I've always been pretty focused on my staying healthy as an avid tennis player. My determination to stay fit and live as long as possible was heightened when I became a parent and then again when the pandemic hit. I'm sure a lot of you have similar priorities and want to maintain a healthy lifestyle.
A big part of staying healthy starts with eating well. So it's no surprise that consumer demand for healthy foods has been on the rise across the U.S. If you are looking for ways to invest in the rising demand for healthy foods, one avenue is through farmland.
Below are some insights by FarmTogether, a leading farmland real estate investing platform and Financial Samurai sponsor. They discuss some reasons behind the increased demand in healthy foods, growth of permanent crops, and which US farmland regions are thriving.
Health Focused Farmland Opportunities
At the start of 2022, about 44% of U.S. adults made diet-related resolutions for the new year. That's nearly three times more than last year. The trend of setting health goals extends well beyond a year-end fad, however. According to the CDC, roughly 160 million Americans are on a diet at any given time during the year.
As consumers shift toward healthier lifestyles, there’s ever-increasing consumer demand for more nutritional food products. This demand presents a unique opportunity for farmers and farmland investors.
Let’s explore the evolution of healthier diets and the types of farmland opportunities available for investors looking to take advantage of this trend.
The Accelerating Demand for Healthy Foods
Several global factors are driving the demand for healthier diets and lifestyles.
COVID-19 Reminds Us Of Our Mortality
The COVID-19 pandemic brought heightened awareness of people’s overall health. Before the pandemic, Americans consumed roughly 21% of their calories at restaurants – where nutrition quality is often lower.
When lockdowns were implemented, however, eating at home became the norm. Simultaneously, consumer demand for products that support the immune system increased during the pandemic.
In turn, grocery stores saw spikes in demand for fresh produce and other immunity-boosting, nutrient-dense foods.
Growing Middle Class
The growing global middle class has also contributed to the demand for healthier foods. By 2030, the global middle class is expected to reach 5.3 billion people. This is up from 4 billion people in 2021.
Though it only comprises around half of the world’s population, the middle class is responsible for 68% of total consumer spending.
Specific to food, middle-income American households spend over $6,000 per year on meals. This higher-income demographic is purchasing more fresh fruits and vegetables due to higher disposable income and access to produce.
Technology Helps With Healthier Food Access
Technology is also making healthier food more accessible and affordable. Online grocery delivery services are helping to bring more fresh fruits and vegetables to lower-income neighborhoods.
Meanwhile, innovative, on-farm technological solutions are making operations more efficient:
- Smart agriculture sensor systems provide farmers with environmental and machine metrics that help them improve crop quality and quantity, optimize manual labor, and reduce waste.
- Photonics sensors promote crop health by detecting microscopic traces of harmful chemicals and bacteria on fruit and vegetables.
- Smart spray precision technology identifies individual trees within an orchard and determines how much irrigation or fertilizer is needed based on their size, shape, and leaf density.
The Growth of Permanent Crops
As more people prioritize healthier foods and snacks, permanent crops have seen significant growth. Permanent crops are those such as fruit or nut trees that produce for many seasons rather than being replanted after each harvest.
Already a nearly $39 billion industry, global tree nut production increased 15% over the past year and 65% over the past decade. Global consumption of almonds rose 10% each year for the past five years, with almond consumption up 7.5% per year in the U.S. alone.
In 2020, the U.S produced a record 523,000 tons of pistachios, while global exports increased by 8.4% between 2019 and 2020. Meanwhile, the United States is the world’s leading pecan producer, with global demand expected to grow almost 6% per year until 2027.
Worldwide tangerine and mandarin consumption has doubled since 2008, with over 35 million metric tons required to meet demand each year. Oranges remain one of the top consumed fruits in the United States, partially due to their immunity-boosting qualities.
Global lemon and lime production is expected to top 2.5 million metric tons, while record global consumption and exports are expected.
In 2021 alone, year-over-year avocado consumption in the U.S. increased by 33% to a record 320 million pounds. Per capita consumption of avocados doubled from 2010 to 2020 and is expected to reach 11 pounds per person per year by 2026. Expect a few (million) of those pounds to be consumed during the Super Bowl.
High in gut- and heart-healthy nutrients, pome fruits are commonly sought after for their unique benefits as well. Whether consumed fresh, baked, or as a juice, apples have consistently been one of the most demanded fruits in the U.S.
Meanwhile, from 2019 to 2020, per capita pear consumption grew 7.3%, rising to almost 3 pounds per person.
