Agri-food industry needs $500bn a year to reverse environmental impacts, says UBS

UBS suggests that with the right investment, the food and farming industry could be transformed from an environmentally damaging sector into an environmentally positive one

The agriculture and food industry needs annual investment of $200bn-$500bn to reverse its negative impacts on health, the climate and nature, and turn it into a sector that generates as much as $5tn a year in positive impacts, finds a report by investment bank UBS.

According to the report, the agri-food industry creates $15tn a year in “negative externalities” on health, climate and poverty, including increasing rates of deforestation, fertiliser pollution and food insecurity as more extreme weather hits harvests. Investing up to $500bn annually would reverse this trend, it says.

Farming accounts for the majority (68 per cent) of the agri-food industry’s emissions, with 43 per cent coming from on-farm activities and 25 per cent from land use change, the report says. Solutions to improve sustainability include improving on-farm efficiency through technologies such as “precision agriculture”, which uses GPS and automation to help farmers make data-based decisions.

Financing the necessary technologies “offers the most substantial near-term benefits” and is a “no brainer” for industry investors, it adds.

The report also suggests changing production models to include artificial environments, such as urban farming techniques that limit additional impacts on nature and reduce resources by growing crops in mediums other than soil, such as water or air.

UBS likewise recommends increasing the shelf life of food through edible coatings and films, more efficient cold storage or digital screening tools and cutting waste by shipping food in response to demand. 

“Better consumption habits” could also increase the industry’s sustainability, the report adds, highlighting the potential to change attitudes around “wonky”, or non-standard produce.

Capital providers “can enable the agri-food industry’s transition” by providing finance, says the report, which also calls on “public authorities, producers, big corporates, retailers and consumers” to act more sustainably within the agricultural value chain.

The report is available to read here.