Demand and supply in the food and agribusiness industry
When asked about the factors that affect price volatility in the
agribusiness industry, respondents emphasised that it is the
fluctuating balance between supply and demand that most impacts
price volatility. It is then important to look at the factors which
affect supply and demand to understand the price volatility seen in
the food and agri industry in recent years.
An expanding middle class and urbanisation in emerging markets
is having a profound effect on demand in the agribusiness industry
as larger segments of the population have the money and appetite
for meat, dairy, protein-rich foods and western style diets.
In turn this is putting pressure on the agribusiness sector to
be more productive, innovative and efficient to meet increased
Factors impacting on the food and agribusiness industry
Respondents identified climate change and natural disasters,
increased consumption in emerging markets and the price of, or
access to, agricultural inputs as having the most impact on the
global agribusiness sector in the next three years. Respondents
showed considerably more concern for climate change than in our
97% of respondents believe that the BRIC nations will have a
significant or very significant impact on the agribusiness sector.
64% expect the BRIC markets to have a very significant impact.
20% of respondents see labour force constraints and the cost of
labour as a significant hurdle for sustained growth in the
GMOs and agribusiness
53% of respondents identified that consumers and retailers have
become more receptive to genetically modified food over the last
71% of respondents expect an increase in utilisation of
genetically modified foods or inputs over the next two years.
67% are looking to increase investment in food safety in the
next 12 months.
Foreign investment and capital investment in the food and
26% of respondents identify China as the source of the greatest
foreign investment flows in the next 12- 18 months, although
respondents acknowledge that resistance to foreign ownership of
agribusiness assets will pose a problem. Respondents also believe
that the United States will continue to be an influential source of
A sizeable 59% of respondents expect to increase their
investments in the agribusiness sector in the next 12 months.
51% believe the availability of finance to the food and
agribusiness sector has improved in the last 12-18 months.
Agribusiness and renewable energy
68% of respondents state that the production of fuel from food
should not be subsidised.
However, respondents are optimistic about increasing food
production while still meeting renewable energy targets. 80% of
respondents believe that it is possible to increase food production
while meeting targets. This compares with only 59% in 2012.
Regulation and subsidies
69% of respondents believe that further regulation to manage
price volatility is unachievable and 55% say that it is
72% of respondents believe that there should be greater
regulation surrounding water rights and access to water.
65% of respondents believe that the production of food should
not be subsidised. However, respondents recognise that there are
political imperatives around food supply for local
19% of respondents do not have a formal anti-bribery/corruption
compliance programme in their organisation.
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