By: Robert Jones
There are many reasons why people invest, whether it’s long-term goals like retirement or harnessing the power of compound interest to earn more money. Impact investments are made with the intent to improve social and environmental standards while generating profit. Global challenges, such as affordable basic services and sustainable agriculture, are motivating issues for many people.
Improvements in the Environment
Climate change is impacting how the agriculture industry operates, and is a consideration for many producers. As the climate affects how fertile land can be in the future, investment in alternative growing methods can be utilized to ensure stable food production.
Indoor farming systems have been on the rise as a solution to tackling this problem. For example, hydroponic farming is a method for growing plants without soil using mineral nutrient solutions in a water solvent. This system has been rising in popularity the last few years, along with aquaculture and vertical farming.
Water conservation is another pressing issue, due to declining water tables in many areas. According to the EPA, at least 40 states are expecting water shortages by 2024. Farmers are using methods such as drip irrigation to combat the overuse of water. Studies have shown that drip irrigation can save up to 80 percent more water than traditional irrigation, and can play a part in increasing crop yields.
Farmers are trying new practices to eliminate pesticide residue, particularly with water runoff. Runoff is the movement of water along with any contaminants (such as pesticides) across the soil. The runoff could absorb into the soil, negatively affecting its viability for farming. Using methods such as crop rotation, proper irrigation and proper drainage prevents water contamination and reduce runoff.
Impacting Rural Economies
Rural areas have been the lifeblood of America’s agriculture throughout history. But as of late, some farmers have been forced to downsize or close down their operation due to global competition of industrialized agriculture. Keeping local, family farmers and ranchers’ operations producing and bringing new jobs to rural areas are main concerns.
Opportunity Zone Funds can help rural economies for the better. Made to stimulate economic development, Opportunity Zone Funds can bring back jobs to these communities.
The Sustainable Agriculture Opportunity Zone Fund will invest and create positive impact to the agricultural industry across disadvantaged regions of the United States. Investors will also be provided with tax-favorable risk-adjusted returns in assets that are not correlated to stock and bond markets. Unlike other Opportunity Zone funds that are focused on gentrification of urban areas, this fund is designed to help bring jobs to rural communities.
Tackling Food Insecurity
According to Hunger and Health, 1 in 8 people in the U.S. were living in a food insecure household in 2017; that’s 40 million people in the U.S., approximately the population of Canada.
Creating improved and resilient food systems can close the gap in food security. Efficient food production can help, as well as reducing food waste. Because of poor food preparation and storage facilities, thousands of tons of food is ultimately wasted each year. Mentioned earlier, the use of indoor farming systems can help battle food insecurity. The food harvest rate for indoor growing operations is over 95% compared to field grown produce, which often waste up to 40% of the fruits and vegetables.
Socially Responsible Companies
More companies are aligning themselves with issues that their customers care about. Firms are willing to talk about their commitment to impact investing. While some skeptics believe this an attempt for good press, companies are taking action.
Private equity investment firm Bain Capital raised $390 million in 2017 to focus on mission-oriented North American companies. These funds are used to invest into different areas such as agriculture, waste management, and energy efficiency.
These are just a few areas that impact investing can reach. Investing through agriculture can produce benefits for both the investor and the community. As people gain awareness about several issues and take on social responsibility, the more problems can be resolved. From family farms to local communities, Harvest Returns will give investors the opportunity to help feed, clothe and fuel the world.