Meeting the challenges of the food and agriculture sectors sustainably could unlock 14 major business opportunities worth US$2.3 trillion annually by 2030, a seven-fold return on investment. Businesses in developing countries should especially take note; over two-thirds of potential value is up for grabs in developing countries due to their large shares of arable land, high future consumption growth, and large potential efficiency gains.
Today, businesses and governments worldwide are facing significant challenges in the food and agriculture sector. For businesses, resource and financial challenges are constraining the industry. The sector’s financial returns are 5%, low compared to other industries. Growth rates in yields are declining below what is needed to meet the demand of population growth. And governments are struggling to overcome the obesity epidemic, price natural resource inputs, and reduce poverty. While many people are eating better than ever, over 800 million people are still under-nourished, and 165 million children suffer from two nutrition extremes: stunting and a growing obesity epidemic. In rural economies, over 1.5 billion smallholder farmers are still living at or below the poverty line. And competing demands for land – for food, feed, fuel and forestry products – are causing an immense pressure on forests and other natural habitats, not only contributing to greenhouse gas emissions but also to the current wave of species extinction.
It may seem daunting, but with the right level of investment in achievable opportunities and changes to regulations, businesses and governments can shift the food and agriculture system to a sustainable one, helping to solve these societal challenges, while creating financial value for businesses. This is the key finding of the Business and Sustainable Development Commission’s new report Valuing the SDG Prize in Food and Agriculture.
Companies will need to operationalize sustainability across its supply chain and internalize social and environmental costs, while transforming consumption. Unlocking social and economic rewards in food and agriculture will require closer collaboration among business, government and society, and new ways of working together to advance common social, economic and environmental objectives.
If the private sector can put these prerequisites in place, the social benefits, including food security, job creation and health outcomes, could be significant. Opportunities like improving technology in smallholder farms and restoring degraded land could double the incomes of smallholder farmers in the world, who are among the poorest in the global economy.
The opportunities are categorized into 14 areas, including food waste, farming technology, low-income food markets, micro-irrigation, land and forests, product reformulation restoration, changing diets, aquaculture, package waste reduction, cattle intensification and urban agriculture. Researchers estimate a range of value for each opportunity; the lowest in the range is US$15 billion per year for cattle intensification while the largest opportunity goes up to US$405 billion per year for reducing food waste across the production process. Here’s how the challenges, business opportunities, and societal benefits match up across the food and agriculture system.
Business opportunities in food and agriculture could deliver a range of societal outcomes linked to the Sustainable Development Goals.
Valuing the SDG Prize in Food and Agriculture looks at how food and agriculture businesses can grow by pursuing sustainable and inclusive business models aligned with the Sustainable Development Goals (SDGs), or Global Goals. Launched in 2015, the SDGs are 17 time-bound targets for ending poverty and hunger, reducing inequality and tackling urgent challenges such as climate change, by 2030. The food and agriculture sectors directly relate to SDGs 2 (ending hunger), 3 (health & well-being), 8 (decent work and economic growth), 10 (reduced inequalities), 12 (responsible consumption and production), 13 (climate action), 14 (protect life below water) and 15 (protect life on land), but they are cross-cutting sectors that also affect the remaining Global Goals. The SDGs are not conceptual goals, but valuable guides to accessing new forms of financial and extra-financial value for businesses.
The Business and Sustainable Development Commission estimates that unlocking the trillions in sustainable food and agriculture will take US$320 billion a year in new investment, which will require a lot of new capital. The current capital base in 31 leading agriculture funds is just under US$4 billion a year—less than 1.5% the annual investment needed to capture these opportunities. Partnering with government will also be critical to put in place enabling policies and the right regulatory frameworks as well as to advance research for facilitating product innovation.
While scaling capital investment and improving research and innovation policies are needed, the reality is that many of the SDGs offer new and higher-quality economic growth in business profitability, if businesses and governments work to achieve it.