Ag Investment Trends On The Minds Of Investors In 2025

At the end of each year, Harvest Returns generates a list of trends in the agriculture investment space based on investor sentiment and what we observe across the industry. Before jumping into 2025 predictions, we’ll take a moment to review how accurate our forecasts turned out for 2024.

Last year, we anticipated a resurgence in the Controlled Environment Agriculture space. This prediction did not pan out as additional high-profile vertical farming companies vaporized shareholder equity, and others struggled to stay afloat. Investment in regenerative agriculture gained significant momentum globally in 2024 and will likely see further gains next year. Agriculture biologicals also attracted significant capital with notable investments by Corteva Catalyst’s fund in SOLASTA Bio, Micropep, and Pairwise.

For 2025, here are five trends to watch:

RFK Jr’s Vision For A Healthy America

In February, the Senate voted to install Robert F. Kennedy Jr. at the helm of the Department of Health and Human Services. There are many questions about what happens next as Kennedy takes control at the huge health agency. His ideas could have some interesting, if unpredictable, impacts on America’s food and agriculture systems. Among other things, RFK Jr. has opposed the Food and Drug Administration’s mandates against raw milk, clean foods, and nutraceuticals, while arguing against seed oils, pesticide-intensive agriculture, and ultra-processed foods. This appointment, and others at USDA and the FDA could impact where capital flows into America’s food system over the next four years.

Regenerative Agriculture Has Growing Appeal

The interest in regenerative food systems and agricultural practices has been growing in the investment community, despite the lack of standards on what exactly that term constitutes. Shifting to regenerative practices requires an upfront investment in infrastructure and equipment. Several companies announced funds to raise capital for converting farmland into regenerative production, while government incentives and non-profit grants into the space also grew.

Regenerative agriculture holds promise, but there are significant challenges associated with its adoption. Scalability is a common concern, as many regenerative efforts remain small-scale, artisanal, fragmented, and difficult to replicate on a larger scale and regenerative agriculture competes heavily with conventional production for subsidies. One of the areas that could see a “meet in the middle” approach across the spectrum of regenerative food acolytes is some consensus on regenerative standards, disclosure, and labeling. Though the sector may see a de-emphasis on carbon sequestration, interest in other positive aspects of regenerative agriculture including nutrition, soil health, and preservation of biodiversity could gain new backers.

Production Gains Slow, Back Office Ag Companies Accelerate

As noted in a recent edition of Damian Mason’s “The Business of Agriculture” podcast, U.S. farmers have experienced significant production efficiencies in production over the past several decades, but the rate of change in those gains has greatly slowed. Harvest Returns works with dozens of early stage (and some more mature) farms, ranches, and agribusinesses, and one commonality we see is that despite modern agriculture production methods, many of them are behind other industries in the adoption of back office practices. Therefore, we’ll continue to collaborate with and invest in companies that allow farmers to focus on reducing the load of back office farm functions such as accounting and book keeping, lease management, and supply chain management. AI-enabled and Software as a Service (SaaS) companies will attract increasing attention from investors in 2025.

Alternative Proteins Market Is Stalling

Sales of plant-based food in the United States are expected to grow to $1.6 billion by 2029, but despite this growth, many consumers have never tried plant-based meat. Given projections of stellar growth in the plant-based industry, driven mainly by the rise of health and wellness as well as a growing interest in making more sustainable choices, companies like Beyond Meat looked to seize a clear market opportunity and become market leaders, but many of the companies in the sector are struggling. In February, plant-based “shrimp” producer New Wave Foods ceased operations. Beyond Meat market value has been cut in half in 2024, while its privately owned competitor Impossible Foods was challenged by food recalls in several states.

Mycelium and mushroom-based ingredients seem to be a bright spot in the industry, though some of that interest was driven by a growing demand for psychedelics and micro-dosing in food products. Grand View Research projects a compound annual growth rate of 9.4% from 2024 through 2030 for U.S. fungi-based markets.

What Lies Ahead For Farmland Values?

The demographic trends that make farmland an appealing asset will persist for the foreseeable future. In addition to the de-emphasis on conventional production and seed oils, other headwinds could impact the rate of appreciation of U.S. broad acre farmland. Two of the biggest factors influencing farmland values are input costs and commodity prices. Commodity prices have fallen and row crop farm income is down. Tariffs are another wildcard that could impact land producing corn or soy over the next few years. On top of these challenges, interest rates remain elevated, agriculture banks have tightened collateral requirements and lending standards, with smaller producers being disproportionately impacted on loan availability. However, farmland is fundamentally different from highly liquid debt and equity markets. As a more liquid and slow-moving asset, farmland tends to adjust gradually over time. Farmland’s strength has been its ability to generate future income. In crop production agriculture, this income comes from producing some of the world’s most strategic resources: food, fiber, and fuel. The long-term promise of U.S. agriculture remains strong, fueled by rising global demand for these essential resources. Whether or not farmland values lose steam in 2025 remains to be seen.

A dynamic confluence of political, market, and technology trends will make 2025 an interesting year for investors in agriculture. By understanding the key drivers of change and identifying promising opportunities, investors can position themselves to capitalize on the growth potential of this vital sector.