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Rabobank:

Farming, agriculture must become “smarter”

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.

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.”

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.

For more information:
Justin Sherrard
Rabobank
Tel: +31 (0) 30 71 23182
Email: justin.sherrard@rabobank.com

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