Looking to the future is not easy under current circumstances. We don’t currently even know where we will be able to go and who we will be able to meet in a month’s time. Nevertheless, investors in agribusiness and those who support them are finding ways to look beyond the crisis, both to ensure that agribusiness is resilient and to try to identify emerging opportunities.
In this final event of the CASA series, four experts considered future trends and how these will be shaped by the COVID-19 pandemic, and the implications for investment. This discussion built on the earlier session which explored how investors are supporting agribusinesses to navigate through the crisis and preserve jobs and livelihoods.
The disruption to logistics and distribution caused by the lockdown has highlighted the need for local capacity for storage and processing, providing options to manage perishable products and prevent food waste. The importance of building this capacity close to the places where food is grown has therefore emerged as a central plank in increasing the resilience of supply chains. This type of local value addition has been recognised for a long time as a way to increase income for small farmers in developing countries. Finding ways to finance this should be considered a priority.
The crisis may also accelerate existing trends relating to the distribution of some agricultural products by air. As the airline industry emerges from the effects of the lockdown, its future activities may be more closely linked to the need for action on climate change. This may well change the patterns of international air freight. There may also be a reaction against imports of some products on the grounds of food safety. Investors will need to be aware of these trends in order to avoid stranded assets. Cost will remain an important factor as many people’s incomes are squeezed.
But speakers warned against an assumption that local supply chains are likely to be more resilient than international supply chains in a post-COVID world. Very global mechanised international supply chains have in many cases continued to operate during the lockdown, while the more local value chains (for example, collecting milk from farmers and taking it to local dairy processing centres) have in some cases been a lot more vulnerable. So in any future scenarios, the food supply chains should remain diverse.
The role of digital technologies in supporting value chains has been evident throughout the crisis. Speakers acknowledged that this was already taking off before COVID-19 necessitated digital responses, but the last few months have highlighted the critical importance of digital infrastructure and accelerated its roll-out. Future scenarios for smallholder farmers and small-scale agribusiness will depend to a large extent on how they are able to build on the digital models that have emerged.
Future scenarios will also depend on whether investors properly engage with farmers on the ground and fully understand the changing markets in which they operate. For this, they need to properly integrate farmers and owners of agribusiness SMEs into their process of gathering insight for investment.
Amidst the challenges of investment in an uncertain world, the panel discussion therefore highlighted opportunities for investors to support the process of building back better.