Agrifood Sector 2023

Industry overview
Allianz
Trade
Agrifood Sector
Industry strengths
and weaknesses
2023 Outlook
Keep calm and chow on
Industry risks
Global trends
insolvency trends
Payment and
Market focus
Allianz Trade is the trademark used to designate a range of services provided by Euler Hermes.
Industry overview
AGRIFOOD SECTOR 2023 OUTLOOK
Contents
PAGE 3- 4
Industry strengths
and weaknesses
Industry overview
PAGE 5-6
Industry strengths
and weaknesses
Industry risks
PAGE 7
Industry risks
Global trends
PAGE 8
Global trends
PAGE 10
Payment and insolvency trends

Payment and
insolvency trends
PAGE 11-16
Market focus
Market focus
2 Allianz Trade is the trademark used to designate a range of services provided by Euler Hermes.
Industry overview
Industry overview
The global agrifood market has grown significantly,
expanding from US$8.28 trillion in 2021 to US$8.67 trillion Global agrifood market (US$ trillion)
Industry strengths
in 2022. Furthermore, the sector is projected to reach
and weaknesses
US$9.73 trillion in 2023 and about US$12 trillion by 2027,
representing a CAGR of +6% over that span. This growth is
driven by a number of factors such as population growth,
technological advancements, and also shifting consumer
preferences. Despite the ongoing war in Ukraine that has
added new challenges and uncertainties to the industry
which resulted in declining volumes in both production 2022 2023 2024
and sales, the non-reducible nature of food products
allowed companies in the industry to compensate lower 8.7 9.73 10.23
volumes with higher sales prices.
Industry risks
Figure 1: Global cereal production (million tons)
Rice Coarse grain Wheat Cereals
3000 2,714 2,777 2,811 2,774

2500
2000
1500
1000
Global trends
500
0
2019/20 2020/21 2021/22 2022/23
Sources: FAO, Allianz Research
Figure 2: Global food market (US$ trillion)
Rest of the world Asia

insolvency trends
Payment and
15
12
9
5.3 5.6 6.0
6 4.6 4.9
3.8 4.0 4.2
5.8 6.3 6.0
3 5.1 5.3
4.0 4.2 4.4
0
2020 2021 2022 2023 2024 2025 2026 2027
Sources: various sources, Allianz Research

Market focus
Industry overview
Figure 3: Q4 2022 revenue (Y axis) and earnings (X axis) growth (% y/y) by industry
18% Automotive
Banks Energy
13%
Machinery
Industry strengths
and weaknesses
Transportation
Software
8%
Food, beverage
Food & staples & tobacco
Media & entertainment retailing
Paper & forest

Construction Retailing 3%
materials
Cons. durables Pharma
& apparel
-70% -60% -50% -40% -30% -20% -10% 10% 20% 30% 40%
Semiconductors -2% Insurance
Household Telecom
products Tech hardware
Industry risks
Real estate
Chemicals
-7%
Metals & mining
-12%
Sources: Eikon Reuters (as of 15 March 2023), Allianz Research
Overall, most industries faced financial deterioration in On average, listed companies in this industry recorded
Global trends
the last quarter of 2022. Revenues grew by +4.0% y/y on revenue growth of +6.7% y/y and EPS growth of +12.2%
average while earnings per share (EPS) fell by -4.9% y/y. y/y (Figure 3). Despite inflationary and price pressures, we
The agrifood industry proved to be a winning one despite a expect profitability to grow this year.
challenging environment.
insolvency trends
Payment and
Market focus
Industry overview
Industry strengths and weaknesses

Strengths
Industry strengths
and weaknesses
Diverse and growing market
Agrifood caters to a wide range of consumer needs and preferences, with a large
variety of products available to meet the demands of a growing global population.
Technological advancements
The adoption of new technologies, such as precision agriculture, IoT and AI, has
proved to be improving efficiency, reducing waste and increasing yields.
Industry risks
Increasing focus on sustainability
The industry is making progress in embracing sustainable and regenerative
agricultural practices, reducing its environmental impact and catering to consumer
demand for eco-friendly products.
Growing demand for alternative proteins and plant-based products

