Key Takeaways
- Financial and Environmental Pressures on Farmers: Farmers globally are grappling with declining incomes, stringent environmental regulations, and increased import competition, complicating their operational landscapes.
- Balancing Act Between Profitability and Sustainability: The agrifood sector faces the dual challenge of responsibly meeting the growing food demand while transitioning to sustainable practices without compromising farmers’ profitability.
- Need for Policy Repurposing: Current agricultural policies are inefficient, offering poor returns for farmers and minimal environmental benefits. There is critical to restructure these policies to provide better incentives for sustainable practices.
- Potential of Green Innovations: Innovations in agriculture, particularly those encouraging green practices, can significantly reduce emissions, increase productivity, and offer substantial environmental and economic benefits.
- Digital Transformation as a Catalyst: Embracing digital technologies, such as AI, can dramatically enhance farming practices, improve yields, and reduce environmental impacts, yet adoption rates among small to medium-sized farms remain low.
Farmers all over the world are speaking out and protesting as they face challenges such as decreasing incomes, strict environmental regulations, rising bureaucracy, and competition from imports.
Many farmers feel trapped between the public’s demand for low-priced food and the need to adopt environmentally friendly processes, while the increase in input costs greatly affects their profits.
Securing affordable access to healthy, nutritious, and safe food for the world’s growing population in the face of climate change and the widespread depletion of resources is a significant global challenge. Furthermore, food demand is expected to rise rapidly until 2050.
Europe’s recent wave of protests could be an early warning sign of what’s to come if action is not taken to address this global issue with appropriate measures and policies.
No profitability, no sustainability.
The global agrifood system faces the crucial challenge of providing food for an additional two billion people by 2050 while also becoming net-zero to meet the objectives of the Paris Agreement. To achieve this, the system needs to transform itself to become more resilient, nutritious, inclusive, and net-zero. The estimated cost for this transformation is around 500 USD billion per year for the next ten years.
Agriculture and the food industry are responsible for generating one-third of greenhouse gas emissions and are major contributors to climate change. However, sustainability cannot be achieved without productive and profitable crop production. Therefore, it is important to prioritize solutions that support farmers in optimizing their practices while overcoming financial burdens to make more profit and benefit the planet.
Adjusting agriculture support policies and adopting a holistic approach to addressing both sides of the problem is essential. Sustainability cannot be achieved without profitability, and vice versa. It is crucial to understand that the global agrifood system needs to produce more but better while also tackling climate change and achieving higher productivity.
Repurposing public policies.
According to FAO, global support to agricultural producers currently accounts for almost 540 USD billion a year, or 15 percent of total agricultural production value. Such policies encompass a broad range of government instruments to support the agriculture sector, which are typically funded by taxpayers and consumers. However, current support for agriculture delivers low value for money as a way of helping farmers.
According to the World Bank, for every dollar of public support, the return to farmers is just 35 cents. Moreover, if the “business as usual” model continues, GHG emissions from agriculture would increase by 58 percent from now until 2040. So current models are not benefiting the planet either.
There is a pressing need to change the way we support agriculture in order to give more incentives to farmers and protect the environment. The World Bank and International Food Policy Research Institute (IFPRI) recently conducted a study that looked at four different scenarios for changing current agricultural policies to achieve better economic, environmental, social, nutritional, and climate outcomes.
If we continue with the current “business as usual” policy, the agricultural value will increase by about 3% per year but with double the emissions from agricultural production. If we rearrange the current domestic support, it will have limited effects on emissions. Replacing all subsidies with a uniform set would have little effect on emissions while transferring all subsidies to low-emission cropping activities would paradoxically increase emissions due to global land-use change.
The best solution to current agrifood industry challenges is to repurpose a part of current domestic support as incentives to develop and adopt green innovations. Investing in innovation and technology adoption could reduce emissions and costs and potentially deliver substantial gains for the planet, the economy, and people.
World Bank and IFPRI simulation suggests that investments in innovations could raise productivity by 30 percent and reduce emissions from agriculture and land use by more than 40 percent, returning 105 million hectares of agricultural land to natural habitats while delivering substantial gains in poverty reduction, nutrition, and the overall economy.
To achieve this, concerted action is needed, such as supporting low—and middle-income countries facing fiscal constraints, reviewing current policies, and prioritizing green investments.
The solution is here; it’s time to change.
Although agriculture has seen a technological renaissance in the past decade, the adoption of these technologies at medium-sized and small farms remains less than 5% in most markets. This means that the digitalization of agriculture is still in its early stages, making it important to accelerate its adoption. The most significant transformations across industries depend on digitalization, which involves education, productivity improvement, and lowering environmental impact. Digital transformation is critical for organizations to continuously improve and change. Therefore, digital transformation is necessary in agriculture to overcome some of the main challenges that the industry is facing today. There is a lack of digital knowledge and infrastructure, together with connectivity issues, budget constraints, and an overall skepticism toward technology among farmers worldwide. However, there is no lack of technologies and innovations, only a stronger incentive and support from different stakeholders, from the public to the private sector.
For example, AI has massive potential in all industries, including agriculture. Generative AI, in particular, offers a fast-scaling technology solution that doesn’t require a major shift in business processes, deeper tech knowledge, or experience but can provide valuable support to farmers. It has an immediate role in democratizing access to technology and empowering farms of all sizes worldwide with knowledge and advice in their language. Agrifood companies worldwide can now easily launch their AI-driven agronomy advisor in just a few weeks with the support of AI platforms like AGRIVI Engage, which are available as managed services requiring no internal AI know-how from agri-food companies. This will allow companies to empower all farms in their eco-systems with immediate access to knowledge and advice through channels they already use, such as communications platforms like WhatsApp, Viber, Telegram, and others.
Nevertheless, the status quo is the worst scenario when it comes to food production. Pressure on making global food production sustainable has never been greater, and the pressures will be even more intense in the future. The food system needs to change – a measurable, tangible change. We could talk about how important it is to change something, but the status quo will prevail if we don’t take real action.
Written by: Matija Zulj, CEO and founder at AGRIVI
