MODULE 4

Special Topics

Lesson 1 Agribusiness and ASEAN Integration

Lesson 2 Good Agricultural Practices

Lesson 3 General Concept and Guidelines for Hazard
Analysis Critical Control Point(HACCP)

Lesson 4 Agribusiness Today

 INTRODUCTION

This module presents Special Topics Agribusiness for you to further embrace
the activities in agricultural business. It is hoped that you will learn, comprehend and
appreciate the chosen topics in this section. You will also learn in this module the big
picture of agribusiness today

OBJECTIVES

After studying the module, you should be able to:

1.Explain Agribusiness and ASEAN integration
2.Explain the concept of good agricultural practices
3.Discuss the general concept and guidelines of HACCP
4.Discuss the concept of agribusiness today

DIRECTIONS/ MODULE ORGANIZER

There are four lessons in the module. Read each lesson carefully then answer the
exercises, activities and case studies to find out how much you have benefited from it. Work
on these exercises carefully and submit your output to your subject Professor .
In case you encounter difficulty, discuss this with your subject Professor during the
class meeting. If not contact your Professor at the Institute of Agribusiness Management.

Good luck and happy reading!!!

Lesson 1

Agribusiness and ASEAN Integration

Defining ASEAN

The Association of Southeast Asian Nations (ASEAN) is a regional inter

governmental organization comprising ten countries in Southeast Asia, which
promotes intergovernmental cooperation and facilitates economic, political, security,
military, educational, and sociocultural integration among its members and other
countries in Asia. ASEAN also regularly engages other countries in the Asia-Pacific
region and beyond. A major partner of Shanghai Cooperation Organization, ASEAN
maintains a global network of alliances and dialogue partners and is considered by
many as a global powerhouse, the central union for cooperation in Asia-Pacific, and a
prominent and influential organization. It is involved in numerous international
affairs, and hosts diplomatic missions throughout the world The ASEAN Secretariat is
located at Jakarta, Indonesia.

ASEAN was preceded by an organization formed on 31 July 1961 called the Association
of Southeast Asia (ASA), a group consisting of Thailand, the Philippines, and the
Federation of Malaya. ASEAN itself was created on 8 August 1967, when the foreign
ministers of five countries: Indonesia, Malaysia, the Philippines, Singapore, and
Thailand, signed the ASEAN Declaration. As set out in the Declaration, the aims and
purposes of ASEAN are to accelerate economic growth, social progress, and cultural
development in the region, to promote regional peace, collaboration and mutual
assistance on matters of common interest, to provide assistance to each other in the
form of training and research facilities, to collaborate for better utilization of
agriculture and industry to raise the living standards of the people, to promote
Southeast Asian studies and to maintain close, beneficial co-operation with existing
international organizations with similar aims and purposes

The Treaty of Amity and Cooperation (TAC) in Southeast Asia, signed at the First
ASEAN Summit on 24 February 1976, declared that in their relations with one another,
the High Contracting Parties should be guided by the following fundamental
principles:
 Mutual respect for the independence, sovereignty, equality, territorial
integrity, and national identity of all nations;
 The right of every State to lead its national existence free from external
interference, subversion, or coercion;
 Non-interference in the internal affairs of one another;
 Settlement of differences or disputes by peaceful manner;
 Renunciation of the threat or use of force; and
 Effective cooperation among themselves.
The Purpose of ASEAN

ASEAN's purpose is to form a common market similar to the European Union. The
ASEAN Economic Community was established in 2015. It is working toward free
movement of goods and services, investment and capital, as well as skilled labor. It
will also create common standards in agriculture and financial services, intellectual
property rights, and consumer protection. These are all necessary to attract foreign
direct investment and promote growth. AEC has identified 611 measures it must
implement to achieve its goals. Almost 80% of these measures have been completed.
ASEAN is lowering trade tariffs on 99% of its products to the 0-5% tariff range. Rice is
excepted since it is so important to local economies. ASEAN is working to make
regulations and product standards uniform among the nations.
The multilateral trade agreements between ASEAN and its neighbors lessen these
countries’ need for the World Trade Organization. Communication among these long-
standing enemies in the name of trade means that they realize the preeminent
importance of economic prosperity for all, regardless of ancient grudges and even
democratic principles.