Such offerings are expanding to meet the increasing consumers’ interest in healthier
and more sustainable food options.
Global trends
Figure 4: World population growth by region
Asia Africa Europe South America North America
9
8 There will be
insolvency trends
7
6
9.7bn people by 2050 Payment and
5 vs 7.8bn currently
4
3
2
1
0
1900
1905
1910
1915
1920
1925
1930
1935
1940
1945
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2005
2015
2020
Market focus
Sources: United Nations, Allianz Research
Industry overview
Weaknesses
Supply chain vulnerabilities
Industry strengths
and weaknesses
The industry is susceptible to disruptions in supply chains due to factors such as
climate change, political instability and economic fluctuations.
Environmental impact
Conventional agricultural practices can contribute to deforestation, soil
degradation, water pollution and loss of biodiversity.
Dependence on finite resources

Heavy reliance on non-renewable resources such as fossil fuels and synthetic
Industry risks
fertilizers, which can cause long-term sustainability issues.
Food waste
A significant portion of food produced globally is wasted at various stages of the
supply chain, leading to economic and environmental costs.
Global trends
insolvency trends
Payment and
Market focus
Industry overview
Industry risks
Given the very specific nature of the agrifood
industry and its pivotal part in consumption, risks
Within the 70 countries
currently covered by
Industry strengths
from macroeconomic conditions are quite limited
and weaknesses
and the sector had proved that it could manage a
challenging context in 2022. Allianz Trade, the
Climate change
agrifood industry is rated:
Climate change poses a significant risk to the industy,
as it can lead to extreme weather events such as
droughts, floods and storms, which can negatively Low risk
impact crop yields and food production. These
climate-related disruptions can cause supply chain
15 countries
issues, price volatility and food shortages in certain
Industry risks
regions. Moreover, climate change can exacerbate
existing environmental challenges such as water
scarcity and soil degradation, further affecting the
sector's long-term sustainability.
Medium risk
43 countries
Geopolitical factors
The industry is vulnerable to geopolitical factors,

including trade disputes, political instability and Sensitive risk
conflicts. These factors can disrupt global supply
chains, affect pricing, and lead to food shortages or 12 countries
Global trends
surpluses in various regions. As seen in the ongoing Austria, Belgium,
war in Ukraine, geopolitical tensions can have a Croatia, Egypt,
significant impact on global food security, especially Germany, the Netherlands,
when major food-producing nations are involved. Russia, Slovenia, Spain,
These risks can be difficult to predict and manage, Tunisia, Turkey and
and can have far-reaching consequences for the United Kingdom
the industry.
Emerging diseases and pests

To learn more on Allianz Trade sector
The industry faces risks related to the emergence and
risk methodology insolvency trends
spread of new diseases and pests that can threaten
Payment and
crop and livestock health. Outbreaks of diseases such
as African swine fever, avian influenza or new strains
of crop pests can lead to significant economic losses,
supply chain disruptions, and food safety concerns.
The increasing global interconnectedness of the
industry also increases the likelihood of rapid disease
transmission across borders, making prevention and
control more challenging.
Market focus
Industry overview
Global trends
Supply chain disruptions and price volatility
Industry strengths
The war in Ukraine has disrupted global supply chains and led to a sharp
and weaknesses
increase in agricultural commodity prices. For example, global wheat prices
soared by over 30% in the first quarter of 2022, reflecting the impact of the
conflict on the world's largest wheat exporters, namely Russia and Ukraine.
Geopolitics and policies
In response to the Ukraine conflict and rising food prices, several countries
have taken measures such as releasing food reserves, implementing price
controls and offering financial support to affected farmers and consumers.
Industry risks
Some countries, like Malaysia, India and Argentina also implemented
export bans on specific products to ease domestic prices and/or for food
security reasons. With deglobalization reshaping global relations and
climate change putting more pressure on agricultural yields, food products
will become even more strategic in the future.
Innovation (digitalization, vertical farming etc.)
Global investment in agritech startups reached a record high of US$22.3
Global trends
billion in 2021, demonstrating the increasing interest in digital solutions
for the industry. This trend is expected to continue as new technologies
are developed and adopted. Another innovation trend is vertical farming,
which is especially relevant for some Asian markets such as Hong Kong
and Singapore. Global vertical farming market size was valued at US$2.23
billion in 2018 and is expected to grow at around 21% per year until at least
2025 to reach the US$10 billion threshold.
Sustainability and regenerative agriculture

