New business models could boost food, ag industries

Sustainable food and agriculture could deliver 80 million new jobs around the world and bring windfall of economic opportunities.

Companies could unlock $2.3 trillion a year in the food and agriculture sectors with an annual investment of $320 billion in sustainable business models by 2030 — a seven-fold return on investment. This could also lead to more than 80 million jobs, according to a new report, "Valuing the SDG [Sustainable Development Goals] Prize in Food & Agriculture," from the Business & Sustainable Development Commission.

The opportunities are broken down across 14 areas, including food waste, farming technology, low-income food markets, micro-irrigation, restoring land and forests, product reformulation, changing diets, aquaculture, reducing package waste, cattle intensification and urban agriculture. Researchers estimate a range of value for each opportunity; the lowest in the range is $15 billion per year (for cattle intensification), while the highest is $405 billion per year (for reducing food waste across the production process, or value chain).

Of the 80 million jobs the report estimates could be created by 2030, 90% could be in developing countries, including 21 million in Africa and more than 49 million in Asia. The report further breaks down job creation potential in Asia to 22 million in India, 12 million in China and the remaining 15 million in developing Asia. There could also be an additional 5 million new jobs in Latin America.

“As the world’s population is expected to increase by another 1 billion by 2030, the global food and agriculture system requires a new way of doing business and new approaches to feed more than 800 million people who today suffer from chronic hunger as well as to meet future demand,” said Lord Mark Malloch-Brown, chair of the Business & Sustainable Development Commission. “This report makes clear both the social and economic incentives for companies to seize upon the SDGs as compelling growth opportunities. It is part of our larger argument for why the private sector must accelerate new business models that open truly sustainable and inclusive markets.”

The authors cautioned that the annual investments needed to open these market opportunities must be scaled significantly, requiring an estimated $320 billion a year to unlock these opportunities by 2030. They argue that the current capital base in 31 leading agriculture funds is just under $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.

The report looks at how food and agricultural businesses can experience growth by pursuing sustainable and inclusive business models aligned with the 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 and 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 research shows that developing countries have the most to gain from SDG-aligned business opportunities, capturing more than two-thirds of the estimated economic value due to their large shares of arable land, high future consumption growth and large potential efficiency gains. Across regions, the biggest business opportunity in developing Asia is in cutting food waste across the value chain, while in developed Asian countries like South Korea and Japan, the opportunity is greatest in consumer waste. In India, low-income food markets are the strongest opportunity for businesses, and in Latin America and Africa, it is forest ecosystem services.

Paul Polman, chief executive officer of Unilever and member of the Business & Sustainable Development Commission, urged more food and agricultural companies to integrate sustainability practices into their models. He explained, “Unilever’s experience clearly demonstrates that business can create value by putting sustainability at its very heart and adopting inclusive growth models. At Unilever, we have helped hundreds of thousands of smallholder farmers improve agricultural practices, enabling them to double or even triple their yields. All stakeholders can share in the benefits: Smallholder farmers improve their livelihoods, suppliers gain increased security of supply with improved quality and we reduce volatility and uncertainty with a more secure and sustainable supply chain. The SDGs present a clear moral case for change, but companies must recognize that they represent the business opportunity of a lifetime, too, and must adapt to take advantage of it.”

Companies will need to operationalize sustainability across the 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. Improving technology in smallholder farms and restoring degraded land, for example, could double the incomes of smallholder farmers in the world, who are among the poorest in the global economy, the report shows. According to the U.N., of the 2.5 billion people in poor countries living directly from the food and agriculture sector, 1.5 billion people live in smallholder households.

“The best way to build an enduring business is to put sustainability at its heart. Value is then unlocked for all, from shareholder to supplier, and nature is not depleted. Values and value creation do not have to, and actually should not be, traded in the long term.” said Sunny Verghese, co-founder and group CEO of Olam, a global agribusiness with a portfolio of 47 agricultural commodities, and a member of the business commission.

View the full report by clicking here.

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