The Guardian "To feed the world, food and agriculture industry must embrace innovation"
January 16, 2015
With an estimated 60% increase in demand for food by 2050, the food industry must overcome its reluctance to change and throw its weight behind innovative technologies and new practices * Why we must invest in local food storage in sub-Saharan Africa?
Lower oil prices – you can hardly move without running into news of new lows, which should be good news for us all, right? They should reduce the cost of producing goods and delivering services, in addition to offering relief at the pump. But while the latter may hold true, the picture for goods and services is less clear. Yes, production costs will come down, although it turns out that the way savings are shared along supply chains and reach consumers is complex. In short, don’t expect big savings to hit your wallet soon.
The global food and agriculture industry is faced with a considerable conundrum. The current economic malaise has created an operating environment characterised by sluggish growth, soft demand and ample supply. Seemingly, consumers are the winners, as they reap the benefits of lower prices. Meanwhile, the thumbscrews have been put on retailers, producers and farmers: margins are being squeezed and confidence in businesses is ebbing away.
These days, individual companies are struggling to protect their share of the market; some of them are simply struggling to survive. And yet we need to look beyond this and focus on the long term. The demand for food is set to expand exponentially, driven by the powerful combination of a rapidly expanding global population, increased wealth and standards of living, and further urbanisation. The Food and Agriculture Organization of the United Nations (FAO) predicts a 60% increase (pdf) in global demand for food by the year 2050, with 9.15 billion mouths to feed.
In order to rise to this daunting challenge, global food production needs to be ramped up on a large scale and this needs to happen amid increasing competition for agricultural land and water resources.
So how can the industry successfully navigate its way through the slow-moving operating environment it finds itself in? How can it meet the stronger demand that lies ahead? How will the sector be able to overcome current uncertainties while positioning and preparing for future challenges and opportunities? And, most importantly, how can it do this sustainably?
The answer: through innovation. Innovation must form the bridge between our current challenges and longer-term opportunities. Yet innovation hasn’t always been this industry’s hallmark; in fact, overcoming reluctance to change and accepting how different the industry will have to look are the first hurdles to clear. Only then will global agriculture be able to do more with less: making food more available and accessible to all, while taking better care of the planet.
This innovation will have to focus on two key areas. In research and development we need to develop new technologies and practices that can be implemented on a commercial scale. The tried and trusted business model needs to change. We have to accelerate the take-up of new technologies and practices in ways that better manage risk and better align investments and returns.
This is not a call to place our future hopes in the building of castles that may turn out to be made of sand. Rather, there are clear opportunities to boost global food availability and improve access to food. In upcoming contributions to the sustainable business food blog, we will look at some concrete examples that show how innovation can tangibly improve outcomes: in eastern Europe, where modernisation could lift grain production by 9m tonnes a year; in sub-Saharan Africa, where 25% of grain production is lost each year due to poor storage facilities; in the southern hemisphere, where investment in infrastructure will be vital in linking South America’s production potential with Asia’s demand.
Although there are significant obstacles ahead of us, I’m quite positive about the food and agriculture industry’s future and its ability to rise to the challenge. The ideas are bold, but achievable. And while innovation may be the key ingredient in changing the way we feed the world in the future, we face another challenge: that of leadership.
Without leadership and the political will to change the status quo, we won’t be able to overcome the difficulties ahead, and we won’t be able to put these ideas into practice. Success will depend on leaders in industry and government having the confidence to invest in the future by thinking big and embracing change.
Justin Sherrard is global strategist at Rabobank