Not very long ago, ASX agriculture stocks used to be the most under rated stocks. These stocks were often assumed to be totally at the mercy of weather and commodity cycles, but much water has flown down since then.
Although, inclement weather still plays its role, Agriculture Stock Market has come a long way in mitigating risks to some extent and improving productivity. Producers have implemented new technologies and management practices. This has led to strong volume growth and improved productivity.
Earnings from some of the best agriculture stocks have beaten market expectations, belying the notion of these being cyclical freaks of the past.
The world's population is ever growing, thus demand for food and agricultural products will continue to rise. The challenge lies in meeting future food demand in a sustainable way. Globally, addressing the issues related to climate change will require advances in climate resilient agricultural strategies.
Australian agriculture achieved a record gross value of production in 2022–23 on the back of past reforms, investments in productivity and industry responses to domestic and global pressures. Driven by these factors, the sector finds itself in a strong position to take advantage of historically high global commodity prices
The Australian agriculture industry is poised for a prosperous future, with recent reports indicating a substantial increase in the value of agricultural production, projected to soar by 6% to reach an impressive $85 billion during the 2024–25 period.
The growth potential for Australian agriculture exports remains in commodities, as many regions, such as Indo-Pacific are facing shortfalls in production, such as pulses, grains, horticulture, and oilseeds.
Further, the global interest in emissions and sustainability is growing. Governments, investors and consumers are responding to this by increasingly seeking for sustainability credentials in global food systems. Australia’s major agricultural industries anticipated these trends already and have developed sustainability frameworks.
The Three Sustainable Agriculture Stocks listed on the ASX
Nufarm Limited (ASX: NUF),
Nufarm, on 8 December 2023, reported $111 million in statutory net profit after tax in FY2023, a 3% increase over the previous comparative period.
NUF is currently reaching important milestones and has a well-defined plan. The company anticipates that as the industry adjusts to price changes and optimizes input costs; its growth trajectory will be upward-sloping from the first to the second half. With solid grower support in "Aquaterra," the volume expansion is proceeding as planned. A new hybrid core seed called "Canola" is intended to help the company maintain its dominant market position in Australia and pave the way for future growth in America.
A growth stimulus from the introduction of new crop protection products, pipelines already in place, and rising market share is expected to keep the revenue momentum going at the quickest rate through FY2025
Select Harvests Limited (ASX: SHV)
Select Harvests Limited’s ongoing priorities remain controlling expenses, increasing productivity, and maximizing crop volume and quality in 2024.
The global almond market is experiencing consistent pricing appreciation because of the US crop failing to meet volume and quality projections.
As the US crop falls short of volume and quality projections, the worldwide almond market remains active, and prices are steadily rising. The business enhancement programs of Select Harvests are having a favourable effect.
GrainCorp Limited (ASX: GNC)
GrainCorp is strategically positioning itself for long-term success with substantial investments in core operations. By optimizing processes within the ECA network and integrating GrainCorp Nutrition and Energy, GNC aims to enhance internal efficiencies and elevate customer satisfaction.
Additionally, GNC's focus on asset optimization, exploration of growth avenues, and investments in Digital and AgTech underscore its commitment to sustainable growth. These initiatives not only drive short-term profitability but also establish a resilient foundation for continued success and profitability in the future
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