insolvency trends
Payment and
Cardiovascular disease is the leading cause of death in the Asia Pacific
region, even if it is easy to prevent. Cardiovascular disease is responsible for
an estimated 9.85 million deaths in the WHO South-East Asia and Western
Pacific Regions and accounted for 45% of all non-communicable-disease
deaths in these regions. Cancer is the second leading cause of death in Asia
Pacific, resulting in around 5 million deaths per year.
Market focus
Industry overview
Industry strengths
and weaknesses
Industry risks
Alternative protein sources and plant-based products
The global plant-based protein market, valued at US$10.3 billion in 2020,

should continue to grow as more and more consumers are asking for
healthier and low-carbon intensity products. The market is expected to
Global trends
reach US$15.6 billion by 2028.
E-commerce and direct-to-consumer sales
The Covid-19 pandemic accelerated a trend that was already increasing:

online/direct purchases. The global online grocery market should continue
to grow at a fast pace of about 25% per year, to eventually become a
US$800 billion market by 2027.
insolvency trends
Payment and
In conclusion, the global agrifood market in 2022-2023 is shaped by a complex interplay of technological
advancements, shifting consumer preferences, sustainability concerns and geopolitical factors. The
ongoing war in Ukraine adds further complexity to the market dynamics, highlighting the importance of
resilience, innovation and international collaboration in addressing the multiple challenges the industry will
face in the future.
Market focus
Industry overview
Payment and
insolvency
trends
Industry strengths
and weaknesses
Our latest research published in March 2023 revealed
that global working capital requirements (WCR) for APAC WCR in 2022
listed companies increased by +9 days to 72 days of
turnover in 2022. This is the largest annual increase
since 2008, following an increase of +3 days in 2021.
77 days +10 days
The rise in WCR is explained by lower growth,
higher inflation, the higher cost of financing and
more non-payments.
Industry risks
In Asia Pacific, WCR rose by +10 days to 77 days of 22%
turnover, where all countries but Singapore faced of Asia Pacific companies
increases, ranging from +2 days in Japan to +12days are paid after 90 days
in India and +15 days in China. Asia Pacific also has
the second largest proportion of firms exposed to
the longest day sales outstanding (DSO) and thus to
cashflow risks. Overall, 22% of Asia Pacific companies
are paid after 90 days. +12%
APAC business
Global trends
On the other hand, Allianz Trade’s Global Insolvency
insolvencies in 2023
Index published in April this year revealed that global
insolvencies are set to rise by +21% in 2023 and +4%
further in 2024. Lower growth, extended pressure
on profitability, weaker cash buffers and tighter-for-
longer financial conditions are the main drivers in
+72%
this rise. q/q in number of claims
in the agrifood industry
In Asia Pacific, we forecast business insolvencies to
hike by +12% and +5% this year and next. We expect
the most fragile industries and companies will face insolvency trends
the biggest challenges, such as those most exposed Payment and
to the global slowdown; those benefitting less from
China’s earlier-than-expected reopening; those
in labor-intensive industries and most exposed to
recovery in wages; and those most exposed to rising
interest rates.
As global trade resumes, we observe the frequency

