The Agri Food sector works to solve one of the world’s biggest challenges: providing a sustainable food supply to an increasing population. Food demand is expected to increase anywhere between 59% to 98% by 2050 (source). This will shape agricultural markets in ways we have not seen before. What are currently the most pressing challenges the sector faces, and what upcoming trends will define its future?
Due to rapid globalization, changing consumer demands and a new focus on sustainability and digitization, agri food companies are provided with ample opportunities. However, to seize those opportunities, the industry must overcome its most important problems.
Below, we’ve outlined the three most important issues the industry currently faces:
Imbalance in the supply chain
The power in the supply chain is often skewed towards the end and the very beginning, and with it most of the returns. To improve the sustainability of our food supply, more should flow into the middle, like the farmers, to create a better balance for investing in sustainable solutions throughout the entire supply chain.
Increased global competition
Globalization has led to regional sales markets being opened up to all agri food companies worldwide. Increasingly more agri food companies operate on both a regional as well as a global scale, which results in an increased competition within the market. Increased prosperity, on the other hand, has resulted in the emergence of whole new growth markets. Both developments have resulted in agri food companies having to switch their focus from regional (focussing on a specific country or continent) to global, with all opportunities and challenges that come along with it (f.i. increased competition, different consumption patterns, complex global price dynamics, and entering new markets).
A shortened supply chain
Nowadays, increasingly more products are becoming a commodity, which means less money can be made from it. In order to keep the production process afloat, it is necessary to shorten the supply chain. Also, due to this development, agri food companies have to ask themselves the question: what are the opportunities and risks to integrate more into the value chain? And how sustainable is my right to exist in the chain?
Within the agriculture food sector, there are multiple forces at play that have a significant impact on the way business is being done within the industry. In order to benefit from these developments, agriculture food companies have to understand what trends are shaping the future of the industry.
The world population is growing significantly. By 2050, global food production will have to be increased between 59% to 98% in order to feed the growing population (source). However, deforestation causes rapid and irreversible losses of biodiversity. For that reason, farmers and trading companies need to commit to deforestation-free supply chains. Which means they must grow more on the land they currently operate through “sustainable intensification” by using precision farming tools.
Naturally, this presents agri food companies with ample opportunities to grow. But how are they planning on increasing their production capabilities, entering new markets and competing with other global competitors? And what kind of insights do they need in order to give a complete answer to the question how to seize the opportunities?
Besides a lot of opportunities, the increased global demand also causes an important challenge: how are we agri food companies going to meet these increased demands in a sustainable way?
Within the agri food sector there is an increased understanding that our current food system is not sustainable anymore. This, on one hand, has to do with the way we produce our food products, but it also has to do with our current diet.
In order to make the necessary improvements before it is too late, production companies will have to change. Agri food companies that find a way to make their production processes more sustainable, will most-likely have a greater chance of benefiting from the increased global demand in the future. But how do you determine if you are sustainable enough? And how do you determine if your partners are sustainable enough?
Both the increased urgency to look for more sustainable solutions as well as more and more consumers wanting to know where their food comes from, has led to supply chains in the agri food industry getting shorter. Buying locally does not only reduce gas emissions emitted by transportation, it also aligns with the increased demand of consumers for local, unprocessed foods.
This development allows supply chains in the agri food industry to be shortened. That forces agri food companies to evaluate their current position within that supply chain. What and will I still have a valuable position within this supply chain in the future? And what data is out there to make a decision?
The agri food industry is ever-evolving. In order to keep-up with the competition, it is of vital importance to know how the industry is evolving so you can act accordingly. In our trend reports about the European Bakery, Dairy, Fruit & Vegetables, and Meat industry, we highlight the most important trends in the agri food industry based on our industry analysis.