BCG: Agriculture Sector Can Address Global Food Challenges

The global population is set to increase by over two billion in the next 30 years. Malnourishment is endemic, soil quality is in decline and water and other critical resources are becoming scarcer. Nevertheless, agricultural companies have a great opportunity to integrate sustainability into their core business practices in order to meet the growing global demand for high quality food, and do so sustainably.

Boston Consulting Group (BCG) recently published a report detailing how some leading agricultural companies are rising up to the challenge of sustainable farming. Most of these companies, however, are still lagging behind and have yet to adopt more sustainable practices.

More stakeholders are stepping up efforts

BCG notes in its report that the depletion of farmland resources and the deteriorating environment has motivated some key stakeholders, including consumers, farmers, food companies and government regulators, to compel agricultural companies to embrace more sustainable methods and processes.

Their efforts are showing results and these external stakeholders are able to drive a transformation that had seemed impossible just a few years ago. Some agricultural companies, including crop nutrition providers, seed companies, farming equipment makers and crop protection manufacturers are adopting more responsible practices in disparate areas of their operations.

Many agricultural companies have also introduced new or improved products, such as crop protection agents, which are more sustainable. The persistent efforts of other stakeholders could soon compel the lagging agricultural companies to adopt sustainability - or be left behind.

Regulators urging sustainable practices

In 2015, governments worldwide announced their support for sustainable farming and backed the UN’s 17 Sustainable Development Goals (SDGs). Since then, regulators in many countries have implemented policies to fulfill these goals.

These regulators have triggered change by linking farm subsidies to more sustainable agriculture practices. Farmers now have a strong financial incentive to adopt eco-friendly agricultural methods. As regulators and policymakers recognize the correlation between sustainable agriculture and economic growth, they are increasingly willing to address the deficiencies in their country’s farming approaches.

Consumers and food companies are selling better products

A BCG survey of 9,000 consumers in nine countries revealed that 86 percent of the consumers want food products that are “good for the world and me.” These include items that are labeled natural, organic, ecological or fair trade. Another BCG study showed that 70 percent of retail growth in the U.S. food market between 2011 and 2014 came from the sales of “responsible consumption products.”

To meet consumers’ needs, some food companies have joined the efforts, doing so in part because it helps them gain a competitive advantage in the lucrative healthier foods market segment. These companies are encouraging farmers to adopt sustainable practices and making it a condition within their procurement contracts.

The key takeaway

While the BCG report highlights that agricultural companies are not taking sustainability “seriously enough,” it emphasizes that this threat could offer economic opportunities. After all, it is now impossible for agricultural companies to claim that they are strangers to sustainability concepts. They can play a critical role in more responsible and ecological farming, and therefore make it integral to their core business, while becoming knowledge partners with their customers to help build a sustainable, and quite possibly, a hunger-free planet.

Image credit: BCG