New Business Models in Food and Agriculture Could Create a US$2.3 Trillion Windfall

Companies could unlock US$2.3 trillion a year in the food and agriculture sectors with an annual investment of US$320 billion in sustainable business models by 2030, a 7-fold return on investment. This could also lead to more than 80 million jobs, according to a new report, "Valuing the SDG Prize in Food & Agriculture", from the Business and Sustainable Development Commission (BSDC). The release of the report coincides with World Food Day 2016 on the 16th of October.

The opportunities are broken down across 14 areas, including food waste, farming technology, low-income food markets, micro-irrigation, restoring land and forests, product reformulation, changing diets, aquaculture, reducing package waste, cattle intensification and urban agriculture. Researchers estimate a range of value for each opportunity; the lowest in the range is US$15 billion per year (for cattle intensification) while the highest goes up to US$405 billion per year (for reducing food waste across the production process, or value chain).

Of the 80 million jobs the report estimates could be created by 2030, 90% could be in developing countries, including 21 million in Africa and more than 49 million in Asia. The report further breaks down job creation potential in Asia to 22 million in India, 12 million in China, and the remaining 15 million in developing Asia. There could also be an additional 5 million new jobs in Latin America.

“As the world’s population is expected to increase by another one billion by 2030, the global food and agriculture system requires a new way of doing business, and new approaches to feed more than 800 million people who today suffer from chronic hunger as well as to meet future demand,” said Lord Mark Malloch-Brown, Chair of the Business and Sustainable Development Commission. “This report makes clear both the social and economic incentives for companies to seize upon the SDGs as compelling growth opportunities. It is part of our larger argument for why the private sector must accelerate new business models that open truly sustainable and inclusive markets.”

The authors caution that the annual investments needed to open these market opportunities must be scaled significantly, requiring an estimated US$320 billion a year to unlock these opportunities by 2030. They argue that the current capital base in 31 leading agriculture funds is just under US$4 billion a year—less than 1.5% the annual investment needed to capture these opportunities. Partnering with government will also be critical to put in place enabling policies and the right regulatory frameworks as well as to advance research for facilitating product innovation.

The report looks at how food and agriculture businesses can experience growth by pursuing sustainable and inclusive business models aligned with the Sustainable Development Goals (SDGs), or Global Goals.

The research shows that developing countries have the most to gain from SDG-aligned business opportunities, capturing more than two-thirds of the estimated economic value due to their large shares of arable land, high future consumption growth and large potential efficiency gains. Across regions, the biggest business opportunity in developing Asia is in cutting food waste across the value chain; while in developed Asian countries like South Korea and Japan, the opportunity is greatest in consumer waste. In India, low-income food markets are the strongest opportunity for businesses, and in Latin America and Africa, it is forest ecosystem services.

“Many commentators have incorrectly perceived the SDGs to represent an additional headwind to growth and profitability. The reality is that in many cases the SDGs offer a new and higher quality channel for economic growth and business profitability,” said Dr. Fraser Thompson, Director, AlphaBeta, which conducted the research for the Business Commission. “This is particularly the case in these sectors. This study is the first attempt to provide a holistic assessment and quantification of the business opportunities related to the SDGs in food and agriculture.”

"Valuing the SDG Prize in Food & Agriculture" is part of a larger body of research that quantifies the value of business opportunities across four key systems, including cities, health and well-being, and energy and materials. The findings for these systems will be revealed in the Business Commission’s flagship report, to be launched in January 2017. The report will show how the Sustainable Development Goals (SDGs) —17 objectives to end poverty, reduce inequality and tackle climate change and other urgent challenges by 2030—provide the private sector with the framework for achieving sustainable and inclusive growth. The report will also cover the new business models and financing required to open these opportunities, and will include key action points for the private sector to take the findings forward and accelerate.

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