As inflation creeps into everyday consumer prices, one way to play the changing market is via a technology-focused: the Global X AgTech & Food Innovation ETF (KROP).
Having technology that efficiently harvests crops and reduces agricultural inputs can be of benefit to producers. In turn, this can translate into more strength and investment opportunities for KROP.
“Precision agriculture seeks to maximize crop yields and quality while conserving inputs like water, fertilizer, pesticides, and labor,” a Global X blog post by Andrew Little said. “Key to this are the Internet of Things (IoT) and Artificial Intelligence (AI). With these technologies, farmers can monitor and address the precise needs of specific crops and livestock.”
The fund invests in the public equity markets. It invests in the stocks of companies operating across AgTech & Food Innovation companies. including precision agriculture, robotics/automation, controlled environment agriculture, agricultural biotechnology, protein & dairy alternatives, and food waste reduction sectors. It invests in growth and value stocks of companies across diversified market capitalization.
The ETF invests in stocks of companies that are deemed socially conscious in their business dealings and directly promote environmental responsibility. It seeks to track the performance of the Solactive AgTech & Food Innovation Index, by using full replication technique.
Growth Ahead for Agriculture Tech & Food Innovation
KROP can also give investors high growth potential since it essentially lends itself to disruptive technology exposure. It’s one way investors can obtain growth while adding niche exposure to the agricultural industry.
“The global market for precision agriculture is expected to grow from $5.3B in 2020 to $10.7B in 2026, representing a 12.3% compound annual growth rate (CAGR),” the Global X blog post noted. “We expect that increasing demand for agricultural products and a dire need for more sustainable production methods will drive this growth in the long-term as stakeholders strive to minimize inefficiencies and negative externalities.”
The ETF offers:
- High Growth Potential: Forecasts suggest the global market for agricultural robots could reach $21bn by 2026, almost triple the market size in 2020.
- Global Tailwinds: The AgTech and Food Innovation theme could potentially benefit from helping address global food insecurity and minimizing the adverse environmental impacts of large-scale agriculture.
- An Unconstrained Approach: Production and consumption dynamics around food are evolving. KROP seeks to gain exposure to the forefront of these dynamics by investing in AgTech and Food Innovation companies, regardless of sector or geography.
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