Genetically modified organism (GMO) crops were first introduced to the market over 20 years ago as an environmentally-friendly solution to the problem of producing food for a rapidly growing world population. In many parts of the world, they are still seen as the solution for food insecurity, like these bananas that were created to provide children with vital nutrition they were lacking. They are genetically engineered to include traits such as resistance to weeds and pests, allowing farmers to use fewer pesticides. However, in some cases, weeds adapted and became more resistant to herbicide, meaning farmers had to increase their use of it. In addition to the concerns about the safety of ingesting GMOs, consumers began to worry about the health concern of more herbicides being consumed. Recently, the popularity of non-GMO crops has risen, as consumers seek out GMO-free products and farmers return to planting conventional seeds.
Non-GMO crops are a controversial topic in the food and agriculture space and misinformation on the subject is common. Regardless of your opinions of them, however, non-GMO crops have the potential of being extremely profitable for farmers and investors. As people grow more concerned about what is in their food, the market for non-GMOs and sustainably-raised food products continues to grow. At a recent conference of agriculture investors, Rich Gammill, of Proterra Investment Partners, forecasted that the compound annual growth rate for non-GMO farmland from 2017-2022 will be 16.2%.
There are benefits to non-GMO crops; not only can non-GMOs be more profitable than GMOs, they are also better for the environment. Organic farming using conventional seeds can produce a better yield while lowering operating costs for the farmer. Genetically modified seeds are more expensive, and it was originally thought that farmers could recoup that money by spending less on pesticides. As weeds have adapted, farmers have been forced to increase their use of pesticides on GMOs, meaning they are not always realizing those savings. In addition to the added cost of these pesticides, there are disadvantages associated with the chemicals needed to keep crops pest-free. The chemicals needed to get rid of the stronger weeds that have adapted to GMOs are harmful to the land surrounding the crop and damage the biodiversity of a piece of land.
Thanks to well-organized marketing interests and the expansion of brands and niche stores, there is an increasing consumer interest in GMO products. There has been a rapid increase in consumer demand for organic and natural food products, to include non-GMO produce. Many large companies, such as General Mills and Chipotle, have begun to incorporate non-GMO ingredients into their offerings as consumer interest grows. Farmers can sell these crops at a higher price, meaning a larger return for both farmer and investor.
If you would like to own agriculture in your portfolio, non-GMO crops may be an interesting category to consider. The debate over the safety of GMOs is ongoing, and whether or not one believes they are dangerous, it cannot be denied that there is a quickly growing market for products free of GMOs. This means that non-GMO marketed crops have the possibility of producing higher returns than the genetically-modified version of the same crop. Investors who rely on the profitability of a crop to recoup their investment can benefit from these long term consumer trends.