Global Trends Impacting the Farmer s Future

Transcription

1 Global Trends Impacting the Farmer s Future Illinois Farm Bureau Commodity Conference July 29, 2015 Copyright President & Fellows of Harvard College

2 Today Harvard Agribusiness Major Trends Global outlook What s going on with consumers The Agribusiness response How does this affect you? Q&A

3 Agribusiness at Harvard Business School A Concept of Agribusiness, Davis and Goldberg (1957) MBA elective Agribusiness Seminar (Executive Education) since 1960 Hundreds of cases, thousands of program alumni

4 AGRA (Kenya) Alltech (USA) Arcadia Biosciences (USA) Asian Agri (Indonesia) Associated British Foods (UK) Barilla (Italy) Brasil Foods (Brazil) Bunge (USA) CHS (USA) CME Group (USA) Codevasf (Brazil) COFCO (China) Cosan (Brazil) Cresud (Argentina) DaChan (China) Diageo (Africa) Diamond Foods (USA) Disney (USA) Domino s (USA) Ebro Puleva (Spain) Exima (Russia) Harvard Agribusiness Cases Fonterra (New Zealand) FreshTec (USA) Friona (USA) GlobalGAP (Germany) Greencore (UK) Heineken (Netherlands) HN Naturals (India) Hungerit (Hungary) Identigen (Ireland) Jain Irrigation (India) JBS (Brazil) Kepak (Ireland) K&N s Poultry (Pakistan) Los Grobo (Argentina) Louis Dreyfus (Switzerland) Lufa Farms (Canada) Marine Harvest (Norway) Marks & Spencer (UK) Mission Produce (USA) Monsanto (USA) Munoz Group (Spain) Mutti (Italy) Nestlé (Switzerland) Ocean Mist (USA) Olam (Singapore) OSI (China) PureCircle (Malaysia) Queensland Sugar (Australia) Rabobank (Netherlands) Red Lobster (USA) Red Tomato (USA) Ripe N Ready (USA) Simplot (USA) Syngenta (Switzerland) Taylor Farms (USA) Tesco (UK) Tissue Culture Beef (NL) Unilever Tea (UK) Vegpro (Africa) ViniBrasil (Brazil) Woolf Farming (USA) Xinjiang Tunhe (China) Yum! China Zespri (New Zealand)

5 Harvard Agribusiness Cases

6 Major Trends Globalization Consolidation Volatility Food security Scarcity of land, water and talent Consumer engagement/activism Food and health Traceability and transparency Technology Sustainability

7 2007+: A New Era for Agriculture & Food? Source: FAO, June 4, 2015 Long-term fundamentals remain strong

8 Fundamental shift in Supply-Demand balance DEMAND Population, Income Increasing China and others eating more meat, dairy Biofuel use continues Demand +70% by 2050 SUPPLY Land and Water constraints Uneven productivity growth Large yield gaps Government policies Prices, quotas, stocks Environment Trade Weather events COMMODITY PRICE SWINGS MAGNIFIED BY HFT 8

9 Harvard Agribusiness Seminar Cases

10 Strongest growth in emerging markets

11 People (and appetites) moving to MEGACITIES

12 Supply history: Producing more with less

13 Area needed in 2050 at current yields

14 Where s the land?

15 Where s the water?

16 China s IMPACT

17 China s Challenge: Feeding 1.3 billion Improving diets Pork consumption doubled since Chicken, beef, dairy, fresh produce. Relentless urbanization 160 cities > 1m (35 in Europe) Largest grocery market in the world + Rapid growth online shopping More discerning consumers - Digitally connected (1.2B mobile phones, 618M internet users) - Global outlook (200m Chinese tourists a year by 2020)

18 Yum China: 6,800 restaurants in 1,000 cities

19 Challenges: Quantity AND Quality Fragmentation Environment Food Safety Cold Chain Labor

20 Securing China s future Food policy - Critical! Produce? Import? 60% of global soybean exports go to China Investing globally to stimulate production, improve logistics FDI $12B in Brazil in 2011 Also Australia, New Zealand, Argentina, Africa. Buying commodities, land & companies Smithfield, Nidera, Noble.

21 Africa on the rise 7 of top 10 fastest growing economies 60% of world s uncultivated arable land World s youngest population $1 Trillion food market by 2030 if - Capital - Electricity - Technology Challenges: Stability, Standards and Enforcement, Smallholder farmers

22 Outlook Growing mismatch production and consumption locations Food security concerns will drive re-examination of free trade Global axis is shifting China Brazil Top companies of tomorrow will not be the same as today

23 Consumers: Engaged and Empowered Food is Trending Internet = (Im)Perfect Information Trust friends more than ads Product AND Purpose Rejection of BIG ag/food companies VALUE BIFURCATION PREMIUM

24 Local Markets

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27 Traceability - There s an App for That!

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30 From Sustainable Agriculture to Sustainable Diet Source: Barilla Center for Food and Nutrition 33

31 Supply Chains: From Farm to Fork Integrating to Manage volatility Capture margins Secure current and future supply Ensure food safety Protect brand reputation Deliver differentiated products 34

32 Domino s buying chicken feed HARD RED SPRING WHEAT CORN

33 TRUJILLO, PERU AUGUST

34 TRUJILLO, PERU DECEMBER

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36 Our goal: by 2016 all food & drink exports from farms and food businesses certified as on the road to sustainability ingreen/pages/default.aspx Saoirse Ronan for Origin Green

37 Farm Quality & Sustainability Audits 45,000 Beef Farms 90% of Beef Exports, Audited & Carbon Footprinted 18,000 Dairy Farms 100% Milk production, participants entering audit cycle Pigmeat, Poultry, Eggs, Grain, Horticulture Sustainability measures being implemented

38 Where s the beef?

39 Soaring Global Investment Farmland and forests AgTech ($2.36B in 2014) Agri-food as a strategic industry Brazil New Zealand Ireland Illinois? 42

40 What s this mean? Volatility the new normal Local, national, AND global supply chains More specialties, fewer commodities Substantial change in investment flows Opportunities for smaller, more innovative, more flexible producers Talent the biggest constraint

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43 Transformational Technologies From automation and big data to purchasing portals and differentiated products 46

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