2024 is set to be a year for the books. As major changes in the economy and politics are coming, we're looking at how they could affect food businesses. Stay alert and get ready: trailblazers are already planning ahead for what’s to come.
Half of the world’s population is going to vote.
What is happening:
More than 70 elections will take place in 2024 in countries involving more than 4.2 billion people–more than half the world’s population. Eyes will especially be riveted on the American elections which might see a rematch between former and incumbent US presidents Donald Trump and Joe Biden.
How can this impact the food sector:
With the rise of right-wing politics worldwide, countries are leaning towards more nationalist policies. This could shake up international trade, especially as tensions between the US and China persist. Trade tariffs are likely to cause trouble for the food industry. The expected to be Republican nominee, Donald Trump, announced that he would tax Chinese products up to 60% if he becomes president. This will impact how food companies produce and sell their products, highlighting the importance of being flexible in a changing world.
China is getting older and slower
What is happening:
China is unwell. The world's second-largest economy, home to more than 1.4 billion people, is facing a host of problems - including slow growth, high youth unemployment and a property market in disarray.
How can this impact the food sector:
The slowdown in China's economy is anticipated to have varying effects across different economies and industries. On one hand, reduced growth in B2B transactions and private consumption is likely to affect exporters to China and domestic retailers within the country negatively.
On the other hand, other markets are likely to capitalize on the situation. Take, for instance, the potato industry, which is experiencing exponential growth in countries like India. While the quality of French fries was deemed not good enough a few years ago, the country is now supplying 40% of the Philippines and 28% of Thailand's French fries.
With abundant data available on India's market trends and consumer preferences, leveraging this information can prove beneficial for businesses aiming to expand their presence or diversify their operations.
Disruptions to continue on the Suez Canal
What is happening:
Recent attacks by Yemen-based Houthi rebels in the Red Sea have halted shipping through the Suez Canal. This has forced exporters in the Black Sea region and beyond to find other, more expensive shipping routes. The Suez Canal is vital for global trade, handling about 12% of all shipments, including a large portion of containerized goods and oil shipments from the Persian Gulf to Europe and North America.
How can this affect the food sector:
Rerouting shipments around the Cape of Good Hope adds about 3,000-3,500 nautical miles (6,000km) to journeys connecting Europe with Asia, adding about 10 days to the duration of the trip, according to the Dutch bank ING. With the prospect of lengthier shipping times, there could be a knock-on impact for turnaround times at ports in the UK and large European hubs such as Rotterdam, Antwerp and Hamburg.
Increased transportation costs have several economically disruptive impacts. They raise consumer costs and reduce demand, which in turn means lower prices for producers in exporting countries. They also lower trade volumes, resulting in higher price volatility, as it is more costly to import goods when prices are high or to export goods when prices are low. Suppliers dependent on disrupted trade routes can see their competitiveness erode as importers seek alternative suppliers to secure lower prices.