ASEAN & Food Security

Member states recognize the importance of strengthening food security to maintain

stability and prosperity in the region. As ASEAN moves towards AEC and beyond, food
security would be an integral part of the community-building agenda. Strengthened
food security is even more relevant in light of potentially severe risks from climate
change with agriculture and fisheries being the most affected industries.
Part of the aim of ASEAN integration is to achieve food security collectively via trade
in rice and maize. Trade facilitation measures and the harmonization/equivalency of
food regulation and control standards would reduce the cost of trade in food
products. While specialization and revealed comparative and competitive indices
point to complementarities between trade patterns among the member states, intra-
ASEAN trade in agriculture is quite small, something that integration could address.
The MARKET project would provide flexible and demand-driven support to the ASEAN
Secretariat while bringing more private-sector and civil-society input into regional
agriculture policy dialogue. By building an environment that reduces barriers to trade,
ASEAN trade would increase, thereby decreasing the risk of food price crisis.

ASEAN Integration

The Association of Southeast Asian Nations (ASEAN) established the ASEAN Community
in 2015; comprising the ASEAN Political Security Community, the ASEAN Economic
Community (AEC), and the ASEAN Socio Cultural Community. Complementing the
establishment of the ASEAN Community was the adoption of the ASEAN Community
Vision 2025 and the three successor Community Blueprints to chart ASEAN’s
integration trajectory towards 2025.

The AEC, on which the ASEAN Integration Report (AIR) focuses, was established
building on the achievements under the implementation of the first AEC Blueprint
(2007-2015) as reported in the inaugural ASEAN Integration Report 2015. Towards
2025, the region’s economic integration agenda is guided by the AEC Blueprint 2025.
The AEC Blueprint 2025 envisions five interrelated and mutually reinforcing
characteristics, namely:

(1) a highly integrated and cohesive economy;

(2) a competitive, innovative, and dynamic ASEAN;
(3) enhanced connectivity and sectoral cooperation;
(4) a resilient, inclusive, people-oriented, and people centered ASEAN; and
(5) a global ASEAN.

Most notable under the AEC Blueprint 2025 is a greater focus on developing a policy
environment that is supportive of innovation that improves productivity in the region,
strengthens ASEAN’s participation in global value chains, enhances sectoral
cooperation, promotes inclusivity and sustainability – including through support to
micro, small, and medium enterprises (MSMEs) – and encourages a more proactive role
in the global economy.

ASEAN & Agribusiness

Agribusiness represents a substantial opportunity as well as a priority or even a

problem. “Sensing an opportunity, strategic and financial investors are racing to
capture value from technological innovation and discontinuities in food and
agriculture. Since 2004, global investments in the food-and-agribusiness sector have
grown threefold. In Asia meanwhile, “agriculture and agribusinesses are key drivers
behind the ASEAN [Association of Southeast Asian Nations] region’s economic growth.
Southeast Asia is one of the most productive agricultural baskets in the world”, as the
USAID documentation states. Furthermore, “ASEAN is also strategically located
between major East Asia and South Asia markets, making it an ideal supply and
processing base
for agribusinesses with an eye for expansion and growth”, while “over half the total
population in Southeast Asia depend on agriculture for their livelihoods”. “A
projected surge in demand for protein in emerging markets, especially pork in China,
would create opportunities for companies to grow in core production and supporting
industries such as breeding, animal-health testing, feed, and vaccines”. the country’s
expanding meat, dairy, and vegetable demand”.

Unfortunately, no one suggests that investment in agribusiness is risk free. Despite

the risks, some investment managers present agribusiness as a specific differentiating
offer to institutions and high net worth (HNW) investors. Singapore-based investment
platform Milltrust International offers “institutional asset management and wealth
management solutions”, with specialist expertise in agricultural as well as
environmental themes, and offers several funds as well as other products.

“Investment in agriculture as an asset class can provide significant benefits including

income generation, inflation protection and exposure to the very real themes of
global food demand and land scarcity,” Singapore-based dedicated Asian agribusiness
investment fund Caudex Asia (Caudex) invests “from farm to fork – including seed
production, tissue culture, crop sciences, land holdings, plantations, forestry,
fertilizer, disease/pest control inputs, feed-meal, waste recovery, recycling, post-
harvest technology, carbon credits, logistics, transportation, processing, distribution,
marketing and farm equipment leasing”.

In direct investment, meanwhile, investment in agribusiness is hardly a new theme for

Asia Pacific private equity firms. Take for example Olympus Capital Asia, one of the
region’s longest established firms, which declares that since 1998 it “has made
numerous successful investments in this sector, across multiple markets and
subsectors”, as “Olympus believes the favorable demand dynamics and changing
consumer preferences in the agribusiness and food sector in Asia make it a highly
attractive area for investment”.

Significant investments by Olympus in the sector include Japan’s Arysta LifeScience

Corp, “the world’s largest privately held agrochemical company”, which it sold to
Permira in 2007 for $2.2 billion, and China’s Huaxia Dairy Farm Ltd, which Olympus
has, and remains invested in, through a series of rounds, one alongside Singapore’s
GIC.

