Food and agri: ‘Innovation is the essential ingredient’ for growth

At present the food and agriculture sector is struggling in an operating environment characterised by slow growth, soft demand and ample supply, a combination that’s challenging business confidence. Yet the sector has a bright future, asserts Rabobank in a new report.

Over the longer term, growth in global F&A will be strong, driven by a powerful combination of population expansion, rising wealth and urbanisation.

So, asks Rabobank, how can global F&A navigate its way through the sluggish operating environment it finds itself in towards the stronger growth that lies ahead? How can it find new ways to profit through the current uncertainties while positioning and preparing for future opportunities?

In its 2014 report “Unleashing The Potential For Global F&A – A Call For Innovation And Leadership”, Rabobank argues that a stronger focus on innovation can provide the all-important bridge between the near-term challenges and the longer-term opportunities for global F&A. Innovation can and should help global F&A to do more with less—that is, increase food availability and improve access while stepping more lightly on the planet.

To demonstrate both what is needed and what is possible, Rabobank has developed what it describes as ten big ideas in global F&A aimed at boosting global food availability and improving access to food over the next decade.

However, while innovation may be the key ingredient, leadership will be the single most important tool in overcoming these difficulties and putting these big ideas into practice, the company said.

Rabobank’s 10 big ideas:

1. Adopt big data in US agriculture
2. Close the yield gap in Central and Eastern Europe
3. Improve China’s food security
4. Strengthen South-South trade
5. Invest in local storage
6. Boost production in the F&A engine room
7. Develop cold chains in China
8. Grow aquaculture
9. Lift dairy production in India
10. Raise sugarcane’s productivity

“This leadership will come from CEOs of global and local F&A companies, from investors in global F&A, from scientists with the ability to promote new and improved technologies and practices, from government experts, from NGOs, from international networks, and from international commercial and institutional banks,” said Wiebe Draijer, Rabobank executive board chairman. “Where these leaders sit is not what sets them apart – it is their vision, the way they drive the case for change and their ability to inspire action that differentiates them.”

The report argues that harnessing innovation requires a shift in mindsets, to accept that business as usual is not likely be the right way forward. Although global F&A has seen much change over the past decade, there is still some reluctance to accept that the future is going to be different, says Rabobank, or appreciation of how different global F&A is going to have to be in order to successfully respond to the significant constraints that come with the long-term opportunities.

Innovation, it is suggested, should be focussed in two areas. The first is in basic research and development (R&D), to discover new technologies and practices that are implementable at a commercial scale. The second focus area is in business models, which need to change to accelerate the take-up of new technologies and practices in ways that better manage risk and better align investments and returns.

Although there are some significant hurdles ahead, Rabobank is positive about the sector, and confident in the ability of global F&A to rise to the challenge. The future of global F&A requires leaders with the confidence to invest in the future by thinking big and embracing change, Rabobank concludes.

Rabobank: See more here