Several megatrends influence the agrifood landscape, reshaping how food is produced, processed, and consumed. In this latest Point of View, HAïAT's consultants give insights to better understand these trends and ensure that businesses remain competitive and sustainable. We call it the CoCliCo PoWR framework.
CoCliCo PoWR framework: megatrends affecting the food demand and production
HAïAT Consultants have identified six key trends that are affecting food demand and production:
1. Consumption Patterns
2. Climate and Environment
3. Competition for Natural Resources
4. Population
5. Waste & Loss
6. Technological Revolution
Source: HAïAT Group
Let’s get a deep dive into each of these megatrends.
1. Changing Consumption Patterns
In higher-income and more urbanized countries, a notable shift in consumption patterns reflects a complex interplay of emerging trends that cater to consumers' evolving preferences and values.
Firstly, there's an increasing demand for convenient food options that align with urban people's fast-paced lifestyles. Consumers gravitate towards delivery services, grab-and-go meals, and spontaneously consumed foods that come in individual portions and are microwave-friendly or ready-to-eat, including fresh, paleo, and guilt-free snacks.
Secondly, there's a pronounced shift towards healthier eating, with a surge in demand for more natural, organic foods and functional foods enriched with probiotics and nutrient boosts, highlighting a proactive approach to wellness and nutrition.
We also observe a movement towards greener and more ethical food consumption, with a significant inclination towards alternatives to dairy and animal proteins—especially red meat—as veganism, vegetarianism, and flexitarianism gain ground. This trend is accompanied by a preference for locally sourced products and a heightened sensitivity towards brands' social and environmental impacts, indicating a deepening concern for sustainability and ethical considerations in food choices.
Finally, the quest for new experiences reshapes consumption habits, especially in the US. This desire for novelty manifests in a willingness to be surprised by new food concepts, an eagerness to break free from routine, the flexibility to eat anytime and anywhere, an increasing digital engagement with food, and a growing appreciation for ethnical foods.
2. Climate & environmental concerns
The agrifood sector is confronting various environmental challenges that significantly impact its capacity to sustain and enhance food production for the global population.
Rising temperatures, a direct consequence of climate change, are altering growing seasons, pest patterns, and crop yields, presenting a volatile scenario for food security.
Water scarcity further exacerbates these challenges, as agriculture faces stringent water competition amidst growing industrial and domestic demands. This scarcity is poised to intensify with the increasing frequency of droughts and heat waves.
Floods and other natural disasters are becoming more common and severe, disrupting food supply chains, damaging agricultural infrastructure, and putting immense pressure on food availability and accessibility.
Soil erosion, primarily driven by intensive agricultural practices, is leading to a decline in soil fertility. This diminishes agricultural productivity and soil's ability to store water and carbon, thus feeding back into the cycle of climate change.
Finally, urbanization plays a dual role in this complex situation. As cities expand, arable land diminishes. This reduces the area available for food production and increases the distance between production and consumption points, impacting the efficiency of food distribution networks.
3. Competition for Natural Resources
The competition for natural resources, particularly land and water, is intensifying as the demand for biomass is divided between food, feed, and non-food uses like biofuel production. With the rise of biofuel demand, this competition is expected to sharpen by 2050.
The push towards biofuels, driven by a global pursuit for renewable energy sources as alternatives to fossil fuels, has led to an increased use of cereals and oilseeds in their production. This shift exerts additional pressure on agricultural output, as these crops, once primarily devoted to human consumption or animal feed, are now being redirected towards energy generation.
At the same time, the demand for agricultural resources for animal feed is escalating, particularly with the growth of aquaculture, which relies heavily on oilseeds for fish feed.
This situation is also complex with the increased interdependency between food, feed, and energy markets, where fluctuations in one can have significant repercussions across the others. Such interdependencies introduce volatility and unpredictability, heightening the risks to local food security and equitable access to land resources.
The increasing scarcity of essential resources like arable land and freshwater is leading to their overuse and degradation. Overuse, driven by the need to meet the simultaneous demands of food, feed, and biofuels, compromises the health of these resources, diminishing their productivity and leading to a vicious cycle of scarcity and intensified competition.