Shanghai and Singapore-based growth capital investor CMIA Capital Partners similarly
maintains a strong agricultural focus, especially in China. Portfolio investments
include China Minzhong Food Corporation Ltd, “a leading integrated vegetable
processor in China”; Fujian Dongshan Haikui Aquatic Products Co Ltd (Fujian Dongshan
Haikui), “a leading seafood processor and exporter in Fujian”; and Hunan Longzhou
Farm Equipment Holdings Co Ltd, “a leading agricultural machinery manufacturer”.
For those who prefer to keep their investments public and liquid, meanwhile,
exchange-traded funds (ETFs) can serve as another vehicle for investors targeting this
area. For example, the PowerShares Global Agriculture Portfolio (Fund) because it
claims this “is designed to measure the overall performance of the most liquid,
globally traded companies involved in agriculture and farming-related activities.”

In agribusiness, though, broader social and environmental dimensions are rarely far
behind. Southeast Asia’s small and medium-sized agribusinesses, “often suffer from
low productivity and declining growth rates. These businesses have limited access to
inputs, information, technology, markets and affordable working capital as well as
growth capital to expand their business”, the USAID materials state. “These factors
highlight
the need for improved access to information, technology, and private capital for
agribusinesses in order to promote market systems development for not only the
member economies that make up ASEAN, but for ASEAN as a region”.

Caudex includes environmental, social and governance (ESG) criteria in its investment
process, including “ethical practices, community welfare and ecological safety, to
identify potential risks involved in non-compliant investments. It states: “We believe
that long-term sustainability is crucial and that enduring success necessarily means
alignment with our partners, within the larger community, including all
stakeholders”.

The Committee on World Food Security’s ten Principles for Responsible Investment in

Agriculture and Food Systems remain as anchors for investment into agribusiness and
the agricultural sector. As they maintain, “responsible investment in agriculture and
food systems is essential for enhancing food security and nutrition and supporting the
progressive realization of the right to adequate food in the context of national food
security”. And in that statement, “essential” remains balanced by “responsible”.

LEARNING ACTIVITY

Identify at least ten agribusiness problems in ASEAN Nations and enumerate

at least three possible solutions or recommendation to the stated problems.

REFERENCES
https://www.thebalance.com/what-is-asean-3305810
https://www.iisd.org/project/asean-guidelines-responsible-investment-food-
agriculture-and-forestry
file:///C:/Users/JOANA/Downloads/AJAD_Inclusive%20Agribusiness%20in%20SEA.pdf
http://investasean.asean.org/index.php/page/view/agriculture
https://www.cfr.org/backgrounder/what-asean
https://asean.org/?static_post=asean-integration-report-2019
https://theaseanpost.com/article/success-and-challenges-within-asean-integration
https://www.rappler.com/world/regions/asia-pacific/167942-why-care-asean-relevance-
citizens
https://www.eastvantage.com/insights/5-advantages-asean-integration-philippines
https://carnegieendowment.org/2008/11/28/asean-integration-and-its-effects-event-1233
https://www.giz.de/en/worldwide/37203.html
https://www.worldbank.org/en/region/eap/publication/asean-integration-monitoring-report

SUMMATIVE TEST
1. What is the importance of ASEAN Integration?
2. Enumerate the advantages of ASEAN integration to the Philippine Agribusiness?
3. What is the importance of the ASEAN Integration to the Philippine economy
Lesson 2

GOOD Agricultural Practices

Defining GAP

Good agricultural practice (GAP) is a certification system for agriculture, specifying

procedures (and attendant documentation) that must be implemented to create food
for consumers or further processing that is safe and wholesome, using sustainable
methods. While there are numerous competing definitions of what methods constitute
good agricultural practice there are several broadly accepted schemes that producers
can adhere to.

What are Agricultural Practices?

Agricultural practices are basically a collection of principles to apply for farm

production processes in order to get better agricultural products. They are simple
practices used in agriculture to facilitate farming. Nowadays, decent agricultural
practices are some of the methods applied in agriculture, it helps create food for
the consumer as well as for safe further processing. Our farmers are the key person in
cultivation of crops to provide food for the entire population. Herewith is an example
of an activity for a good agricultural practice.
 Preparation
of Soil

Storage Sowing

Fertilizer
Harvesting
Application

Weeding Irrigation

9 Major Agricultural Practices and Techniques 

1. Fallow
The soil loses its fertility due to continuous cultivation. Therefore, the land is left
fallow time to time for some period, so that it may regain its natural fertility.

