corporate

Rethinking Food Systems at Davos 2023 – Shifting a ten trillion dollar industry

Rethinking Food Systems at Davos 2023 – Shifting a ten trillion dollar industry
© Sam Churchill and Goals House

It is estimated that one out of every eight people on the planet is a farmer1. Add to that the millions of people who work elsewhere in the food and agriculture value chain – producing fertilisers or manufacturing farming equipment – the list goes on. What’s clear is that it’s a sprawling, labyrinthine giant.

Food and agriculture beats all other industries for numbers of both workers and producers – between them, the world’s one billion farmers run well over 500 million farms, most of them small-holdings less than two hectares in size.2 With annual revenue of USD 10 trillion, this giant industry is a major contributor to global GDP3.

It is also a major contributor to climate change. Around one fourth of all greenhouse gas emissions come from Agriculture, Food and other Land Use (AFOLU) systems, and the industry is the biggest transgressor across “planetary boundaries”, the environmental safe zones that must be preserved in order to maintain a stable ecology.

Around one third of all greenhouse gas emissions come from Agriculture, Food and other Land Use (AFOLU) systems, and the industry is the biggest transgressor of our planetary boundaries…

The industry is also the most vulnerable to the threat created by climate change, with crops increasingly at risk from the floods, droughts, wildfires and heatwaves that are being caused by rising global temperatures.

At the World Economic Forum Annual Meeting in Davos, Lombard Odier hosted a roundtable discussion in collaboration with Goals House, where experts and thought leaders from the food and agriculture industry, academia, finance, politics and civil society gathered to debate the urgent question of this giant at risk, and to explore how a global shift to sustainable diets and food systems can be achieved while maintaining affordability and accessibility.

 

A stark picture

Hubert Keller, Lombard Odier’s Senior Managing Partner, began by painting the stark picture of the sector’s impact on environmental stability.

“When we think about environmental issues we mainly think about energy,” he said. “But while energy is critical, there is no sector more consequential to our overall environmental stability than Agriculture, Food and other Land Use (AFOLU). It is the number one transgressor of our planetary boundaries, responsible for 90% of global deforestation, 70% of species threatened with loss, 65% of agrochemical pollution and the use of 70% of global freshwater supplies.4

Much of the problem, he explained, lies in the inefficient way the sector operates. “We have claimed half of all habitable land on earth for agriculture. 80% of that land goes into producing meat and dairy. This is the case even though meat provides only 20% of the world’s calories, is more water intensive than producing plant-based foods, and creates double the greenhouse gas emissions5. Today’s AFOLU systems are highly problematic and inefficient.”

In transforming the sector, there is one key imperative, he said. “To create sustainable food systems we must return 1 billion hectares of agricultural land to nature – this is an area roughly the size of China. We must shift away from animal-based consumption towards plant-based consumption. We must produce different foods, for different species, and we must produce them differently. They must also be distributed more efficiently.”

“This is essential if we are to preserve planetary, human and economic health,” he concluded.

To create sustainable food systems we must return 1 billion hectares of agricultural land to nature – this is an area roughly the size of China

Read also: Cutting out the middleman: the problem with meat

 

Remembering the role of smallholders

Guest speaker Sabrina Elba, actress, model, and Goodwill Ambassador for the UN’s International Fund for Agriculture Development (IFAD), as well as joint winner (along with her husband, actor Idris Elba) of this year’s Crystal Award, agreed that changing our food systems is essential if we are to tackle climate change and protect biodiversity.

Picking up on Hubert Keller’s theme of producing different foods in different ways, the good news, she said, is that many of the solutions – such as regenerative agricultural practices, alternative proteins, and decarbonised fertilisers – are already out there.

However, she warned, in the push to create this new food system, we must not forget the world’s small-holder farmers. “We must understand their importance,” she said. “80% of Asia and Africa are fed by these small-holdings – that’s one third of the entire population of the world being fed by small-holder farmers6.”

 

Watch our video on Sabrina Elba's efforts in advocating for small-holding farmers here at Davos:

As a first-generation Canadian immigrant of Somalian origin, she gave insight into just how important small-holdings are to rural communities, and to women in particular. “My mother told me, ‘The land I lived off was the most important asset I had.’ Job security and opportunities are imperative. There are 1.7 billion rural women and girls, and on almost every development indicator they do worse than men. We must talk about these women and these farmers.”

“They are bearing the brunt of climate change. These are the people that feed us. How can we source our food from them, and then not support them? As we transition our food systems, we need to help them adapt and transition their farming practices, to help bring rural communities out of poverty, and to empower women.”

…changing our food systems is essential if we are to tackle climate change and protect biodiversity

This must not be seen as a “them” problem, she concluded, “…it is our problem” especially as these communities are not the culprits when it comes to climate change and can massively help in combatting its devastating effects.

