How Investment And Innovation Can Help Meet The Global Food Demand

By Isaac Fletcher, contributing writer, Food Online

With many factors pushing the global supply and demand of food out of equilibrium, investment and innovation could play the key roles in restoring the balance and helping developing regions meet their production and consumption potential

The increasing rates of consumption, climate change, natural disasters, and urbanization in emerging markets are some of the major factors causing concern over the global supply and demand of food. With these concerns in mind, a recent survey on food and agribusinesses revealed that nearly 60 percent of respondents expect to increase their investment in agribusiness over the next 12 months. Additionally, 48 percent are considering investing in transport and infrastructure to support food production.

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In order to accommodate a continually-expanding middle class and growing demand for meat, dairy, and high-protein foods, this type of investment is going to prove essential. Other notable information includes:

• 71 percent of respondents believe there will be in an increase in consumption of genetically-modified food over the next two years, with 53 percent believing that consumers and retailers have become more accepting of genetically-modified food over the last two years
• 51 percent note an increased availability of finance through means such as private equity, bank debt, sovereign wealth funds, and capital markets
• 80 percent believe that increasing food production, while meeting renewable energy targets is possible
• 97 percent say the BRIC nations (Brazil, Russia, India, and China) will continue to have significant impacts on production and consumption, and observe that the influence of Africa and South East Asia will become more prevalent

There is clearly an increase in the global demand for food and agricultural products, which can be largely attributed to a growing middle class in emerging markets. Rather than increasing demand being met with a corresponding increase in supply, factors such as natural disasters and global warming are raising concerns over the ability of supply to meet global demand. Although there are many challenges, there is also great opportunity, especially when considering how the increased participation from Africa and Asia will play an essential role in the growth of the global food industry.

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An increase in access to diversified sources of finance is good news for agribusinesses, as further investment and rising popularity of innovative products will foster further industry growth. Although much of the industry still views Africa as a risky place to conduct business, there is a growing appreciation for the variation between different parts of the continent, and there is obvious potential for the region as both a producer and consumer for agribusiness.