2. Crop Rotation

This practice is followed to avoid the land from being left fallow or to reduce the
duration of leaving the land fallow. The most common crops grown in crop rotation
are leguminous plants, which fix the atmospheric nitrogen naturally.

3. Mixed Cropping
In this practice, two or three crops are simultaneously grown on an agricultural land
so that the nutrients utilized by one crop can be replaced to some extent by the other
crops. The ratio of crops to be mixed varies according to the methods applied and the
local needs

4. Two-Cropping Agriculture
In this practice, two crops are cultivated in rotation in a year. It is practice in those
areas where there is adequate rainfall or proper facility of irrigation. The second drop
grown is, normally, the nitrogen fixing crops i.e. leguminous crop.

5. Multi-cropping Agriculture
In this practice generally three crops are cultivated in a year and are common in
those regions where availability of early maturing varieties of crops and better water
management techniques.

6. Relay Cropping
When a new crop is sown, while the ripening crop is still standing in the field then, it
is termed as relay cropping.

7. Crop-Productivity
It refers to the amount of production of crop per hectare or per worker. In the areas
of extensive agriculture, per worker productivity is high whereas, in the areas of
intensive agriculture per hectare productivity is high.

8. Agricultural Efficiency
It is concerned with what maximum quantity is produced in a minimum time and at
what price it is sold.

9. Crop Intensity
The arable land can hardly be stretched further in the countries like India. Therefore,
it is essential to obtain more than one crop from the land in a year. The optimum
agricultural use of a land is termed as crop intensity.

Importance of GAP

Good Agricultural Practices (GAPs) are ways that produce growers can prevent on-
farm contamination of fruits and vegetables. GAPs are a new way of thinking about
food safety.

Agriculture practices are also use to maximize the farm produce in different ways and
quality production. It include uses of chemical in farming , insecticide, pesticides
weed management and farm mechanization .Every grower should take time to learn
about potential food safety hazards that can occur on the farm or orchard and take
preventative steps to prevent contamination with harmful microbes.

GAPs are also about protecting your business. They not only prevent the public from
illness, but they also protect your farm business from the economic consequences of
food contamination.

Different aspects of practice

1- reducing food safety risk during harvest.
2 -reducing food safety risk during packaging.
3-reducing risk from animal and manure.
4-Safe uses of agriculture water
5-Workers health and hygiene.

Who benefit from the GAPs?

 Farmers and their families that will obtain healthy and good quality food to
assure their nutrition and nourishment, generating a value added in their
products to access markets in a better way.
 §Consumers, that will enjoy better and safe quality food, with sustainable
production.
 The population in general, that will benefit from a better environment.

GAP Programs
 FAO GAP
 EUREP/Global GAP
 USDA GAP
 Australian GAP
 Japan GAP
 ASEAN GAP

LEARNING ACTIVITY

Select one agricultural commodity and present its good agricultural

practices.

REFERENCES
https://en.wikipedia.org/wiki/Good_agricultural_practice
https://www.ams.usda.gov/services/auditing/gap-ghp
http://www.fao.org/3/a-i6677e.pdf
http://www.fao.org/3/a-a1193e.pdf
https://ncfreshproducesafety.ces.ncsu.edu/ncfreshproducesafety-good-agricultural-
practices/
https://www.slideshare.net/SunilJain9/good-agriculture-practices
https://www.searca.org/pubs/monographs?pid=218
https://manoa.hawaii.edu/ctahr/farmfoodsafety/step-1-basic-good-agricultural-
practices/
https://www.youtube.com/watch?v=-qxaKMlhZJU
https://www.sciencedirect.com/topics/agricultural-and-biological-sciences/good-
agricultural-practice
http://itfnet.org/istf2016/PresentationSlide/ITFS%20-%20Davao%20GAP
%20Presentation.pdf
https://unfss.files.wordpress.com/2013/04/the-role-of-national-gap-asean-gap.pdf
https://members.wto.org/crnattachments/2017/SPS/PHL/17_2260_00_e.PDF
https://ideas.repec.org/a/sag/seapbs/2013209.html
https://www.apo-tokyo.org/publications/wp-content/uploads/sites/5/Manual-on-
Good-Agricultural-Practices-2016.pdf

SUMMATIVE TEST

1.What are the constraints of Farmers in the implementation of GAP?

2.Do we need GAP in agribusiness? Justify your answer
3.Why do we need to consider GAP in food safety? Cite specific examples.
Lesson 3

General Concept and Guidelines for Hazard

Analysis Critical Control Point(HACCP)

Defining HACCP

Hazard Analysis Critical Control Points (HACCP) is an internationally recognized

method of identifying and managing food safety related risk and, when central to an
active food safety program, can provide your customers, the public, and regulatory
agencies assurance that a food safety program is well managed.

