Independent Dialogue
Geographical focus:
No borders
Discussion topic outcome
Discussion topic #4: Generating investable asset classes around nutritious foods, Investing in nutritional food must be one of the new investment themes for the next decade. The ageing population, increasing urbanization, excessive build-up debts, fiscal deficits, climate change commitments, and innovation all make a compelling case for governments globally to create a separate line asset class for Sovereign Wealth Funds and Development Funds. The aim must be not just an increase in life span but the quality-of-life span with a significant reduction in health costs and enhanced productivity. T
... Read morehe following are the key game-changing ideas proposed for the UN Food Summit for creating nutritional food as an asset class: 1. Financing • Creating an asset class for ‘nutritional food’ will attract significant capital from institutional investors and funding agencies. • Investment in ‘nutritional food’ is likely to have a significant positive impact on government health spending globally. For instance, US federal spending on health is expected to be over 20% of the GDP. A study carried out by Cleveland Clinic suggests it can drop down to 7% with healthy habits and healthy eating. Some of the savings can be allocated to funding: o Research for alternative sources for protein in animal feed to reduce the feed cost. This will contribute towards affordability. a) Infrastructure for logistics and cold storage to reduce food wastage b) Subsidies for finance cost for SMEs o Campaign to create awareness and encouraging consumption of healthy food. This is likely to create demand and increase capacity utilization. o Tax exemption for foreign investments and capital investments on Education for SMEs on policies and how to deal with government bureaucracies. • Forestry and growing fruit and vegetables offer the cheapest & long-term option for earning carbon credits for fossil fuel and heavy energy-intensive industrial production. This is critical when globally CO2 emission will need to be reduced by 23 Gigatons by 2030 if the Paris Climate change aspirations are to be realized by 2050. This has a great potential to generate new and cheap capital for farmland. • Compared to conventional asset classes investing in farmland: o Has generated excess returns o is relatively less volatile o is uncorrelated o Is resilient to economic cycles o Represents a good hedge against inflation This is likely to encourage institutional investors to invest in farmland as a yielding asset. This should provide fresh capital for investing in nutritional food. 2. Building Good Credible Investment Pipelines Establishing and funding of independent platforms with the required industry-specific know-how, finance, legal, investment, and policy-specific expertise along the entire value chain of investing in the nutritional food asset class to identify, structure, and match attractive sustainable and scalable investment opportunities with potential investors. Read less
Action Track(s): 1, 2, 3, 4
Keywords: Data & Evidence, Finance, Governance, Innovation, Policy, Women & Youth Empowerment