In this piece, we will take a look at the 15 most profitable crops in the world. If you want to skip our analysis of the global food industry and stocks of food companies in general, head on over to 5 Most Profitable Crops in the World.
Societal progress is often marked by a country shifting its economy from the primary to the secondary and tertiary sectors. The primary sector is made of activities that utilize natural resources to earn a living. This includes agriculture, mining, and forestry among others. A shift to the secondary industry brings high value outputs to a country, and the tertiary sector is made of office workers who often produce higher margin outputs such as software and financial services.
However, just because farming might make someone less money doesn’t mean it’s going to go away. After all, no matter how many computers humans build, we still need to eat food. Simply put, one cannot eat a computer or the Internet. And so, the farming industry continues to prosper and tick along, helped by advances in technology that makes crops safer and more profitable. And the ubiquitous demand for food makes the industry worth trillions of dollars. According to data, the global food industry should be worth a whopping $9.43 trillion by the end of this year and is expected to grow at a compounded annual growth rate (CAGR) of 6.27% between 2023 and 2027.
This growth is unsurprising given that global caloric consumption has grown over the past years and will continue to grow in the future as well. Data from the United Nations’ Food and Agriculture Organization (FAO) shows that from the 2,789 kilocalories that it stood at in 2000, global caloric consumption is slated to sit at 3,139 kilocalories by 2050 to mark a 12% growth.
At the same time, not all crops are equally profitable. While some crops, such as corn and wheat are grown primarily for food, others are grown for profit. These crops are called cash crops, and the list of cash crops varies by country. In America, some cash crops grown are oranges, corn, and soybeans. In fact, America is one of the biggest producers and exporters of corn, and it produced 360 million tons in 2020. This accounted for a significant portion of global corn production, with global corn production in the next year (2021) sitting at 1.1 billion tons.
The immutable global need for food has also led to some of the biggest companies in the world also being food companies. Some food stocks that belong to firms ranking high in the list of the world’s biggest companies are The Coca-Cola Company (NYSE:KO), PepsiCo, Inc. (NYSE:PEP), McDonald’s Corporation (NYSE:MCD), and Mondelez International, Inc. (NASDAQ:MDLZ). And, contrary to the popular belief of being less profitable the bigger you get, these firms are also more profitable than the industry average. McDonald’s has a profit margin of 26% while Coca-Cola has a profit margin of 22% – both of which are higher than the industry averages of 9% and 14.6%, respectively.
Just as a small business is unlikely to grow into the next McDonald’s, growing different kinds of crops have different requirements. And there are a variety of crops that beginning farmers can grow to ensure that their inputs and time yield favorable results that might even lead to some money flowing in. Some of the best cash crops that beginning and small farmers can grow include bamboo, mushrooms, garlic, and even Christmas trees!
Apart from food companies, agribusiness and farming companies are also quite big. Some of the top agricultural companies, such as The Mosaic Company (NYSE:MOS), Corteva, Inc. (NYSE:CTVA), and Archer-Daniels-Midland Company (NYSE:ADM) have market capitalization going in the billions of dollars. And, the biggest agricultural businesses in terms of revenue often rake in hundreds and billions of dollars each year in the form of net sales.
At the same time, technology has also made an impact on the farming industry. One new trend is what is called vertical farming. As the name suggests, this involves growing crops on vertical plans to squeeze out more yield per acreage. The U.S. government is investing millions of dollars to support innovation in agriculture, and the corporate world is already picking up the mantle. If you are interested in vertical farming, then some of the best stocks are are favored by hedge funds are The Scotts Miracle-Gro Company (NYSE:SMG), Hydrofarm Holdings Group, Inc. (NASDAQ:HYFM), and AppHarvest, Inc. (NASDAQ:APPH).
Finally, while the U.S. might lead the world in corn production, it isn’t the world’s biggest food producer per capita. In fact, the top five food producing countries per capita are Brazil, Paraguay, Australia, Argentina, and Ukraine.