HACCP is a management system in which food safety is addressed through the analysis
and control of biological, chemical, and physical hazards from raw material
production, procurement and handling, to manufacturing, distribution and
consumption of the finished product.
Through analysis of hazards and where they can occur, Safe Food Alliance helps
implement systems and procedures to minimize risk. Safe Food Alliance provides a
truly hands-on food safety management system at each and every operation in
assisting in the management of critical control points.
A food safety program, however, does not just stop with HACCP. To be effective,
prerequisite programs such as pest control, traceability & recall, hygiene and
sanitation need to be developed and implemented. Additionally, the issue of ensuring
that suppliers and distributors also have a food safety program needs to be addressed
through development of ingredient specifications and a vendor assurance system.

Principles of HACCP

HACCP is a systematic approach to the identification, evaluation, and control of food

safety hazards based on the following seven principles:

Principle 1: Conduct a hazard analysis.

Principle 2: Determine the critical control points (CCPs).
Principle 3: Establish critical limits.
Principle 4: Establish monitoring procedures.
Principle 5: Establish corrective actions.
Principle 6: Establish verification procedures.
Principle 7: Establish record-keeping and documentation procedures.

Advantages of HACCP

HACCP offers a number of advantages over the past system. Most importantly, HACCP:
 focuses on identifying and preventing hazards that may render food unsafe
 is based on sound science
 permits more efficient and effective government oversight, primarily because the
recordkeeping allows investigators to see how well a firm is complying with food
safety laws and following practices that reduce the risk of unsafe food over a
period rather than how well it is doing on any given day
 places responsibility for ensuring food safety appropriately on the food
manufacturer or distributor
 helps food companies compete more effectively in the world market
 reduces barriers to international trade.

Developing a HACCP Plan

The format of HACCP plans will vary. In many cases the plans will be product and
process specific. However, some plans may use a unit operations approach. Generic
HACCP plans can serve as useful guides in the development of process and product
HACCP plans; however, it is essential that the unique conditions within each facility
be considered during the development of all components of the HACCP plan.

In the development of a HACCP plan, five preliminary tasks need to be accomplished

before the application of the HACCP principles to a specific product and process. The
five preliminary tasks are given in the Figure

Preliminary Tasks in the Development of the HACCP Plan

Implementation and maintenance of the HACCP plan

The successful implementation of a HACCP plan is facilitated by commitment

from top management. The next step is to establish a plan that describes the
individuals responsible for developing, implementing and maintaining the HACCP
system. Initially, the HACCP coordinator and team are selected and trained as
necessary. The team is then responsible for developing the initial plan and
coordinating its implementation. Product teams can be appointed to develop HACCP
plans for specific products. An important aspect in developing these teams is to
assure that they have appropriate training. The workers who will be responsible for
monitoring need to be adequately trained. Upon completion of the HACCP plan,
operator procedures, forms and procedures for monitoring and corrective action are
developed. Often it is a good idea to develop a timeline for the activities involved in
the initial implementation of the HACCP plan. Implementation of the HACCP system
involves the continual application of the monitoring, record-keeping, corrective
action procedures and other activities as described in the HACCP plan.

Maintaining an effective HACCP system depends largely on regularly scheduled

verification activities. The HACCP plan should be updated and revised as needed. An
important aspect of maintaining the HACCP system is to assure that all individuals
involved are properly trained so they understand their role and can effectively fulfill
their responsibilities.

Control and monitor food supply chains with HACCP

The growing consumer demand for a wider variety of foods, have resulted in the
formation of interconnected, yet complex and lengthy food supply chains. New
globally aligned food safety standards are required to ensure integrity of food supply
chains and movement of food products between countries, and it is also necessary to
identify emerging food safety issues, and focus areas of international co-operation
between lawmakers, government agencies, producers, and consumers.

Hazard Analysis Critical Control Point (HACCP) is a preventive quality assurance

program designed to provide increased control and monitoring during critical stages of
the food processing chain, including: sourcing, preparation, processing , packaging,
manufacturing, storage, transportation, distribution, and handling.
HACCP for SMEs

Food safety management is paramount to your business – whatever its size or location.
And HACCP can add value to your entire supply chain with improved hazard controls.
We understand that small companies may have less time and smaller budgets to work
with. We also understand how to overcome these challenges with service packages
tailored to your business. HACCP removes the unnecessary cost and complexity of
achieving the right standards of food safety.