Creating an equitable future was the overarching message from Nicola Gryczka, Co-Founder of Social Gastronomy Movement (SGM). Reiterating Sabrina Elba's position on underrepresented communities, Nicole explained how SGM aim to cultivate connections to create positive changes in local food systems coupled with coaching young women and social entrepreneurs around the world. Nicola outlined the need to "create grass roots solutions on a community level" by employing "technological advancements, coordination and willingness". She went on to say that famers must to be given a seat "at the table...we have to speak with them and not about them" in order to redress the imbalance of power.

 

A vicious cycle

While small-holder farming communities are significantly more vulnerable to climate change, since early 2022, farmers around the world have been united by a common problem – the spiralling cost of fertilisers. With Russia, Belarus and Ukraine all important exporters of the raw materials needed for fertiliser production, Alzbeta Klein, CEO of the International Fertiliser Association, warned, “The war in Ukraine is creating supply chain issues due to pricing. We do not have enough. We have to make it affordable for farmers to produce and connect to the global market.”

According to Arne Cartridge, Special Adviser at fertiliser giant Yara International, farmers are united by another problem. “We must talk about soil health,” he said. “It is degraded and it is less productive. Farmers are having to apply more chemicals, creating a vicious cycle.”

But while the problem is the same in both the developed and developing world, rural communities often lack the resources to tackle it. “How can we support small farmers?” he asked. “Yara is trying to create a soil knowledge platform. There is so much information out there but it is fragmented. We need to make it easily available. We can help solve the problem with information.”

Read also: The CLIC® Chronicles: how global food giant Nestlé is putting regenerative agriculture at the heart of sustainable food

With monoculture farming partly responsible for degrading soils, the rise of alternative, more diverse food sources takes on extra importance

Eating better from the bottom up

With monoculture farming partly responsible for degrading soils, the rise of alternative, more diverse food sources takes on extra importance. The EAT-Lancet Commission, a report compiled by the EAT forum in conjunction with science journal The Lancet, recommends increasing dietary diversity for both human and planetary health.

Echoing Hubert Keller, Olav Kjørven, Director of Strategy at the EAT Forum, explained that for diets to become more sustainable, and enable us to feed more people using less land, we will need to double our consumption of fruits, vegetables, nuts and legumes, and cut consumption of red meat and sugar by 50%. We will also need to replace conventional agriculture with a combination of precision farming and nature-positive regenerative practices, to allow the world’s soils to recover.


Davos-WriteUp2_ArticleLOcom.jpg


Rob Opsomer, Executive Lead at the Ellen Macarthur Foundation, agreed that there must be an emphasis on regenerative practices, but said that this approach must pervade the entire food sector, not just farming. “Most of the food we eat has been designed,” he said. “Someone has chosen the ingredients for you, and designed the production. Who is doing that? A small group of people in the biggest brands and retailers influence 40% of the way agricultural land is being used.” Calling for a new, bottom-up approach, he said, “We have to design using more diverse ingredients. We have to design for regenerative outcomes and solutions.”

Read also: What is the role of investors in financing the transition towards sustainable food systems?

We estimate the sustainability transition in AFOLU systems will unlock a USD 1.5 trillion market by 2030s

Financing the shift

Against this backdrop, Lombard Odier’s Hubert Keller turned to the question of how this sector-wide transformation can be achieved.

“We estimate the sustainability transition in AFOLU systems will unlock a USD 1.5 trillion market by 2030,” he said. “Ultimately, improved economics and the prospect of green revenues will be key to creating the flow of investment. For instance, we expect plant-based proteins – such as burgers made with soy or peas – to reach price parity with animal-based proteins this year. And other alternative proteins – such as those made from microorganisms like fungi – to hit parity by 2025.7

Read also: Food that feeds the planet: Building Bridges 2022

“To accelerate this there must be cooperation across the industry. We need corporate transparency on food sector emissions. And, as investors, we need visibility on how business models will evolve so that we can invest effectively.”

“There is also the opportunity of subsidies. Today, there is between USD 500 and 700 billion of subsidies in the agriculture sector globally. Some of these are misaligned with climate targets. These need to be redeployed to meet government climate and biodiversity targets, and reduce public health costs related to poor diets.”

“As the population grows we will need to feed 25% more people with 20% less land,” he concluded. “How do you shift an industry worth USD 10 trillion? We think it’s not only possible, it’s a massive opportunity.”


 

Map of the Month: How Many People Work in Agriculture? - Resource Watch Blog
Small family farmers produce a third of the world’s food - World | ReliefWeb
Food Systems I Lombard OdierZ
4 Idem
5 Idem
Factsheet_SMALLHOLDERS.pdf (fao.org)
Food Systems I Lombard Odier

Important information

This document is issued by Bank Lombard Odier & Co Ltd or an entity of the Group (hereinafter “Lombard Odier”). It is not intended for distribution, publication, or use in any jurisdiction where such distribution, publication, or use would be unlawful, nor is it aimed at any person or entity to whom it would be unlawful to address such a document. This document was not prepared by the Financial Research Department of Lombard Odier.

Read more.

 

let's talk.
share.
newsletter.