The need to nourish a growing population yet reduce the environmental impact of agriculture looks set to transform food production. Scientists are inventing ways to produce more food with less. VanEck’s Future of Food ETF sustainably invests in the companies harnessing new technologies to feed the world.
Without far-reaching changes in agriculture and food production, the world will not be able to halt its march towards environmental disaster. Already, the industry is a major greenhouse gas (GHG) emitter and does widespread harm to the environment in other ways besides. As the global population grows, powerful forces are beginning to transform food production.
Through selecting the companies with high focus on the food sector, the VanEck sustainable Future of Food ETF aims to generate returns for investors. Such is the nature of food’s transformation that it also brings clear environmental, social and governance (ESG) benefits.
Technology is the key to reducing agriculture’s environmental damage. Plant-based meat cuts emissions by 90%, consumes 46% less energy, as well as using 99% less land and water than cattle.2
Greenhouse Gas Emissions of Select Agricultural Products
2 Source: ourworldindata.org, Poor & Nemecek. Analysis as of 2018, using 2010 data.
Traditional agriculture’s land requirements are too great to be sustainable in future. The solution? Automation, sophisticated data and efficient farming practices.
Infrared Sensors on Drones Can Indicate Problem Areas
Source: Purdue University
Nitrogen fertilizer requires fossil fuels to produce, while other agricultural chemicals may be carcinogenic. The answer? Fertilizers produced using green hydrogen and renewable energy, twinned with biological crop protection.
Nitrogen Fertilizer Consumption
Source: FAO, Ourworldindata.org. Through 2014 based on latest available data.
The strategy has an in-built preference towards companies that measure, monitor and report their environmental impact.
Lower risk: Typically lower reward
Higher risk: Typically higher reward
Because all or a portion of the Fund are being invested in securities denominated in foreign currencies, a Food ETF’s exposure to foreign currencies and changes in the value of foreign currencies versus the base currency may result in reduced returns for the Fund, and the value of certain foreign currencies may be subject to a high degree of fluctuation. That is a factor to consider when investing in a Food ETF.
A Food ETF’s assets may be concentrated in one or more particular sectors or industries. The Fund may be subject to the risk that economic, political or other conditions that have a negative effect on the relevant sectors or industries will negatively impact the Fund's performance to a greater extent than if the Fund’s assets were invested in a wider variety of sectors or industries. This is one of the risk factors to take into account when making an investment in a Food ETF.
The securities of smaller companies may be more volatile and less liquid than the securities of large companies. Smaller companies, when compared with larger companies, may have a shorter history of operations, fewer financial resources, less competitive strength, may have a less diversified product line, may be more susceptible to market pressure and may have a smaller market for their securities. This is a further factor to consider when investing in a Food ETF.
For more information on risks, please see the “Risk Factors” section of the relevant Fund’s prospectus, available on www.vaneck.com.