LEARNING ACTIVITY

Gather latest information about HACCP and Food Safety

REFERENCES
https://www.fda.gov/food/hazard-analysis-critical-control-point-haccp/haccp-
principles-application-guidelines#princ
https://www.tuv.com/philippines/en/haccp-food-safety.html
https://www.tuv-sud-psb.ph/ph-en/activity/auditing-system-certification/hazard-
analysis-critical-control-point-haccp_1
https://www.bsigroup.com/en-PH/haccp-food-safety-risks/
https://www.mhlw.go.jp/english/topics/importedfoods/guideline/dl/05.pdf
http://www.gicphilippines.com/certification/hazard-analysis-and-critical-control-
point/index.html
https://www.ag.ndsu.edu/foodlaw/overview/introhaccp
http://www.fao.org/3/v9723t/v9723t0e.htm
https://www.food.gov.uk/business-guidance/hazard-analysis-and-critical-control-
point-haccp
http://haccpalliance.org/alliance/haccpqa.html
SUMMATIVE TEST

1. Do we need HACCP in agribusiness? Justify your answer.

2. What is the relationship of food safety, agribusiness and HACCP?
3. What is the importance of having a HACCP plan?

Lesson 4

Agribusiness Today

Trends Transforming the Agribusiness Industry

The agribusiness industry is undergoing a period of considerable change across

numerous fronts. From changing consumer food preferences and related shifts toward
“clean label” products, to sustained low commodity prices for farmers, to the recent
surge in Agricultural Technology development and adoption, the agribusiness sector
finds itself in the midst of enormous changes and dynamic trends that will continue to
shape how food is grown, raised and produced for years to come.

Among numerous forces at play across the agribusiness value chain, we have
identified nine key trends that are driving transformation within the industry. These
trends touch virtually every part of the agricultural value chain, including growers,
input suppliers/distributors, processors and investors, and are relevant to crops and
animal proteins alike.
While these trends are complex — with many interdependencies and differential
degrees of impact, depending on where across the “farm to fork” chain one chooses
to look — we have developed a brief synopsis of each and its respective impact on the
industry based on experience.

1.Sustained low commodity prices

Agricultural crop commodities such as corn and soybeans are in their fourth year of
sustained low prices, following several bumper years of historically higher prices. This
has had a significant negative impact on farm incomes, debt levels and land values,
making times very tough for growers. However, they are not alone — input providers
for seeds, crop chemicals, nutrients and particularly equipment have seen moderate
to severe declines in demand as farmers have been forced to tighten their belts and
reduce spending. With farmers being more selective in how much and what types of
inputs they use while crop prices remain low, agricultural input manufacturers and
retailers have also felt the pinch. The outlook for recovery of crop prices remains
uncertain and continues to weigh on input providers. Given the slow and steady
growth of commodity crop demand, prices are most likely to move based on changes
in supply, which has not been sufficiently volatile in recent years to help raise crop
prices.
2.Improving yields

Optimizing crop and animal yields has been a primary goal of both growers and
governments alike for millennia. Over the past century, however, yields for major
crops have increased by three to eight times as a result of technological
advancements, agronomic improvements, and industry investment and collaboration.
This pace has accelerated further in the past 20 to 30 years and more recently due to
several key drivers:

A. Significant growth in R&D investment in agricultural biotechnology (e.g., for

developing high-performance seed traits, more effective crop-protection chemicals
and biologics, etc.)
and data analytics that enable precision agriculture

B.Greater collaboration across industry, government and academia

C. The emergence of “smart” farming and data analytics that enable precision
agriculture
On the animal proteins side, yield gains have been much more gradual, yet they remain important for
producers in order to meet growing demand and generate returns. Although low crop
prices have benefited animal protein producers in the form of cheaper feed costs,
other trends — such as reduction in the use of growth hormones and antibiotics —
have challenged growers’ efforts to maintain, much less increase, animal protein
yields. Technology is helping here as well, with key drivers including:

• Improved genetics of grandparent breeding stock

• More tailored feed additives (enzymes, probiotics, micronutrients, etc.)
• Technology-enabled production monitoring systems

3.Focus on sustainability

The drive toward greater sustainability has affected the agribusiness industry in many
ways, despite the challenges associated with finding a common and/or consistent
definition of what “sustainability” really means. For crop growers, sustainability
usually covers growing as much or more food with fewer inputs, using sustainable soil
management practices, perhaps shifting from chemical to organic pesticides, and so
forth. Advances in biotechnology and precision agriculture have been important
enablers of more sustainable agriculture broadly, as they allow growers to be more
precise and to optimize the yield-related traits of a crop or an animal. At the same
time, but in a different manner, organic crop, produce and animal protein growers
also view their approach as a positive for sustainability.

