Is Cal-Maine Foods, Inc. (CALM) the Worst Small Cap Agriculture Stock to Buy?

To proviso the world’s demands for nutrient and earthy materials, the agriculture sector—which includes increasing crops and rearing livestock—is indispensable to planetary sustainability. According to information from the Business Research Company, the manufacture is predicted to grow astatine a compound yearly maturation complaint (CAGR) of 7.9% from $14.36 trillion successful 2024 to $15.50 trillion successful 2025, demonstrating its continued value arsenic a pillar of the planetary economy. Despite its value, the manufacture has experienced structural changes passim the years owed to assets management, changing planetary demand, and technological improvements.

However, fears concerning stunted productivity and sustainability person appeared successful caller years, creating obstacles for semipermanent growth. A important displacement successful the assemblage has been the increasing publication of the Global South—Africa, Asia, and Latin America—which has accounted for 73% of satellite cultivation output by 2020. McKinsey & Company predicts that arsenic these rising markets modernize their cultivation processes, their proportionality of accumulation volition turn adjacent more. This alteration has been fueled by advances successful harvest science, irrigation techniques, and mechanization, which person enabled larger yields with the aforesaid onshore resources. Furthermore, reducing ostentation successful the United States astir the extremity of 2024 has helped trim input costs, notably successful energy, resulting successful higher margins for cultivation producers.

Despite these encouraging signs, the industry’s efficiency, arsenic measured by Total Factor Productivity (TFP), has slowed. The planetary TFP maturation complaint decreased from 1.6% successful the aboriginal 2000s to 0.9% during the past decade. With nutrient depletion expected to summation by 60% by 2050, sluggish productivity raises concerns astir aboriginal nutrient security, terms increases, and accrued biology constraints. Likewise, The Farm Products assemblage has experienced antagonistic year-to-date and one-year returns. In contrast, planetary nutrient commodity prices roseate successful February 2025, driven by rising sugar, dairy, and rootlike lipid costs.

To code these difficulties, the assemblage is focusing connected sustainability-driven solutions, notably connected agriculture. This entails the usage of precocious technologies to improve, manage, and modulate farming operations. Advances successful integer technologies person made it feasible to cod and usage monolithic amounts of information astatine debased cost, hence expanding harvest yields portion reducing assets consumption, specified arsenic water, fertilizers, and seeds. According to Fortune Business Insights, the planetary connected cultivation marketplace was valued astatine $1.84 cardinal successful 2018 and is expected to turn to $7.22 cardinal by 2026, with a CAGR of 19.1% implicit the forecast period. In 2018, North America dominated the planetary market, accounting for a 34.06% stock successful 2018.