Organic Scarcity, Land to Shelf
Oren J. Falkowitz@orenfalkowitz
−0.7%
since Oct 6
The idea
I believe organic farmland can't expand quickly, since converting acres takes years, and that scarcity gives pricing power to whoever owns the land, moves the product, or sells the brand. The basket spreads across scarce organic farmland, the supply chains that get organic food to shelf, premium organic brands, and irrigation and crop-input companies as ballast, with a small cash buffer. I'm avoiding single-name bets and holding this for five-plus years, since the thesis is structural, not seasonal. I'd rethink it if organic acreage started expanding faster than demand.
What it owns
- When new acres are scarce, farmers buy irrigation and better inputs to get more from the land they already have. · VanEck Agribusiness ETFIt holds a broad basket of agribusiness companies worldwide, keeping exposure to the whole land-to-shelf chain and showing early signs if the farm economy weakens., Corteva, Inc.It sells seed and crop inputs including biologicals that help farmers lift yields when acres are scarce, making it the biggest pure play on input spending., Lindsay CorporationIt sells irrigation systems that help farmers get more from the acres they already have, exactly what tight farmland supply forces them to do., Valmont Industries, Inc.It makes center-pivot irrigation rigs that squeeze more crop from limited land when acres cannot grow.29%
- Certified organic acres take years to create, so owners of that land hold a tight bottleneck in the supply chain. · Gladstone Land CorporationIt owns certified organic farms leased to growers, so its rents and land values depend on the scarcity of newly certifiable acreage., Farmland Partners Inc.It holds a large portfolio of U.S. farmland whose rents and values reflect the tight supply of land available to farmers., Limoneira CompanyIt owns citrus acreage plus water rights in California, two things that cannot be created more of and fit the scarce-land core of the take.24%
- Brands on the shelf capture the premium that shoppers willingly pay for organic products. · Vital Farms, Inc.It sells pasture-raised eggs at a premium through a network of small family farms, capturing the pricing power that tight organic supply creates., Lifeway Foods, Inc.It owns the kefir category in US grocery, a premium organic-adjacent brand that commands up pricing for health benefits to shoppers., The Vita Coco Company, Inc.It is the brand layer in coconut water, sourced from a supply chain it largely controls and sold at a premium to shoppers buying better-for-you products.22%
- Someone has to source, process and move organic food from scarce farms to stores, and those middlemen get paid as volumes grow. · United Natural Foods, Inc.It is the biggest distributor of natural and organic groceries in the US, moving scarce organic products from land to shelf through its trucks and warehouses., Mission Produce, Inc.It runs a global sourcing network for avocados including organic, where land-limited supply gives pricing power to whoever controls the flow., Dole plcIt moves fresh produce worldwide with ships, cold storage and farms of its own, sitting in the supply-chain layer where tight demand and supply create value.18%
- Other · SFM5%
- Cash2%