The Agro-Industrial Sector Worldwide Challenge
The main target of the agro-industrial sector is to provide quality food for more than nine billion human beings by 2050, while preserving increasingly fragile environmental resources and fighting climate change. This implies, among others, developing energy production from agricultural products or waste and reducing intrants usage.
The main challenges for the agro-industrial sector are the worldwide population increasing to an estimated at 8.5 billion by 2030 and its world distribution’s: by 2030, 23% of the world population will be in Africa (versus 18.2% in 2023), the western developed countries population will have decrease, and India will be the biggest country with 1,5 billion inhabitants.
History shows that the food consumption pattern changes with an economic development:
- In a first step, the consumption of proteins grows through vegetal proteins produced by local farming (as today in east Africa); the sugar and fat (energy foods) grow in this period
- Then in a second stage, the proteins consumption stabilizes but vegetal proteins are increasingly substituted by animal proteins through the development of livestock (as today in South America and some countries of Asia); the “energy foods” continue to grow as physical activity increases
- The third step, when the purchasing power grows, is a decline of protein needs and a switch back from animal proteins to vegetal proteins (as today in EU); the “energy food” declines in favor of healthy food (less sugar, less fat and less salt)
As a consequence of this “development pattern”, according to the Food and Agriculture Organization of the United Nations (FAO), the global needs of proteins will grow from 85 grams/day per person in 2021 to 90g, with a growth in vegetal proteins consumption in Africa and India (moving from the first phase countries to the second stage combined with a big demographic growth) and in animal proteins in China and other Asian countries, driven by changes in food habits. The “energy foods” consumption will continue to grow but slowly(1.5% yearly).
As needs grow, a key issue will be the availability of arable land, something that requires international action on land degradation (water erosion, climate change, low fertilization, deforestation, etc...). It is forecasted that by 2030 there would be around 1.600 million Ha of arable land available each year for perennial crops which represents 11% of the earth surface. The FAO considers however that the surface available in the future could grow up to 2.800 million ha, if the land degradation is prevented. Land preservation through prevention, new seeds varieties and increased professionalization of agriculture would allow the world to be fed, but at the same time it implies that the consolidation of the agro-industrial sector will continue in order to provide investors with proper revenues.
Food production will however compete with renewable energy production using agro-products (such as oils/sugar for biofuels or biomass cogeneration boilers and biogas production via fermentation of agro-wastes). According to the IEA, nearly two-third of biofuel demand growth will occur in emerging economies, primarily India, Brazil and Indonesia (countries with ample domestic feedstocks and additional production capacity), a policy including energy security considerations (as greater biofuel production will offset some fossil oil imports). Modern bioenergy is the largest source of renewable energy globally today, accounting for 55% of renewable energy and over 6% of global energy supply. The Net Zero Emissions (NZE) by 2050 Scenario sees a rapid increase in the use of bioenergy to displace fossil fuels by 2030, but requires an increase of 8% per year between now and 2030 of their production.
The impact of climate change is more difficult to assess globally since it can make conditions better or worse for growing crops in different regions. For example, changes in temperature, rainfall, and frost-free days can lead to longer growing seasons. A longer growing season can have both positive and negative impacts for the yields and in consequence to the food availability. Some farmers may be able to plant longer-maturing crops or more crop cycles altogether, while others may need to provide more irrigation over a longer and hotter growing season.
The on-going present industrial revolution triggered by digital technologies is slowly making its way with a potential impact in the agricultural sector, and could be decisive, at a time when global agriculture is facing a challenge unprecedented in its scale and complexity. The predicted changes as a result of new technological inventions, particularly artificial intelligence, are also considered as an “agricultural revolution”. Nowadays we can observe some changes, as for instance the agricultural player’s : from a family farmer to a global conglomerate which produces basic food and also processed products. The spread of these digital technologies — such as AI, blockchain, drones, and the Internet of Things (IoT) — to agriculture is leading to increased yields, lower costs, and reduced environmental impact. These tools are also empowering farms to unlock new plant-based innovations and increasing their resilience to extreme weather events and climate change. For example, planting, picking crops, weeding, and milking cattle might all be done by robots. Drones for dispensing agrochemicals, and farming-specific technology such as gene editing to generate higher yielding, disease-resistant crops, vertical farms, and synthetic lab-grown meat are all examples of farming-specific technologies.
As a conclusion, the challenges are big but the opportunities to feed the population with quality and quantity food are there. Transforming them is key to anticipate changes!
CDI Global with its expertise and true international reach with offices in the five continents helps its agro-industrials clients anticipate and be proactive actors internationally in these epochal changes.
By: Gabriel Krapf, CDI Partner
