5 megatrends shaping agribusiness.

Economic shifts, scarce resources drive advances in food technology. A series of “megatrends” will permanently reshape agribusiness as the world’s producers and industry stakeholders re-calibrate to tackle the challenges of feeding 9 billion people in 2050, reports Christopher Nolan Sr., managing director at global professional services firm PricewaterhouseCoopers L.L.C. (PwC). A megatrend, as defined by Nolan, is a proven macroeconomic force backed by science and data that ultimately shape society. Based on discussions with its clients, industry leaders and politicians, PwC “megatrends” share common characteristics:1) Significant, consistent impact across all geographies. 2) Measurable, universal impact across all societies.3) Long-term, lasting impact. 4) An economic impact measurable in trillions of dollars Nolan outlines the key macroeconomic trends that will shape both the world and agribusiness over the next few decades. The PwC’s top five global megatrends include; 1.) Demographic shifts; Population growth is a known constant however, the buying power of a growing global middle class qualifies as a megatrend. PwC defines “middle class” as earning enough to include more protein in their diet, consuming more calories than those classified as lower class. “The rising need for food will increase faster than the rate of growth of the global population,” Nolan states. The global population is set to increase by 18 percent by 2050, “but the projected increase in global food consumption is expected to grow by 35 percent,” he reports. 2) Shift in global economic power According to Nolan, the forecasted 2050 GDP of seven emerging economies (E7 = Brazil, China, Russia, India, Indonesia, Mexico, Turkey) will nearly double that of the G7, i.e. United States, Canada, France, Germany, Italy, Japan and the U.K. Geopolitical issues aside, multinational companies are increasingly investing in E7 countries. With this new found cash flow, Nolan notes, E7 nations are educating their workforce and adding attractive investments to their portfolio, e.g. China’s $1.3 trillion investment in the U.S. treasury debt. Meanwhile, the economies of frontier countries (F7 = Colombia, Peru, Bangladesh, Vietnam, Philippines, Morocco, Nigeria) are growing rapidly — with forecasts pointing to 30 percent growth over the next five years. “The economic power of these economies will drive investment in agribusiness as local governments focus on being able to feed their citizens,” Nolan says. “Food-consuming nations — those who do not produce enough and have to consume product produced outside their country — will pursue investments in food-producing nations to better control the food value chain.” 3) Accelerating urbanization For the first time ever, more than 50 percent of the world’s population lives in cities. “Today there are 30 megacities — those with populations over 10 million — and the number is expected to double,” he says. “If some of these cities were stand-alone countries, they would rank in the top 50 most populated nations.” The vast majority of global population will live in urban areas by 2030. In China, for example, an additional 300 million people will move to cities. To put this in perspective, that’s equivalent to the relocation of the entire population of the United States. Such change will require new means of agricultural production and distribution to deliver food into city centers. 4). Resource scarcity In order to feed a global population of 8.3 billion, the world will require 50 percent more energy, 40 percent more water and 35 percent more food. How will this be accomplished with limited natural resources? Resource scarcity caused or accentuated by climate change will require improved crop technology, producing higher yields with fewer inputs. 5.) Evolving technology The rapid increase in development and acceptance of technology will be utilized to meet food demands, i.e. better yield through genetically modified (GM) seeds and limited use of resources. “One of the challenges we face in agribusiness today is the acceptance of these and how they are perceived to impact food security,” he notes, citing the continued backlash against GM seeds. Nolan suggests that to profit from these changes there will be a need to feed billions which will present many opportunities for agribusiness: a) Feeding the middle class will increase protein consumption and investment in the protein value chain will be required. b) E7 will allow opportunities to capture profit as consuming nations exert greater power over producing nations. c)Urbanization will fuel the rise of city farming, improve food distribution models, and less labor-intensive farms will produce more of the world’s food. d) innovative farming will reduce costs and improve resource sustainability. e)Evolving technology will improve yields and food output.More