Thriving Geographical Locations For Healthy Foods
Investing in the right crop is only half the challenge, as different geographical areas have particular strengths for specific crops. Here’s a look at where farmland opportunities lie within the United States.
Pacific Northwest (Washington and Oregon)
The Pacific Northwest’s diverse climate and volcanic soils lend itself to the region’s uniquely strong crop profile and production track record.
The region is the top producer of 22 different commodities. Run-off from mountain snow flows into fields below as Mount Hood receives a staggering average of 441 inches of snowfall each year. There are still plenty of sunny days in the Pacific Northwest, as the Yakima Valley tends to receive 200 days of sun per year, right around the national average.
Washington’s nutrient-rich soils and semi-arid and wet climate make it specifically well-suited for the production of tree fruit. With 39,000 farms sprawled across 15 million acres, Washington ranks first in the United States in the production of apples, pears, and raspberries.
Meanwhile, Oregon leads the nation in hazelnut and blueberry production. The state has a rich variety of soils and rolling valleys that shelter extreme weather. In addition, a cooler climate that slows the ripening process of grapes makes Oregon home to vast wine regions. It's currently the fifth largest wine producing state in the United States.
Arizona boasts some of the nation’s best citrus-producing conditions for two main reasons: the sun and the soil. Arizona’s climate is exactly what citrus needs to thrive: hot, dry, and rarely below freezing.
In addition, Arizona’s well-draining soil excels at retaining nutrients and allowing oxygen to get to plant roots. With these ideal conditions, Arizona ranks among the nation’s top producers of cantaloupe, honeydew, and lemons. Arizona’s fastest-growing agricultural industries also include tree nuts and wines.
It also boasts one of the strongest and most efficient irrigation systems in the US. This is thanks to leveraging canals developed during the 19th century, that move water from the Gila and Salt Rivers.
South Central (Texas and Oklahoma)
Texas has nutrient-rich prairie soils and a climate that combines ample rainfall with consistent sunshine and low average humidity. This combination is quite conducive to growing pecans.
Thus, Texas has historically been one of the top pecan producers in the nation. The state boasts approximately 170,000 acres of pecans across the state that yield roughly 45 million pounds of tree nuts a year.
Oklahoma, like Texas, also constitutes strong pecan production. The state has an estimated 500,000 acres of pecan trees across the state, though just 20% are harvested. However, Oklahoma farmers are becoming more intentional with dedicating land to pecans.
Between 1944 and 2018, Oklahoma averaged 17.4 million pounds of pecan production each year. And from 2017 to 2020, pecan-bearing acreage in the state increased by almost 14%.
California is one of the most productive agricultural regions on Earth. The unique natural resources make the state an ideal location for growing some of the country’s highest value crops. They include nuts, wine, and other specialty fruit.
In fact, irrigated farmland in California is among the most valuable in the country. The state is home to the world’s largest patch of Class 1 soil. This is thanks to its Mediterranean climate which consists of mild winters, defined periods of rain, and dry summers. This is ideal for growing certain crops like almonds.
Today, California is responsible for more than two-thirds of the country's fruits and nuts and one-third of the country's vegetables. California leads production of citrus, walnuts, pistachios, table and wine grapes, as well as berries and vegetable crops.
In 2020, California accounted for 13.5% of the country’s cash receipts from commodities. This proportion was greater than the second and third states combined.
Healthy Opportunities Through FarmTogether
As our standards of health change, so does the way the world eats. This has had a direct impact on the consumption of healthier foods, ranging from tree nuts and citrus, to avocados and apples. This demand has also positively impacted the value of the geographical locations that produce these crops.
These factors and more have created several financial investment opportunities for investors looking to take advantage of the health craze.
Once out of reach for all but a handful of institutions and billionaires, direct ownership of farmland is now available. FarmTogether is removing obstacles to make owning a slice of prime U.S. farmland affordable and accessible.
Interested in learning more? Visit FarmTogether.com and see if farmland is a good fit for your portfolio.
Venture Capital Alternative To Farmland Investing
In addition, one of the most interesting funds I'm allocating new capital toward is the Innovation Fund. The Innovation fund invests in:
- Artificial Intelligence & Machine Learning
- Modern Data Infrastructure
- Development Operations (DevOps)
- Financial Technology (FinTech)
- Real Estate & Property Technology (PropTech)
Roughly 35% of the Innovation Fund is invested in artificial intelligence, which I'm extremely bullish about. The investment minimum is also only $10, as Fundrise has democratized access to venture capital as well. Most venture capital funds have a $200,000+ minimum.