10 ESG Investments for 2021 - Part 4

Organic feed

Andrew Willis 29 April, 2021 | 4:52PM
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See last week's ESG investment for 2021 here

Andrew Willis: It’s time again for Morningstar Sustainalytics’ “10 for 2021” – which presents investors with 10 ESG investment themes that can positively contribute to advancing United Nations Sustainable Development Goals. In this series, we’ll feature a new development each week so that you can ‘create impact through thematic investing’.

This week, we’re talking about organic feed – or simply, naturally-grown food for cows, pigs, chickens and, anything else we eat. The animals like it, consumers like it and very importantly it helps maintain good soil quality and protect local biodiversity by avoiding chemicals.

But despite all of the benefits, we still find organic farming to be atypical in the industry… and agricultural companies are highly exposed to the risks associated with non-regenerative farming… We are however starting to see some signs of hope with companies adopting practices that include reducing some chemical inputs where possible and using crop residues as compost.

What might tilt the scales for more animal feed going organic could come down to margins. Organic farming practices could prove more profitable and yielding than conventional farming, attracting the attention of global food processors like ADM (ADM).

ADM offers organic animal feed products, but also food and nutritional products for humans. Sector analyst Seth Goldstein expects the company’s nutrition business to grow from 17% to 25% of profits by 2025 – with livestock likely preferring the higher-margin food in the future as well.

For Morningstar, I’m Andrew Willis.


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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Archer-Daniels Midland Co52.79 USD-0.71Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar Canada. He previously produced content for Fidelity Investments and finance industry events for Euromoney Institutional Investor and has written in the past for Thomson Reuters and CNN. Follow him on Twitter @Andrew_M_Willis.

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