In the ever-evolving landscape of agriculture, technology is playing a pivotal role, driving growth and innovation across various sectors. One company that has consistently emerged as a leader in this space is Deere & Co. (DE +1.16%). The company’s cutting-edge technology, paired with its industry-leading farm equipment, has not only revolutionized farming practices but also led to a significant boom in its stock. Since its debut in 1978, Deere & Co. has delivered a total return of over 10,000%, a testament to its successful integration of technology into agriculture.
The agricultural technology sector is witnessing a surge in interest, with several areas showing promising growth. One such area is plant-based meats. The increased demand for animal-free proteins is driving consumer brands such as Beyond Meat (BYND -11.06%), Impossible Foods, and others to innovate and deliver on nutrition, taste, texture, and price. To succeed, these companies are forming strategic partnerships and supply agreements with larger agriculture companies like Archer-Daniels-Midland, Bunge, and Tyson Foods. This collaboration not only benefits the plant-based meat producers but also the agriculture giants, creating a symbiotic relationship that drives growth and innovation.
Nontraditional stocks are also making waves in the agricultural technology sector. Precision BioSciences (DTIL -1.82%), for instance, is developing a novel gene-editing technology platform focused on human health. However, it also owns a subsidiary dedicated to agricultural applications. One of its focuses is engineering high-protein, neutral-tasting chickpeas, which could become a next-generation, plant-based protein source. This development could potentially tempt companies like Beyond Meat, which currently relies on yellow pea protein, to switch at least some of its supply to chickpeas if the Precision product lives up to the hype.
Another area of growth is biologicals. While chemical-based pesticides and fertilizers are expected to dominate their respective markets for the foreseeable future, living technologies are also gaining traction. Biologicals are microbe-based treatments designed to boost yields, improve defenses against pests, and reduce dependence on chemical inputs. Individual investors can gain exposure to this emerging opportunity through companies like Bayer, FMC, and Corteva, all of which are leading developers of biologicals. Bayer, in particular, has a leading biologicals brand on the market through a partnership with Novozymes (OTC:NVZM.Y), following its acquisition of Monsanto.
Vertical farming is another agricultural technology that is sweeping the market. Companies like Local Bounti (LOCL -1.11%), a hybrid featuring vertical farming and hydroponics, are attracting significant investment. Vertical farming operations use shelves and artificial light to grow produce, minimizing land and water consumption. By conserving space, vertical farming has the potential to create facilities located much closer to consumers than traditional farms. Despite falling short of earlier goals, Local Bounti is still growing, with Cargill, a privately owned agriculture giant, as a major investor and partner. Cargill loaned $200 million to Local Bounti in September 2021 and is considering financing all of its future facilities through 2025.
As the agricultural technology sector continues to evolve, it is clear that innovation and collaboration are key drivers of growth. Companies that can successfully integrate technology into their operations and form strategic partnerships are likely to thrive in this dynamic landscape. Investors, too, stand to benefit from the opportunities presented by this exciting sector.