Innovation and leadership to drive growth in global food and agribusiness
Innovation in food and agribusiness should focus on improved technologies and new business models. On the occasion of the 2014 Duisenberg Lecture in Washington DC Rabobank issued a call for leadership in the sector and presented 10 big ideas that could materially boost food production over the next decade.
‘Global food and agribusiness faces a remarkable conundrum. Right now the sector is struggling in an operating environment characterised by slow growth, soft demand and ample supply, which in combination are challenging business confidence. And yet the sector has a bright future. Over the longer term growth in global food and agribusiness will be strong, driven by a powerful combination of population expansion, rising wealth and urbanisantion’, explains Justin Sherrard, global strategist at Rabobank Food & Agribusiness Research.
Find new ways to profit through the current uncertainties
So how can global food and agribusiness 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? These questions are relevant for farmers and companiesin food and agribusiness, for society as a whole and for Rabobank itself. Rabobank gives access to finance, knowledge and networks for food and agribusiness entrepreneurs around the world. ‘Rabobank is committed to continue its financial services delivery to the food and agri sector, and aims to play a leading role in international coalitions focussed on increasing food and nutrition security’, says Rabobank CEO Wiebe Draijer.
The key questions for the global food and agribusiness were addressed during the 2014 Rabobank Duisenberg Lecture in Washington, which has been held in conjunction with the Annual Meetings of the IMF and World Bank. Dave MacLennan, president and CEO of Cargill, shared his thoughts on the ability of the sector to meet that challenge: to feed the world. Rabobank CEO Wiebe Draijer presented his views, based on the 2014 Rabobank flagship report ‘Unleashing The Potential For Global F&A - A Call For Innovation And Leadership’. MacLennan: ‘Cargill is optimistic about the ability of the world to feed itself. Africa is critical to feeding the planet’s growing population. We have huge opportunity and challenge within our grasp.’
Innovation can provide a bridge
The solution lies in a stronger focus on innovation. Justin Sherrard: ‘More specifically, innovation can provide a bridge between global food and agri’s near-term challenges and the longer-term opportunities, by leading to new ways to profit through the current period of uncertainty and slow growth, while positioning the sector to increase food availability and improve access for future populations.’ Innovation is also needed because the projected 60 percent increase in global food demand by 2050 will also be subject to significant constraints, such as competition for access to water and limits imposed by planetary boundaries.
'Rabobank is committed to continue its financial services delivery to the food and agri sector, and aims to play a leading role in international coalitions focussed on increasing food and nutrition security'
Improve technologies and business models
Innovation should focus on two areas. Sherrard: ‘The first is improved technologies and practices, starting with traditional research and development, and extending through to sharing and rolling out new ideas on a commercial scale. The second area is business models, which need to change to accelerate the uptake of new technologies and practices in ways that better manage risk and align investments and returns.’
To demonstrate both what is needed and what is possible, Rabobank analysts have developed 10 big ideas that could materially boost global food availability and improve food access over the next decade:
- Adopt big data in US agriculture - boosting grain and oilseed production and resource efficiency
- Close the yield gap in Central and Eastern Europe - consolidating food & agri to upgrade production
- Lift dairy production in India - adding value and improving rural incomes
- Grow aquaculture - realising tilapia potential in Latin America
- Boost production in the food & agri engine room - capitalising on Brazil’s grain and oilseed and animal protein potential
- Raise sugarcane’s productivity - improving consistency of yields and cane quality in Brazil
- Develop cold chains in China - improving meat and seafood availability
- Invest in local storage - reducing post harvest food losses in Sub-Saharan Africa
- Strengthen South-South trade - linking South America’s production potential and Asia’s demand
- Improve China’s food security - taking domestic actions to complement agri imports
Reason to be positive
‘These ideas are bold yet realistic, as they represent the possibilities for building the much-needed momentum for change while drawing from current areas of innovation. Considering what could happen if these big ideas were fully implemented is an inspiring reason to be positive’, says Sherrard.
Leaders have to drive the case for change
However, while innovation may be the key ingredient, leadership will be the single most important tool for putting these big ideas into practice. The future of global food and agribusiness requires leaders with the confidence to invest in the future by thinking big and embracing change. Rabobank CEO Wiebe Draijer during the 2014 Duisenberg Lecture: ‘This leadership will come from CEOs of global and local food and agri companies, from investors in global food and agribusiness, 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. 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.’