Sustainability, however one defines it, is an increasingly important issue for many
parties:

• For growers, it is essential to preserving the long-term health and productivity of

their soil and fields.

• For public sector officials, sustainability also matters, but the underlying issues
emphasized may differ between federal and local officials

 For food and beverage companies, as well as other consumer-facing companies,

demonstrating a pro sustainability approach may be an important element of meeting
consumer brand expectations
• For suppliers, driving yields upward and enabling growers to produce sufficient food
with the arable land available are often critical sustainability objectives.
4. Arrival of AgTech
Over the past five to 10 years, the growth of agricultural technology has been fervent,
with technology being applied in radically new ways in the field, around the farm, for
raising animals, and all the way across the farm-to-fork supply chain (see Figure 2).
Crop biotech, the traditional pillar of AgTech, continues to advance, spawning a host
of new seed types and traits, more effective crop protection and enhancement
chemicals, and (increasingly) biologic compounds to augment or replace conventional
crop chemicals. Over the past six years, the number of AgTech deals grew at an
annual average rate of 73%, with a total investment of $3.2 billion in 2016. Over this
time frame, AgTech investment by agribusiness operators has also expanded, as
shown by the following examples:
• Precision/prescriptive agricultural technologies — Software, data and equipment are
providing growers with a wealth of field and crop health data, which enables yield
improvements and provides intelligence to assist with variable-rate application of
fertilizers and chemicals.
• Indoor growing technologies — Advancements have been made in controlled growing
environments, from next generation hydroponics to “vertical” farming, particularly
for produce/greens. While more costly to produce than their farm-raised alternatives,
products from such operations can be attractive to retailers seeking a year-round
supply of locally sourced, often organic offerings.
• Animal protein production — Technology has accelerated developments in animal
breeding, nutrition and health in a number of ways. Animal protein producers are
using technology in new ways to monitor animal health and track and optimize
production.
• Meat replacements — As consumer interest in non animal sources of protein grows,
technology is driving advancements in so-called meat replacements, produced through
innovative (and still very expensive) cell tissue culture technologies. While still in
their early days, such technologies and the companies behind them, such as Beyond
Meat and Memphis Meats, have attracted the investment of majors such as Tyson
Foods and Cargill, respectively.
• Food safety/traceability tracking — To help address food safety concerns and
enormous public scrutiny, major retailers and foodservice operators have been using
technology to improve their management of food safety issues and track the origin of
food products and ingredients all the way back up the supply chain.

