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Study Finds Ag Sector Has Beaten S&P 500 By Over 24% In Previous Recessions

Small Business Trends News reported that the agriculture industry is one of the most recession-proof sectors because everyone still needs food to live. “It is not a luxury that can be put aside during difficult times, so businesses in this sector can continue to do well even during a recession.”

Farm Folio wrote that farming is a wise route for diversification. They report that during recessions when the value of stocks, bonds, and other investments fall, farming assets historically increase in value.

The results of a new study from Money Made are also illuminating. In the study, the performance of 12 different asset classes was examined against the S&P 500 during three recent market crashes. Agriculture came out on top overall, averaging returns of over 24% better than the S&P 500.

New technologies in agriculture such as vertical farming and other controlled environment agriculture derivatives could in turn become part of a well-diversified portfolio. John G. Levy, Director of Impact, Franklin Real Asset Advisors, on real estate opportunities in vertical farming commented on the recent Franklin Templeton latest insights on the food innovation investment opportunities: 

“Like clean energy infrastructure before it, vertical farming will mature into a defined real asset sector that will be a part of well-diversified portfolios. Over the next several years, vertical farms will create alternative use cases for underutilized land and vacant buildings, and create opportunities to drive lasting social and environmental impact.”

“A confluence of powerful short-term and long-term market factors gives vertical farms the potential to become major disruptors in the food and agriculture space. The global population is growing, the supply of arable land is shrinking, weather patterns are becoming far less predictable, eating habits are shifting and demand for sustainable products is growing. We need solutions that increase yield; use less water, chemicals, and land; and reduce our dependence on long, wasteful, and complex food supply chains. Vertical farming promises to not only increase global food security but also to provide forward-thinking investors with strong opportunities to bring scale to this burgeoning space.”

Nonetheless, Ag investment remained prone to future disruptinons as Citi reported that hidden costs associated with the food industry are estimated to stand at $11.9 trillion, almost $2 trillion higher than the industry’s current market value, underlining the urgent need to address the food industry’s outsized impact on the environment, climate, and its potential adverse effects on the health and welfare of the global population.

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