World Economic Forum
This article originally appeared on World Economic Forum.
The global food system is a marvel of human achievement. It feeds 7.9 billion people, employs 40% of the world’s population, and generates a third of the global GDP. But at the same time, agriculture places a heavy burden on the environment, and the economic benefits are uneven.
An inclusive and sustainable global food system
We need to act more quickly to build a more sustainable, inclusive, and healthy food system. There are fewer than nine annual planting cycles left to meet key milestones of the Paris Agreement and the United Nations Sustainable Development Goals.
Real progress depends on urgently tackling three paradoxes.
Fixing our food system depends on solving three paradoxes
1) Consumers say they want to buy, but often don’t
Consumers around the world value sustainable food offerings. In a recent Bain & Company survey, 80% of European consumers report caring about sustainability, and 14% say ESG considerations are their main purchase criteria. Eighty-seven percent are willing to pay more for products made in an environmentally and socially responsible way. The figures are similar in Asia and the US.
Unfortunately, shoppers’ high level of interest is not consistently reflected in what lands in their carts. Sustainable options often carry too high a price tag, and while sustainability is important to consumers, other factors are too, including taste, quality, and health benefits. Shoppers are also frustrated by how challenging it can be to get the information and guidance needed to evaluate a product’s sustainability. They want brands to provide clearer, simpler information.
2) Farmers would change, but often can’t
Individual farmers are critical to creating a more sustainable food system. As stewards of the land, farmers want to see it thrive, but farming is their livelihood, and they often operate on thin margins.
Studies show that, over time, there is an economic benefit to shifting to the regenerative farming and grazing practices that help fight climate change by rebuilding soil’s organic matter, pulling carbon from the atmosphere and sequestering it in the ground. However, adopting these practices costs money and involves significant change, and farmers are looking for proof that it’s worth the investment.
3) The market should support, but often doesn’t
Our food system is optimized for scale and efficiency and is centered on commodities that meet common standards. Farmers work to produce those commodities, and food companies rely on them to create consistent products. Operated at high volumes, it’s an incredibly efficient system, but sustainability simply isn’t factored in.
Transitioning from a food system aimed at maximizing yield and efficiency to one that also rewards how food is grown will require fresh thinking, collaboration, and coordination among key market participants.
Five actions can break these paradoxes and speed food systems’ transformation.
- Shifting consumption. Some companies are successfully helping consumers switch to healthier and more sustainable options by satisfying their taste and performance expectations, clearly articulating sustainability benefits, and setting reasonable price premiums. Brands that are seen as sustainable grow two times faster than rivals, according to Bain research. Upfield, a maker of plant-based spreads, butter, creams, and cheese, is an example of a company optimizing its entire product portfolio to reduce the use of plastics, emission of carbon, and generation of waste. Scale insurgents like Beyond Meat are working to disrupt whole categories and shift consumers to tasty yet sustainable offerings.
- Embracing regenerative agriculture. Food companies can support and provide incentives to their farmer suppliers to adopt regenerative practices at scale. These incentives could include guaranteeing purchase contracts, offering premium pricing, facilitating access to technical assistance and financing, and potentially connecting farmers to carbon credit markets. Yara’s Agoro Carbon Alliance, for example, helps farmers implement practices and processes that ensure they can earn high-quality credits. Governments have a role to play too, by redirecting some of the more than $500 billion in annual agricultural subsidies toward climate-smart practices and commodities.
- Reinventing the value chain. For some commodities, the existing value chain involves such high environmental costs, inequity, and labor abuses that the only way to transform the system is to reinvent it. This often means creating value chains that are shorter, more transparent, and capable of capturing more of the product’s economic value where it is grown, which depends on key market participants—corporate buyers, governments, NGOs, and others—working together in innovative ways. That is what The Nature Conservancy and the Republic of the Marshall Islands have done in founding Pacific Island Tuna (PIT), a fully transparent producer of sustainable, fairly caught and processed canned tuna. Walmart, which is buying this tuna for sale in its stores, provides a reliable source of demand, making possible ongoing investment that helps PIT scale much more efficiently.
- Building resilient local food systems in developing markets. In many developing markets, especially in Africa, where food systems are nascent, yet hold significant potential, the urgency for transformation has never been greater. Public-private partnerships that prioritize support and financing for farmer-allied intermediaries—aggregators, food processors, and vertically integrated brands—are key to building resilient local food systems that enhance smallholder farmer livelihoods, create jobs, and provide more affordable nutrition. Established corporate demand can help these partnerships scale.
- Accelerating innovation. A growing tidal wave of food and agriculture-focused technologies will accelerate the transition to more sustainable practices. In developed markets, entirely new forms of technology-enabled agriculture are already taking root, while other technologies are creating healthier versions of existing foods and, in some cases, entirely new foods. Large food companies must consider what these developments mean for their innovation and technology strategy: what partnerships they might need to launch with innovative start-ups or other technology leaders, the areas in which they should acquire or invest in their own technology, and the proper level of R&D spending.
Overcoming the paradoxes of consumers, farmers, and the market will help build a food system that is strong enough to withstand cycles of global turbulence, that supports a thriving planet, healthy populations, and a prosperous society. With accelerated and committed corporate action, this is a goal within reach.