and amount of claims are also on an upward trend.
As of March 2023, our received number of claims
from the agrifood sector increased by 72% q/q while
Market focus
claimed amount expanded by three folds.
Industry overview
Market focus
Click on the icons to find out more
Industry strengths
and weaknesses
Industry risks
Hong Kong
Global trends
Singapore
insolvency trends
Payment and
Australia
Market focus
Industry overview
Market focus
Australia
Industry strengths
and weaknesses
2023 2024
+1.9% +1.8%
GDP growth forecast GDP growth forecast
Industry risks
+5.5% +2.9%
Inflation forecast Inflation forecast
+15.0% +9.0%
Insolvency forecast Insolvency forecast
Global trends
While the war in Ukraine has disrupted global supply For the wine sector, revenue is projected to grow at an
chains and has sent shockwaves through Australia’s annualised growth rate of 1.5% through 2027-28, reaching
agrifood business, revenue of the Australian agrifood a total of AUD6.6 billion with profit margins forecast to
industry is forecast to increase at an annualized rate of rise to 7% of industry revenue. Prior to the implementation
6% over the next five years, reaching AUD326.5 billion in of anti-dumping duties on Australian packaged wine in
2027-28. This is not only supported by rising incomes in November 2020, China accounted for 37.1% of Australian
China and India resulting in increased demand for the wine exports in 2019-20 (over AUD1 billion) but has since
sector (particularly for meat and horticultural products), dropped to merely 1.1% of total exports in 2021-22 insolvency trends
Payment and
free trade agreements with China, Japan, South Korea (around AUD25 million). This has been compensated by
and Indonesia are expected to reduce tariffs on key increased exports to Thailand, Malaysia, Singapore and
agricultural exports which will facilitate trades further India, while demand from Hong Kong, Taiwan and Macau
going forward. The expected increase in annual rainfall are also on the rise.
of 6.3% in 2022-23 is also favourable for the agribusiness.
Select another market (click to view)

Market focus
Industry overview
Market focus
Hong Kong
Industry strengths
and weaknesses
2023 2024
+3.3% +3.4%
Industry risks
+2.5% +2.5%
+1.0% -3.0%
Global trends
Inflation will remain modest in Hong Kong in 2023 (+2.5%). +3.3% (after -3.5% in 2022). As a result, the agrifood market
Moreover, the market’s economic activity will benefit from that proved resilient in 2022 will continue to grow, from
the Chinese reopening and GDP growth should rebound to US$31.3 billion last year to US$32.6 billion in 2023.
Figure 5: Food market size

insolvency trends
Hong Kong (US$ billion - lhs) Asia (US$ trillion - rhs) Payment and
45 7
40 6
35
30 5
25 4
20 3
15 2
10
5 1
0 0
2020 2021 2022 2023 2024 2025 2026 2027
Market focus
Industry overview
Industry strengths
and weaknesses
Industry risks
Like other small Asian markets, Hong Kong's agrifood The city is also home to an increasing number of small-
market depends on its substantial imports. Indeed, Hong scale, urban and rooftop farming endeavours. Hong Kong
Kong imports over 90% of its food supply (mostly from is positioning itself as a regional hub for food innovation
China, the US, Brazil, Australia, New Zealand and the EU). and R&D. Institutions such as the Hong Kong Science and
This high level of reliance on imported food has led to Technology Parks Corporation (HKSTP) are supporting the
Global trends
initiatives aimed at enhancing food safety and diversifying growth of the foodtech ecosystem by offering resources
import sources. Hong Kong's organic food market is and networking opportunities for startups and researchers.
experiencing steady growth, with an expected annual The online grocery market in Hong Kong is also growing
growth rate of about 10% until 2026, reflecting a rising rapidly and reshaping the sector, with a projected growth
consumer interest in health-conscious and eco-friendly of about 18% between now and 2026. The expansion of
food choices. e-commerce offers new opportunities for the agrifood
industry to reach a wider audience and increase revenue.
insolvency trends
Payment and

