Blog: How Soil Degradation Threatens Food Security and Prices

Introduction

In a world increasingly focused on technological advancements, the very ground beneath us, our soil, faces a crisis that could drastically alter the future of global agriculture and food prices. Soil degradation, the process by which soil loses its fertility and structure, is becoming a silent yet pressing threat. Its impact on crop yields, global food security, and the cost of living is profound, and ignoring this challenge could lead to severe consequences for all.

According to the Food and Agricultural office of the United Nations, approximately 33% of the world’s soil is already degraded projected to reach 90% by 2050, in a world that will be expected to feed a population of 10 billion, this trend poses a significant challenge: how can we produce more food on increasingly unproductive land? As much as 95% of global food production depends on soil and after oceans soil is our second largest store of carbon, with degradation reducing soil’s ability to sequester carbon. (FAO, 2022)

Soil degradation occurs due to factors such as over-farming, deforestation, overgrazing, and the excessive use of chemical fertilisers and pesticides. Climate change exacerbates this process, as extreme weather events like floods and droughts strip away topsoil, the most nutrient-rich layer.

Impact on Crop Yields

Healthy soil is the cornerstone of agricultural productivity. It provides essential nutrients, retains water, and supports biodiversity, which in turn promotes plant health. When soil degrades, its ability to support crops diminishes, leading to lower yields.

For instance, crops like wheat, maize, and rice, staples for billions of people, are already experiencing reduced productivity in regions affected by soil erosion and nutrient depletion. The International Food Policy Research Institute estimates that without intervention, crop yields could decrease by as much as 30% in some areas by 2050. (Gautam, et al., 2022)

The Ripple Effect on Food Prices

Lower crop yields inevitably lead to higher food prices. As soil becomes less fertile, farmers must invest more in fertilisers, irrigation, and other measures to maintain productivity. These additional costs are passed on to consumers, driving up prices.

Moreover, supply chain disruptions caused by lower yields can create scarcity, further inflating prices. In some regions, this could exacerbate food insecurity, particularly in low-income countries that are heavily reliant on imports. Food insecurity can exacerbate existing frustrations and disrupt the social and political order of a country and research has shown a causal effect between food prices and political stability such as the Arab Spring Uprising. (Soffiantini, 2020)

What the Future May Hold

If current trends continue, the consequences of soil degradation could be dire:

•ㅤㅤIncreased Dependence on Technology: Farmers may need to rely more heavily on genetically modified crops and advanced farming techniques to offset declining soil quality. Whilst genetically modified crops have associated stigmas, the general scientific consensus is that they exhibit no adverse health affects on humans. However, new variants will need to be researched and developed to accommodate the increasingly difficult landscape.

•ㅤㅤExpansion of Agricultural Land: To make up for reduced yields, more land may be converted for farming, leading to further deforestation and loss of biodiversity.

•ㅤㅤGlobal Inequality: Wealthier nations may be able to mitigate the effects of soil degradation through technological solutions, but poorer countries could face severe food shortages and economic instability.

What can we do?

While the situation is alarming, it is not without hope. Regenerative agricultural practices, which focus on restoring soil health, offer a path forward. These include:

• Crop Rotation: Alternating crops to improve soil fertility.

• Cover Crops: Planting crops that protect and enrich the soil.

• Reduced Tillage: Minimising soil disturbance to preserve its structure and biodiversity.

• Organic Farming: Using natural fertilisers and avoiding chemical pesticides.

Governments, organisations, and companies must work together to promote these practices on a global scale. Investments in soil restoration and education are critical to ensuring long-term sustainability.

How can ebi help?

ebi’s Vantage Impact portfolio invests in the Rize Sustainable Future of Food fund, which focuses on companies driving the transition to more sustainable food production systems and consumption patterns. The fund aims to safeguard nature and ecosystems, promote transparency and safety, and encourage plant-based consumption to help reduce greenhouse gas emissions.

A central component of this fund’s thematic methodology (Tematica Research, 2021) is Precision Farming. Companies in this sub-sector engage in agricultural innovations and new technologies that:

•ㅤㅤIncrease the quantity and quality of crops produced on the same amount of land.

•ㅤㅤImprove efficiency in the use of inputs (e.g., crop protection products, fertilisers, water, and fuel).

•ㅤㅤReduce the negative impact of environmental risk factors (such as single weather events, climate change, or labour shortages).

•ㅤㅤLower the overall environmental footprint of agriculture.

Such technologies include:

Precision Farming Technologies – This refers to machinery such as GPS enabled self-driving tractors incorporating robotics and AI technology for precision planting, weeding, irrigation and harvesting and application of fertilisers and crop-protection products.

Digital/Smart Farming and Internet of Things – This refers to the network of physical objects (tractors, drones, satellites) outfitted with sensors and farm-management software that enable data collection and aggregation for the purpose of field monitoring and data management. Drones take high quality images and satellites capture the bigger picture, which can be used to assess environmental conditions (such as moisture), monitor, and make assessments throughout the growing cycle and predict yields in order to better inform on-farm strategy and practices.

Indoor, Vertical, Aeroponic, Hydroponic and Aquaponic Farming – These technologies grow crops without soil in nutrient-rich solutions, often within increasingly closed-loop systems. Benefits include positioning food production closer to consumers, significantly reducing water usage, and, in many cases, eliminating the need for traditional pesticides and fungicides, thereby lowering chemical runoff into the environment.

Furthermore, this fund also targets companies that are involved in relevant Agricultural Science, companies in this sub-sector are engaged in the maximisation of crop yields and the optimisation of input resources through science and technology, including seed science (gene editing and breeding technologies), fertilisers and crop protection products.

These technologies should increase crop yields while slowing soil degradation, ultimately helping restore soil health so we can continue to feed Earth’s population and enhance global food security whilst reducing our reliance on fertilisers.

The Bottom Line

Soil degradation is more than an environmental issue-it is a fundamental threat to our ability to feed a growing population. Without immediate action, the impact on crop yields, food prices, and global food security will be severe. However, by adopting sustainable farming practices and investing in soil health, we can build a resilient agricultural system that benefits both people and the planet.

The question remains: will we act quickly enough to protect the soil beneath our feet, or will we let it slip through our fingers? The future of food depends on the answer.

For financial professionals only.

References

Food and Agriculture Organization of the United Nations (FAO) (2022) Healthy soils for a healthy people and planet: FAO calls for reversal of soil degradation. Available at: https://www.fao.org/newsroom/detail/agriculture-soils-degradation-FAO-GFFA-2022/en (Accessed: 18 December 2024).

Gautam, M., Tateno, Y. and Wani, S. (2022) Repurposing agricultural policies and support. International Food Policy Research Institute. Available at: https://openknowledge.worldbank.org/server/api/core/bitstreams/9b868e1d-ad84-5229-a0df-12b5411e848b/content (Accessed: 18 December 2024).

Tematica Research. (2021) Sustainable Future of Food: Global Classification. September 2021. Available at: https://europe.ark-funds.com/wp-content/uploads/2020/09/Tematica-Research-Sustainable-Future-of-Food-Global-Classification-September-2021.pdf

Soffiantini, G. (2020) Global food security in the context of COVID-19: A scenario analysis. Global Food Security, 26, 100442. Available at: https://www.sciencedirect.com/science/article/pii/S2211912420300547 (Accessed: 18 December 2024).

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