How health megatrends are driving global demand for tree crops

According to Savills recent Spotlight: Global Farmland, this surge in demand for particular foods is part of a broader health megatrend – where consumers are actively seeking foods that promote overall wellbeing, including physical, mental and emotional wellness. Among these foods are lean proteins (like fish and eggs), healthy fats (like almonds and avocados), and foods with high antioxidant levels (like blueberries and raspberries).

Many of these fall under the category of tree crops. As demand grows tree crops are increasingly seen as resilient, long-term assets in the agricultural investment space.

Given the surge in popularity, here are a few key reasons why tree crops are gaining ground as a strategic asset:

Why tree crops?

Tree crops include everything from apples, peaches and avocados, to berries, tree nuts (such as almonds and walnuts) and olives. 

Unlike annual crops, which are harvested once during their lifetime, tree crops are capable of producing multiple harvests, with most sustaining productivity for 25 harvests or more. In comparison to other crops, they also have a higher sale per tonne and higher tonne-per-hectare yield, marking their high income potential. 

As global consumption continues to rise, so does the demand. For example, if almond consumption worldwide matched that of the United States, global demand could see a 179% increase over the next 20 years.

Where do they grow?

In the UK, tree crops represent a small portion of total agricultural output given the climate, with the main tree crop by area being apples. However, in more tropical destinations, many different types of tree crops thrive such as citrus and tropical fruits, most notably bananas.

What are the risks associated with investment into the sector?

While tree crops offer strong long-term returns, investors should be aware of the following:  

1. Water availability: Tree crops perform best in low-rainfall areas with warm and sunny climates, making irrigation essential to the viability of tree crop orchards. However, water shortages pose risks. This can be mitigated by improving soil structure, balancing water-demanding crops with drought-resistant ones, and prioritising sustainable surface water sources. 
2. Climate variability: Due to climate change, parts of southern Europe are experiencing winters that are too mild for effective tree dormancy. Despite having negative impacts on some regions, this opens up new areas for growth. For example, avocados can grow further north along the Mediterranean coast and almonds are increasingly growing in southern France now that it is experiencing warmer springs. 
3. Market trends and fluctuations: Tree crops take between five to eight years to reach their maximum yield, so it is important investors take a long-term view in order to offset price fluctuations triggered by yield variation at different points in the crop cycle. Returns over 20 years have no sensitivity to the point of the cycle at which the investor entered.

Long-term value

Tree crops are aligned with current powerful health megatrends relating to food, providing investors with the potential for high returns and long-term value. With the proper management and risk mitigation, tree crops offer a well-balanced risk and return profile. As demand for healthy food continues to grow, tree crops stand out as a strong investment opportunity.

Further information

Contact Nicola Buckingham or Jonny Griffiths

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