COVID-19 and Its Impacts on AgFood Trends in 2021
It is likely that the pandemic will not be resolved overnight in its second year running. While Covid-19 has caused disruptive shocks to global food supply chains around the world at first, more lasting effects of the virus can definitely be felt on the agricultural and agtech landscape for the rest of 2021.
Renewed Focus on Sustainability
Sustainability and sustainable recovery are the latest buzzwords when it comes to discussion on how a post-covid world would look like, given the mainstream thought that climate change may have played a contributing role to the rise of the pandemic – many factors that cause climate change increases the risk of pandemics according to Harvard Chan C-CHANGE.
For consumers, this has translated to an increased focus on sustainable foods and clean labels.
Research by Palsgaard A/S has shown that four in ten consumers view environmental concerns are now more important when making food purchases since covid-19, and that two-thirds of consumers would be more willing to buy products from a company if they knew it used sustainably sourced ingredients.
At the same time, there has been more consumer demand for clean label foods, foods that are made as naturally as possible with simple, easily recognizable ingredients that are produced in a manner that is healthy for the planet as well.
According to Mordor Intelligence, sales of clean label ingredients are projected to grow 6.75% annually to $51.1 billion by 2024, with the impact of COVID-19 pushing sales figures higher.
This will likely see suppliers and manufacturers ramp up on sustainability in their sourcing, production and supply chain processes, and communicating this to consumers through branding and marketing in 2021 and beyond.
Doubling Down on Food Traceability & “Messy Middle” Supply Chain
Covid-19 food scares have been aplenty since the pandemic’s onset, with China halting imports of European salmon after traces of the coronavirus had been found on chopping boards used for imported salmon at the Xinfadi market, commonly thought to be the epicentre of the initial outbreak.
That caused Chinese consumers to avoid salmon, hitting the industry hard.
Most recently in January this year, there were claims on Chinese social media that Chilean cherries contained traces of the virus. The inner packaging of the batch of cherries tested covid-19 positive, and all unsold cherries from the same batch in Wuxi, the Jiangsu Province, have been collected and are ready for destruction, which could potentially result in massive food waste.
Although there still exists much uncertainty over the validity of these claims and the origins of the affected cherries, the whole imported fruits industry in China has been badly affected. In particular, cherry prices have plunged 90% and sellers have to resort to showing certificates of nucleic acid tests to help boost sales.
Thus, blockchain and its application for recording verified, immutable information from all stakeholders of the supply chain will definitely be a contender as part of the solution.
At the same time, product digitization will need to happen in order for food traceability to be fully effective. This gives industry players the ability to confirm the quality of the product as it moves along the supply chain, particularly through the “Messy Middle”.
Fintech For Food
It is no secret that working capital is a source of friction in global food trade. Due to the seasonality of the industry, agribusinesses have significant short-term working capital needs in the form of advances to farmers and huge inventory.
We’ve previously talked about how supply chain visibility is vital for cash flow management of agribusinesses in Covid-19. At the same time, this supply chain visibility also has potential for tapping on the unbanked or underbanked Messy Middle agribusinesses, who often are unable to obtain financing for their trades due to the industry being deemed too risky, too complex and opaque, and provide them alternative financing opportunities.
Technologies like blockchain, digital wallets and e-currencies also help to establish trust and facilitate transparency that break down the barriers to trade financing access for the agriculture industry. These have already made headway in terms of smallholder farmer financing, but the biggest potential lie in the Messy Middle, where the bulk of goods exchange hands and the biggest challenges lie. For instance, this can help small and medium traders and retailers, who often find it difficult to sustain business during covid, to get access to credit.
It is also telling of the potential of blockchain when the likes of governments, such as in Singapore and China, have also recently committed to significant resources to develop blockchain capabilities of their country.
The overall undercurrent theme for 2021 seems to be data, where visibility of flow of goods and flow of money needs to be achieved, so that we can really ensure that our food systems are efficient and visible, and that food is sustainable and safe for both people and planet.
If you are interested to learn more about our solutions, please contact email@example.com.