5.Clean-label shift
The seismic shift in consumer food preferences continues to drive the growth of
ingredients with healthy, clean-label attributes: organic, non-GMO, antibiotic-free,
gluten-free, cage-free, etc A recent more than 1,500 U.S. consumers indicated rising
consumer commitment to and interest in clean-label foods across a variety of such
attributes. Almost 70% of respondents always, frequently or occasionally purchased
foods labeled “all natural,” “locally produced/sourced,” “protein-rich” or “low-
calorie.” Furthermore, U.S. organic food sales have grown approximately 10% per
annum from 2005 to 2016, and are expected to reach approximately $50 billion in
2017, spurred in part by consumers seeking more alternatives, as well as by CPG
companies, food retailers and fast-food/ restaurant operators vying for share of the
consumer “food wallet.
The implications of this shift farther upstream in the agribusiness portion of the ‘farm
to fork’ value chain have been enormous and widespread. For food ingredients to be
“organic” requires starting with non-GMO wheat, corn, soy, oils, starches and other
ingredients, which in turn impacts the costs for growers, producers and consumers.
Similarly, producing eggs in a cage-free environment or raising chickens without
antibiotics is typically costlier and requires significant upfront investments by growers
and producers to shift their practices and qualify for the label they seek. As long as
there is consumer demand for the broad array of clean-label foods at the right prices,
however, growers and producers will almost certainly find ways to supply them.
6.Evolving protein demand
Global per-capita consumption of animal based protein has inched up steadily since
the 1960s as incomes and population levels in developing countries have risen, with
the greatest increases observed in poultry and pork. In more economically developed
regions such as the U.S., the EU and parts of Asia, consumption of animal proteins is
growing modestly, yet non animal proteins (plant-based, insect-based, etc.) are
seeing more rapid growth, with one analyst predicting that meat alternatives could
have a 33% share of the overall protein market by 2054.
As plant-based proteins become more mainstream, large corporations are beginning to
adjust their offerings; for example, Wendy’s, Denny’s, Subway, White Castle, Chili’s,
TGI Fridays and others now offer plant-based protein meals. Given shifting consumer
preferences, and the efforts by large food companies to stay relevant, it is likely that
future protein needs will be met by an even more diverse, and less animal-reliant, set
of protein sources.
7.Industry consolidation
Industry consolidation has been playing out for many years to varying degrees across
the agribusiness sector landscape in agricultural equipment and inputs (seeds,
chemicals and fertilizers); animal protein production; and “nichier” segments such as
poultry grow-out equipment, produce sorting and grading equipment, and animal
protein genetics. Most recently, the megamergers in the agricultural seed and
chemicals space (Dow DuPont, Bayer-Monsanto and Chem China Syngenta) are
increasing industry concentration significantly further than ever before. Overall
agriculture-chemical mergers and acquisitions have grown rapidly in recent years,
totaling over $120 billion in 2016, compared with just under $60 billion in 2015 and a
mere $10 billion in 2014. In fertilizer, Potash Corp and Agrium, the two largest
fertilizer companies in Canada, have agreed to merge, forming a $27 billion company
that combines Potash Corp’s mining capabilities with Agrium’s retail capabilities.
Within the agricultural retail and distribution space, consolidation has not been so
swift. Yet new mergers and acquisitions are announced regularly as large regional and
national players seek economies of scale and better buying power with the major
suppliers. The newfound scale of farm input manufacturers and suppliers is of concern
to some growers, who fear higher prices and less choice down the road. However,
new technology and ceaseless innovation continue to fuel new companies in all these
spaces.
8.Water and labor shortages
Water limitations and labor shortages have been persistent issues for agribusiness in
the U.S. and other parts of the world for years. While a snowy winter last year has
brought California much needed drought relief, historical data and climate models
suggest that California and the southwestern U.S. will continue to experience
desertification over the next several decades, making water a sustained, long-term
issue. Globally, agriculture uses about 70% of available fresh water. Observed changes
in climate, shifting land uses and more intensive crop production trends are all
believed to be putting more strain on the world’s water systems. Water-scarce
countries, such as Israel, have developed leading-edge technologies to combat the
shortage and are global leaders in precision drip irrigation to optimize the water
uptake by crops.
Labor shortages, particularly in the U.S., are also becoming a significant issue, as
growers across the country struggle to find the seasonal labor they need for planting,
harvesting and other activities. Although this has been a challenge for many years,
conditions have become even more acute recently as a result of low overall
unemployment, recent government immigration moves and minimum-wage increases
in various parts of the country. In the short term, this is putting pressure on high-cost
agricultural growers and making it harder to stay in business. Over the longer term,
however, sustained water and labor shortages are likely to drive up consumer prices
for a range of fruits, vegetables, greens and other foods that people eat .
9.Uncertainty from new Political Administration
Potential changes to established global trade agreements by the current
administration have not yet affected the agribusiness sector, but the likely economic
impact of such disruptions would be significant on a range of crop farmers and animal
protein growers. The U.S. is a major exporter of commodity crops, specialty crops and
animal proteins: NAFTA, the WTO, and other multilateral and bilateral trade
agreements have enabled U.S. producers to export growth in the past. For example,
U.S. beef exports have risen 78% by volume since 1993, the year prior to NAFTA’s
enactment, with Mexico the largest foreign buyer of American beef and Canada the
fourth-largest foreign buyer. The risk for exports to China, one of the largest export
markets for American agriculture, is similar. To date, despite numerous signals
emerging from the administration on trade and agricultural policy, the agribusiness
industry remains largely unclear as to what could/will change and how the changes
might impact them. Despite some minor trade wins recently around beef exports,
many in the industry fear that export markets are potentially at risk should trade
deals be canceled or renegotiated.
These trends are certainly not the only dynamics impacting the agribusiness industry
— there are many more factors at play that are driving the evolution of the global
farm-to-fork ecosystem. As these changes unfold, and in some cases, accelerate, they
are almost certain to create opportunities for companies that are able to drive and/or
adapt to the increasing disruptions across the industry. At the same time, these forces
will challenge companies that are slow or unable to react. And while the recent
industry upheaval has been enormous, there is strong evidence to suggest that this is
just the beginning of a much more profound shift that is likely to continue for
decades.

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REFERENCES

https://www.precisionag.com/digital-farming/data-management/top-4-data-trends-
for-agribusiness-in-2020/
https://www.farmprogress.com/week-agribusiness
https://www.bworldonline.com/category/agribusiness/
https://www.wandtv.com/news/agribusiness-today/
https://www.facebook.com/Agribu