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NEW RESEARCH FROM DEUTSCHE BANK'S ASSET MANAGEMENT DIVISION ADDRESSES CHALLENGE OF MEETING AGRICULTURAL DEMAND IN A CARBON-CONSTRAINED WORLD
NEW YORK, June 24, 2009 – DB Climate Change Advisors (DBCCA), Deutsche Asset Management's (DeAM) institutional climate change investment and research business, today published a new report, "Investing in Agriculture: Far-Reaching Challenge, Significant Opportunity: An Asset Management Perspective." The report explores the question of how to sustainably meet the growing energy and food demands of a global population approaching nine billion people in 2050 in a sector affected by climate change.
DBCCA, in collaboration with The Nelson Institute's Center for Sustainability and the Global Environment (SAGE) at the University of Wisconsin-Madison (UW) estimates that the caloric needs of the planet will soar 50% by 2050 driven by population, wealth and diet as well as some biofuel demand. The focus of the report is on how to meet the challenge of boosting agricultural productivity to meet the needs of the Earth's population. The paper looks at this challenge through 2050 and presents new agricultural data and models.
The authors investigate the challenge of boosting productivity in three phases:
- They investigate the world's existing agricultural lands and raised the productivity using the best available practices. This would entail massive investment in production technologies and yet, supply would fall short of meeting demand.
- They explored utilizing additional lands such as degraded and abandoned lands, pasturelands and multi-cropping while still preserving existing forests. This still may not meet global demand.
- Taking into consideration the resulting increased use of water, land and increased greenhouse gas emissions in a climate change framework, some alternative approaches were considered such as low-input organic farming practices, broad scale reallocation of land uses, and the potential of using more biotech crops, to maximize output with minimal input.
"Meeting the challenge of feeding and fuelling a growing population in a world facing climate change requires boosting yields through sophisticated land management with mechanization, precision irrigation and fertilization methods," said Dr. Bruce M. Kahn, Senior Investment Analyst. "However, this alone may be insufficient and farmers, markets and governments will have to consider other alternatives including more substantive land use changes and the potential benefits of biotech crops. While the challenges in developing biotech crops require substantial research and development, and a robust regulatory environment, they offer the potential to substantially reduce water and fertilizer inputs and increase productivity."
"It is important to note that there is no silver bullet to increasing global agricultural production, only silver buckshot where a diverse mix of management, technology and foresight are applied to solve one of the greatest challenges we face in the next century," said David Zaks, a researcher at UW's SAGE. "If we are to manage global agriculture sustainably, we need tools and data to make informed decisions, such as geographic information systems, satellite imagery and on-the ground production data."
According to the report, policy solutions are necessary in boosting agricultural productivity. Currently, there are a host of tariff systems and subsidies that create distortions in the global agriculture markets. Additionally, policy makers and scientists are asking how agriculture can help to mitigate carbon emissions. This is evident in the current Waxman-Markey legislation. Sustainable forestry, addressing deforestation, and ending slash-and-burn agricultural conversion are obvious answers. Carbon sinks can also be created through practices that sequester carbon in agricultural soils, such as low tillage and biochar.
On the investment front, the report outlines the long-term view that the upward trend in agricultural prices will resume. The good news is that this should stimulate investment and will offer large investment opportunities across the agribusiness complex including, fertilizers, irrigation, mechanization, sustainable biofuels as well as management practices and infrastructure development.
The report analyzes production trends, identifies opportunities for improvement and studies the supply-side responses that will attract capital in the effort to boost agricultural output. The following topics are also discussed at length:
- Recent market trends and what they mean for the future
- Land-use analysis: measuring the production and yield gap by major crop and region
- Constraints for raising productivity
- Key investment themes and implications (including, water, fertilizers, stronger plant varieties, agricultural equipment, farm commercialization, and supply change management)
- Biotech and Genetically Modified Organisms (GMO) crop options
- Policy trends
DeAM is one of the leading climate change investors in the world, with approximately $4 billion under management as of March 2009. With a world-class in-house research team focusing on this theme, DeAM is an investment industry thought-leader on a broad range of climate change dynamics. DeAM recently created DBCCA, an institutional and alternatives investment management business, to manage assets of institutional investors and high net worth individuals.
Earlier this month, DBCCA launched the world's first scientifically valid, real-time carbon counter, a nearly 70-foot-tall digital billboard displaying the running total of long-lived greenhouse gases in the atmosphere in New York. The Carbon Counter Number is available 24 hours a day at http://www.know-the-number.com and updates will be available at http://twitter.com/knowthenumber.
A copy of the report can be found at: http://dbcca.com/research
For further information, please call:
Deutsche Bank
Mayura Hooper +1 212-250-5536
Louise Pancott +44(20)754-57790
Media Relations
About Deutsche Bank
Deutsche Bank (NYSE: DB) is a leading global investment bank with a strong and profitable private clients franchise. A leader in Germany and Europe, the bank is continuously growing in North America, Asia and key emerging markets. With 80,277 employees in 72 countries, Deutsche Bank competes to be the leading global provider of financial solutions for demanding clients creating exceptional value for its shareholders and people. www.db.com
About Deutsche Asset Management
With approximately $613 billion in assets under management globally (as of 30 March 2009), Deutsche Bank's Asset Management division is one of the world's leading investment management organizations, not just in size, but in quality and breadth of investment products, performance and client service. The Asset Management division provides a broad range of investment management products across the risk/return spectrum.
Mayura Hooper
Vice President, Press and Media Relations
Deutsche Bank - Asset Management, Private Wealth Management
60 Wall St., 21st Floor
Mailstop - NYC60-2115
New York, NY 10005
Phone: 212-250-5536
Fax: 212-797-0279
Cell: 212-380-3533
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