Market focus
Industry overview
Market focus
Singapore
Industry strengths
and weaknesses
2023 2024
+1.7% +2.2%
Industry risks
+4.5% +1.8%
+5.0% +2.0%
Global trends
Despite inflation that is expected to remain high in 2023 totalled US$9.88 billion in 2022, should continue to expand
(+4.5%) and as the country’s GDP is expected to grow at a and pass the US$10 billion threshold in 2023.
modest +1.7%, the agrifood industry in Singapore, which
Figure 6: Food market size

insolvency trends
Singapore (US$ billion - lhs) Asia (US$ trillion - rhs) Payment and
11.5 7
11.0 6
10.5 5
4
10.0
3
9.5 2
9.0 1
8.5 0
2020 2021 2022 2023 2024 2025 2026 2027
Market focus
Industry overview
The agrifood market in Singapore is characterized by The government has also established the Singapore
its heavy reliance on imports, focus on food security, Institute of Food and Biotechnology Innovation (SIFBI)
increasing investments in agritech and sustainable and allocated SGD50 million (approximately US$36.7
food systems. Singapore imports over 90% of its food million) to the FoodInnovate initiative to support research
supply due to its limited land and natural resources. The and development (R&D) in the agrifood industry. Among
country's food import dependency has driven its focus on the strong agrifood sub-industries, Singapore is a leader
strengthening food security and diversifying its sources of in vertical and urban farming, with companies such as
Industry strengths
supply. So far, this has been successful, Singapore ranks as Sky Greens, Sustenir Agriculture, and SinGrow leading the
and weaknesses
the second Asian nation in the Global Food Security Index way. The country's aquaculture sector is also expected
(Figure 6). To improve further its security, the government to grow as the government aims to increase local fish
has committed SGD144 million (approximately US$106 production from the current 4,700 metric tons to 15,000
million) to the 30x30 Express grant, aiming to support local metric tons by 2030.
food production and help the country to achieve its "30 by
30" goal, which is to locally produce 30% of its nutritional
needs by 2030.
Figure 7: Food Security Index 2022 (selected countries)
Industry risks
India
Thailand
Indonesia
Vietnam
Malaysia
South Korea
Singapore
Global trends
China
Germany
US
Japan
France
Finland
Sources: EIU, Allianz Research

insolvency trends
Payment and

Market focus
Industry overview
Industry strengths
and weaknesses
Allianz Trade
Industry risks
is the trademark used to designate a range
of services provided by Euler Hermes.
We hope you found this report insightful and useful.
Global trends
insolvency trends
Payment and
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purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information
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Industry overview

Payment and insolvency trends

Rice Coarse grain Wheat Cereals

3000 2,714 2,777 2,811 2,774

Figure 2: Global food market (US$ trillion)

Rest of the world Asia

Sources: various sources, Allianz Research

Paper & forest

Sources: Eikon Reuters (as of 15 March 2023), Allianz Research

Industry strengths and weaknesses

Growing demand for alternative proteins and plant-based products

Asia Africa Europe South America North America

Sources: United Nations, Allianz Research

Supply chain vulnerabilities

Dependence on finite resources

The industry is vulnerable to geopolitical factors,

Emerging diseases and pests

Geopolitics and policies

Innovation (digitalization, vertical farming etc.)

Global investment in agritech startups reached a record high of US$22.3

Sustainability and regenerative agriculture

The global plant-based protein market, valued at US$10.3 billion in 2020,

E-commerce and direct-to-consumer sales

The Covid-19 pandemic accelerated a trend that was already increasing:

As global trade resumes, we observe the frequency

claimed amount expanded by three folds.

Select another market (click to view)

Figure 5: Food market size

Sources: various sources, Allianz Research

Select another market (click to view)

Figure 6: Food market size

Sources: various sources, Allianz Research

Figure 7: Food Security Index 2022 (selected countries)

Sources: EIU, Allianz Research

Select another market (click to view)

We hope you found this report insightful and useful.

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