4. Population Dynamics and Food Demand
Population dynamics is the most critical factor of these megatrends, as the intricate demographic shifts and economic development are fundamentally reshaping the global agrifood landscape.
Population growth is the overarching driver of increased food demand. The Food and Agricultural Organization (FAO) projects that agriculture must produce 50% more by 2050 to meet this surging demand. With the world's population expected to rise to 9.7 billion by 2050 and 10.4 billion by mid-2080, the strain on food systems will be unprecedented. This growth is not evenly distributed, with Sub-Saharan Africa and South Asia poised for the most significant increases, followed by the Near East and North Africa.
An aging workforce is also particularly evident in high-income countries and, increasingly in low-income nations, poses unique challenges for the agricultural sector. This aging demographic, coupled with urbanization trends, significantly impacts the agricultural labor force and the socio-economic fabric of rural communities. Older farmers, often at the helm of agricultural operations, may find it challenging to adopt new technologies or innovations due to limited resources, skills, or energy.
Rising GDP per capita is another pivotal factor influencing food consumption patterns. Increased income levels are intrinsically linked to higher food demand, particularly for animal-based proteins such as meat, milk, and eggs. As populations become wealthier, their dietary preferences shift towards more resource-intensive foods, amplifying the pressure on agricultural systems to increase sustainably and environmentally responsible production.
5. Waste and Loss Reduction
The global food system is facing a critical challenge, with approximately 1/3 of all food produced worldwide being lost or wasted from the producer to the consumer. This staggering amount of waste highlights inefficiencies in the food supply chain and raises significant concerns about food security, resource conservation, and environmental sustainability.
Food waste predominantly occurs at the retail and consumer levels in high-income countries. However, food losses happen earlier in the supply chain (during the transport and storage phases), primarily in low- and middle-income countries. These losses are frequently attributed to inadequate technology, insufficient knowledge and skills, poor logistics, and inefficient market mechanisms.
Source: VVA adaptation from FAO Database, HAïAT Group
6. Technological Revolution
The agri-food sector is on the cusp of a technological revolution, poised to fundamentally alter every facet of the food value chain, from farm to fork. This transformation is driven by integrating advanced technologies designed to increase efficiency, sustainability, and traceability.
High-impact technologies: at the forefront are technologies such as the Internet of Things (IoT), big data analytics, artificial intelligence (AI), and robotization. These tools are integrated into agricultural systems to enhance traceability and operational efficiency. By leveraging IoT and AI, farmers can monitor crop health in real-time, predict yield outcomes, and optimize resource usage, significantly reducing waste and enhancing productivity.
Medium-impact technologies like Blockchain, the global navigation satellite system (GNSS), and Virtual Reality (VR) are expected to have a medium impact on the agri-food value chain. Blockchain, for instance, promises unparalleled transparency and security in food traceability when GNSS technology enhances precision in agricultural practices.
Low-Impact Technologies: broadband networks, information and communication technology (ICT), and e-business platforms are seen to have a lower immediate impact on transforming agricultural practices.
The decreasing cost of technology is accelerating the adoption of these innovations, making them more accessible to a broader range of players in the agri-food sector.
This democratization of technology fosters production efficiency, the primary driver behind technological advancements in agriculture. Such efficiency reduces the consumption of critical resources like energy and water and mitigates agricultural practices' environmental and climate impact.
Moreover, technological advancements facilitate vertical and horizontal integration within the food value chain, favoring large food suppliers and opening opportunities for innovation and competition from new entrants, such as startups. For example, digital platforms now enable hiring agricultural machinery through smartphone apps on a pay-per-use basis, further lowering the entry barrier for small-scale farmers and enabling more efficient resource use.
Moreover, powered by GPS and remote sensing technologies, precision farming is revolutionizing agriculture by allowing for centimeter-accurate field mapping, optimized input applications (seeds, fertilizers, water), and targeted pest and disease management.
Lastly, biotechnology is set to play a pivotal role in the future of agriculture. Developments in disease-resistant plants promise to reduce yield volatility, increase production, and lessen dependency on chemical pesticides, further aligning agricultural practices with sustainability goals.
The agrifood sector is at a pivotal moment, with megatrends shaping the future of food production and consumption. Leaders who understand these trends and adapt their strategies accordingly will position their companies for long-term success and sustainability.
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