Finally, worries about inflation and recession are causing concern for nearly every industry in the economy. On this front, here’s what the management of Archer-Daniels had to say during the firm’s latest earnings call conference:
Before we wrap up today, I wanted to share some insights into how we’re thinking about the remainder of 2023 and how we are positioning the company to take on the next phase of opportunities. We are confident that ADM will be able to deliver on our plans for 2023 despite some pockets of soft demand. Supply and demand shift are allowing ADM to flex our integrated value chain, in support of another strong year of results. We continue to advance partnership agreements with major players across multiple industries from regenerative agriculture to alternative proteins, to sustainable fuels, to plant-based industrial and personal care products. All of these partnerships are supporting ADM as we evolve at pace with the external environment to capture new growth opportunities.
We see accelerated upsides emerging from product areas like biosolutions expected to grow at double-digit rates again this year. We have significant production capacity coming online within the year across our three businesses to support continued demand growth. And we’re driving forward the broad-based decarbonization agenda in our Decatur complex, which is unlocking both near-term and long-range value for our customers across multiple industries. With a combination of solid business performance in the core business, along with the strong growth opportunities across our value chain, we expect that we will be able to deliver between $6 to $7 in earnings per share in 2023 and based on the strength of our balance sheet and cash position, we continue to pursue opportunities to deliver both near-term value to shareholders while positioning ADM for its next phase of growth.
With these details in mind, let’s take a look at the most profitable crops in the world.
Our Methodology
To compile our list of the most profitable crops, we used the UN’s Food and Agriculture Organization’s (FAO) data to calculate the value per acre of 155 crops. Out of these, the top 15 most profitable crops in the world were chosen for this list.
15 Most Profitable Crops in the World
15. Watermelons
Gross Production Value Per Acre: $5,776
Watermelon is the fruit for the summer. It is one of the best sources of water on a hot day and helps keep people hydrated. Growing watermelons requires slightly alkaline or neutral soil with moderate temperatures. A beehive is also recommended to make sure that pests do not destroy or damage the crop.
14. Peaches and Nectarines
Gross Production Value Per Acre: $5,805
Peaches and Nectarines are almost the same food, with the only main difference between the two being that the former has the characteristic fuzzy skin while the skin of a nectarine is smooth. They are grown from trees, so first time growers will have to wait for the tree to fully grow before it produces the fruit.
13. Pomelos and Grapefruits
Gross Production Value Per Acre: $5,825
Grapefruit is the cross breed of a pomelo with an orange. Like peaches, it is also grown on trees, and is known for its sweet and tangy flavor.
12. Chilies and peppers, green
Gross Production Value Per Acre: $6,186
Green chilies and pepper are not for the faint of heart, at least when it comes to eating them. They are also some of the rare vegetables that have seen interest from psychologists, who believe that people who consume chilies can safely experience extreme emotions in a safe environment.
11. Green Garlic
Gross Production Value Per Acre: $6,487
Green garlic, despite what the name suggests, is not a special kind of garlic. Instead, its simply garlic that has not fully grown. Garlic itself is one of the most well known cash crops. Green garlic is one of the most beneficial foods for health, with high amounts of antioxidants.
10. Blueberries
Gross Production Value Per Acre: $6,683
Blueberries are one of the few super foods, proponents of which claim that they can help with the immune system, diabetes, and overall health. They are grown all over the world, and can also be plucked from the wild.
9. Kiwifruit
Gross Production Value Per Acre: $6,850
Kiwifruit is typically grown on canes which require careful pruning to ensure fruit health and yield. China is the biggest producer, but the fruit is grown all over the world across different continents.
8. Tomatoes
Gross Production Value Per Acre: $7,873
Tomatoes are the soul of most dishes, lending them a characteristic red color and a distinct tangy taste. They are quite easy to grow as well and can be grown at home in pots or in gardens.
7. Cucumbers and Gherkins
Gross Production Value Per Acre: $10,226
Cucumbers and gherkins belong to the same line of vegetables but are grown differently. The former is rather tasteless while the latter has a pickled flavor.
6. Cranberry
Gross Production Value Per Acre: $10,364
Large cranberry fields are some of the best looking agriculture sites that you will come across. A vast sea of red, they are grown in areas with a shallow water table.
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Disclosure: None. 15 Most Profitable Crops in the World is originally published on Insider Monkey.
