GMO Food Producers Have Kept Pace With Whole Foods and Its Peers

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Where food comes from has become an increasingly heated and controversial topic for many American consumers. The production of organic food tends to be associated with local farms and …

Where food comes from has become an increasingly heated and controversial topic for many American consumers. The production of organic food tends to be associated with local farms and consumer-friendly companies such as Whole Foods Market (NASDAQ: WFM), while their engineered counterparts show up on the other end of the public relations spectrum; associated with the likes of Monsanto (NYSE: MON). You are free to purchase foods from organic or genetically modified sources for your household if you prefer, but there is no debating that both industries, organic food and biotech crops, have represented ultra-growth opportunities for investors.

Given the intense rhetoric pitting the two against each other it may be easy to overlook the growth potential that each offers. But which industry presents the better investing opportunity? On one hand, organic foods sales are being spurred by consumer demand and large business investments, such as the $600 million acquisition of Earthbound Farm by WhiteWave Foods (NYSE: WWAV). On the other, developing countries collectively represent an amazing market opportunity for producers of biotech seeds and crops. In fact, developing countries now grow more acreage of biotech crops than industrialized nations.

So, if you take an open-minded approach to both industries, what would the hard numbers from your research tell you about the investment opportunities? Let's discover where growth has originated from in the past, where both types of foods stand in the market in the present, and see what future growth depends on.

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  • 1. Better Growth Investment: Organic or GMO Foods?
  • 2. What has been the best investment in the last 10 years?
  • 3. Investment comparison
  • 4. Growth of U.S. organic food sales • Totals 4% of all U.S. home food sales • Produce (43%) • Dairy (15%) • Driven by organic cropland growth
  • 5. Growth of U.S. organic cropland • From 1997 to 2011… • Pasture: 350% growth • Cropland: 226% growth
  • 6. What about GMO foods and biotech crops?
  • 7. GMO market penetration Agricultural Crop Organic % of U.S. Production GMO % of U.S. Production GMO % of GMO No. of Global Countries Production Grown Canola --- 90% 30% 4 Corn 0.3% 88% 35% 17 Cotton --- 90% 81% 15 Soybeans 0.2% 94% 81% 11 Source: USDA, International Service for the Acquisition of Agri-Biotech Applications Infographic
  • 8. Growth of global biotech cropland Source: International Service for the Acquisition of Agri-Biotech Applications Infographic
  • 9. How do organic and GMO foods, crops compare?
  • 10. Side-by-side Organic Crops & Foods Biotech Crops & Foods* % of U.S. home food sales 4% >88%* U.S. cropland acreage, 2012 2.97 million acres 171.74 million acres Contributions to U.S. GDP, 2012 $30.2 billion $125 billion *foods containing GM ingredients
  • 11. The most pivotal shortterm catalyst? International Trade & Regulations
  • 12. Future GMO growth hinges on global acceptance Source: GMOanswers
  • 13. Export value of organic foods variable, but growing Agricultural Crop Organic Export Organic Export Value, 2011 Value, 2012 % Change Apples $46.2 million $99.8 million 116% Cherries $30.6 million $6.4 million (79.1%) Grapes $60.0 million $39.7 million (33.8%) Pears $8.9 million $20.6 million 131% Overall $412 million $448 million 8.7% Source: USDA, U.S. Department of Commerce
  • 14. Organic catalysts in next 10 years? Consumer demand for local, labeled products Big business investments International trade, exports
  • 15. GM catalysts in next 10 years? Big business investments Next-gen crops offer enhanced production Population growth stressing shrinking farmland
  • 16. Conclusions • Both organic food and biotech crops will continue high growth for foreseeable future. • Biotech crops and GMO foods – Positives: Next-gen biotech crops – Negatives: High global adoption rates = saturation • Organic crops and foods – Positives: Consumer demand, lack of regulatory obstacles, plenty of room to grow – Negatives: Lower yields present risk from environmental factors, farmer fallout
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