst at Global X ETFs. Here is an excerpt of their conversation.

Kinsey Grant: What is the difference between AgTech and Food Innovation?
Andrew Little: Both will play a major role in the future. AgTech is short for agricultural technology. The goal is to improve yields and crop quality. The four segments are precision agriculture, agricultural robotics, controlled environment agriculture, and agricultural biotechnology. Food innovation is the other side of the coin and includes things such as food and dairy alternatives, plant-based meat, and lab-grown meat. Food waste is another area of food innovation. The two sectors marry well together. They look at the production and consumption of food products, addressing them to remove negative structural impacts.

KG: Why do we have a KROP (NASDAQ: KROP) ETF? Why are new players needed in this space, and why invest?
AL: It goes back to thematic investing. First, we identify macro-level trends, such as structural shifts leading to negative impacts. Then, we use this to establish conviction in a set of solutions that affect a paradigm shift in the industry. After, we make sure it is investable for the public. Finally, we consider time horizon. Thematic investing doesn’t happen overnight and while the pandemic accelerated multiple themes, AgTech and Food Innovation look at those macro trends that drive changes.Right now, there is a lot of waste in agriculture, so Food Innovation and AgTech can reduce this waste. This is particularly important with a growing labor shortage. A robot can be used to deploy precision agriculture, we can address production issues.

KG: How is solving the labor shortage in food and agriculture going to solve bigger problems, such as food insecurity?
AL: It’s about using insights from precision agriculture to reduce the number of inputs used currently to cultivate more crops over time. Right now, there are a number of harvesting robots that can identify what food is ripe. Then, they use their arms to harvest a field much faster than a human labor force. This reduces waste because crops don’t go bad due to a labor shortage. Consumption trends are also changing, with people preferring plant-based foods and lab-grown meat, which reduces food constraints on other areas, such as livestock.

KG: How much are the changes in the food industry being driven by changes in taste preferences?
AL: This shift in taste preferences is very disruptive… oat milk is getting tastier… so alternative food is getting more popular, such as plant-based meat companies. It’s no longer veganism and vegetarianism, it’s more about health and sustainability. These new products have those advantages. You have the ability to capture a market that wouldn’t want to transition their diet by growing meat in labs. You don’t use land and you don’t need to use livestock cultivation. There are alternative proteins, such as insect-based protein, that provide a new opportunity.

KG: How do you change people’s minds and drive new taste preferences?
AL: It needs to be addressed, but the growth in areas, such as plant-based meats, is encouraging. Plant-based meat is up 45 percent year over year dairy alternatives are up 20 percent year over year, according to a report published in April. There is strength. We believe this will increase as more products come available. There will also be a generational shift. Younger generations are more inclined to purchase these products. As they mature, this will be a driver. It’s about understanding these issues as a question of sustainability as well. The pandemic showed us what a stressed supply chain was like.

KG: What do these newcomers mean for traditional companies, like Tyson (NYSE: TSN)?
AL: There will be a shift within these companies to roll out their own products. Tyson has some alternative meat operations. There is M&A potential for publics and privates. But, these new companies have the potential to establish a meaningful market moving forward. We are seeing new products arrive in restaurants around the world. The future is bright for these categories, and they have a large growth runway. is an investing app where you can share ideas and explore the stock market in a community of more than 1 million members. You can also participate in Town Hall events and ask questions to CEOs and CFOs of companies you want to learn more about, and tune into Public Live audio shows several times a week to hear the latest takes from journalists, analysts, and executives. Get the app and start with a free slice of stock valued up to $70.

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