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Published on: October 16, 2015
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F&A must increase production, availability and access to meet global population's demands, says Rabobank http://pr.co/p/002fom
Summary
The food and agriculture (F&A) industry must increase production, availability and access to food significantly over the next ten years if it is to meet the demands of a larger, increasingly urban global population. Against a backdrop of uneven growth and soft commodity prices, this will require all in the Food & Agri industry to embrace the opportunity provided by data and technology according to Building a Smarter Food System, a report presented by Rabobank at Expo Milano 2015.
Details

“A smarter food system is more productive, less wasteful, and more profitable,” explaines Fred van Heyningen, Global Head Food and Agri Banking at Rabobank. “It combines technology and data to change the way, as well as the speed, at which decisions are made and to optimise the use of resources to produce and deliver the food consumers need and where they need it.”

An increasingly urban global population with changing consumption habits, is putting pressure on the global food system to adapt. By 2025, the United Nations Food and Agriculture Organisation anticipates a 30% increase in global daily food demand. This will require a global food system that is more efficient, better able to meet consumer expectations, more profitable, and more resilient in the face of macro-economic pressures.

The research makes clear this is not achievable through a ‘business as usual’ approach. Instead, the combination of technology, big data, and more advanced algorithms represents a powerful opportunity to improve outcomes. Rabobank believes a smarter food system could offer productivity gains of at least 5% across a number of sub-sectors, supply chain stages and regions.

“Technology automates the way things happen, big data tells us what is happening, algorithms translate that data into decisions, adding speed and accuracy to food production, processing and distribution,” explains Justin Sherrard, Global Strategist at Rabobank. “Success will depend on disruptive ideas that investors are willing to back. The good news is that the move to a smarter system is already beginning to take shape.”

The research identifies technology use in farming, processing, and logistics, where tangible steps are already being made towards creating the industry of the future. Examples include:

  • Drones: Increasingly used to monitor and boost livestock and crops, and measure pasture and grass growth. However, these are currently ‘work in progress’ due challenges such as real-time decision-making and systems reliability.
  • Big Data: Major retailers are using data to track purchases, and monitor the quality of perishable goods, enabling them to meet consumer demand more effectively. At the same time “Ag Tech” start ups are developing ways to help farmers increase yields and cut costs, through weather information, analytics, soil monitoring, and more.
  • Poultry production: Processors can monitor the performance of poultry farmers providing guidance on potential productivity and welfare gains. Growing control over poultry hatching, production and processing can boost productivity and profitability up to 5%.
  • Smart irrigation: GPS, plant and soil sensors providing real time data to spray systems to optimise the delivery of water and fertilisers.

However, while the technology currently exists to build a smarter food system, Rabobank warns that it is by no means inevitable. Rabobank identifies “three keys” that will be essential if global F&A is to meet the demands of the next ten years:

  • Strengthen supply chains: A smarter food system will require buyers and supplires to make new investments and take on new risks in pursuit of new rewards. Success will depend on greater connectivity between buyers and suppliers, sharing data and making joint decisions in real time.
  • Enable investment: New approaches and technologies entail new risks and opportunities. This will require understanding and support from both investors and regulators, who will need to provide frameworks where technology can be used safely and effectively.
  • Achieve societal acceptance: consumer concerns include genetic modification and cloning, and data privacy, food waste and nutrition. These concerns should be addressed and taken into account in the change process. Increased levels of engagement and education are required to build a smarter and more sustainable food system backed by public support.

Steps are already being taken to address these three keys. For instance new deal flows into smarter food systems are set to nearly double to $4.2bn this year from last year which saw a three fold increase on 2013’s level of investment. F&A companies are additionally making sizeable investments focused on the the three “sweet spots” of farming systems, food processing and trading, distribution and logisitics.

Rabobank understands the size of this challenge but already sees positive examples of the transition towards building a smarter and more efficient food system.

ENDS

Copies of the report were presented yesterday by Fred van Heyningen, Global Head of Food and Agri Banking, to David de Waal, Consul General of the Netherlands in Milan and to Mr Raimondo Orsini, Director at Sustainable Development Foundation.

For other information, please contact Rabobank press office:

For information please contact the report’s author:

Justin Sherrard, Global Strategist justin.sherrard@rabobank.com +31 (0) 30 71 23182

For other information, please contact Rabobank press office:

Madelon Kaspers, Madelon.kaspers@rabobank.com +31 (0) 610 887 244

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Feeding nine billion people requires a vision and solutions that do not stop at the gate of a farm or the turnstiles of a supermarket. Accordingly, the Banking for Food vision of Rabobank, encompasses all links in the food chains, in and outside the Netherlands: from farmers and horticulturists and their suppliers to businesses processing agricultural products and transport businesses and supermarket chains. You can read our entire vision here.

Quotes
“A smarter food system is more productive, less wasteful, and more profitable. It combines technology and data to change the way, as well as the speed, at which decisions are made and to optimise the use of resources to produce and deliver the food consumers need and where they need it.”

— Fred van Heyningen, Global Head Food and Agri Banking at Rabobank