We reviewed the many agri-food trend predictions from diverse and influential published sources such as the Economist, Harvard Business Review, FAO, and Sustainable Brands. And we distilled these into the 5 practical trends that we think most organizations can pragmatically apply.
2021 may be the year when businesses intentionally learn how to structure more resilient supply chains. Improved metrics – with some tests recently published by the FAO – can help managers understand the key resilience factors that permit rural communities and farmers to bounce back from crises and disasters. COVID will pass but new crises will disrupt lives and supplies. Resilient, risk-managed supply chains have taken on greater urgency for 2021. We see 5 top trends that can make a difference.
1. Focus on the farmer: listen upstream. Inequality and social injustice are increasingly less tolerated and arouse elevated levels of risk. The influence of social movements for racial and ethnic justice will increasingly open eyes to other areas where inequality is present. Climate-related disturbances, when they occur, will serve to fuel these problems.
Brands and consumers want to know where their food comes from and there will be more and more sources of information to inform them. The role of supply chain managers will become more dynamic, more risk-oriented, and more reliant on sound data. But it’s not just data; smarter analytics now embed knowledge that is oriented to actionable decision-making. An important benefit: businesses that build deeper relationships with suppliers at origin gain an opportunity to demonstrate the kind of good behaviors that consumers value: promoting poverty alleviation, carbon neutrality, and ethical practices.
To understand supplier risks in agri-food chains, one must understand farmer resilience. Fortunately, we now have much easier ways to measure that.
Ideas for improving economic disparities – like Living Income and Living Wage – are less likely to be disregarded as outside the realm of business practices. From Taylors of Harrogate to Aldi to Tony’s Chocolonely, some businesses are making that happen. Please let us know about others you are aware of. Topics like democratization of data and data privacy for all, a result of emerging and necessary digital innovation, are logical extensions of this thinking. There is growing realization that, no matter one’s livelihood or location, data is a valuable asset that can no longer be accessed without permission and there is new debate on how to share its value.
2. More businesses using Sustainability Intelligence for decision-making and reporting. Technology-driven systems for supply chain sustainability, resilience, and ESG reporting offer integrated, real-time, data-driven processes. But software is only one part of that process, like the vehicle body is a part of an automobile. It will not get you where you want to go without a calibrated engine.
E.J. Kenney, a SAP Senior Vice President, at the 2020 Food Industry Summit described that such tech processes are “the backbone by which companies satisfied the need for top line, bottom line, and green line results, in 2020.” Our partners and clients also see them as the vehicle for rapidly expanding the functionality of ethical sourcing.
Tools like traceability help businesses to build trust and transparency and reduce risks. Digital traceability and supplier mapping is fast becoming the norm in some sectors. New technologies deliver that now, even to mid-sized companies. Walmart, Target, Tesco, McDonalds, and other leading retailers are all demanding more accountability upstream. The Better Cotton Initiative, the world’s largest cotton sustainability program, at the end of 2020 wrote “we recognise that it is time to explore going beyond this mass balance Chain of Custody model to offer full traceability and even more value…” The 2020 Cocoa Barometer reached the same assessment for the chocolate industry.
3. Greater use of common metrics as their benefits become more evident. Adopters soon realize that standardization takes learning and accountability to the next level. Standardized metrics are essential for being competitive at scale. That case has been made across the cocoa sector where leading firms are implementing systems that understand the value of reliable and consistent data already. The Inter-American Development Bank’s Platform for Sustainable Agriculture, Food and Environment (SAFE) proves the value of standard shared metrics (3 podcasts cover that). Investors and ESG experts often report that inconsistent company data and low-quality information about risks (sustainability) diminish credibility and perceived value. The Global Coffee Platform’s Coffee Data Standard – developed in partnership with COSA and an array of industry experts – with its 15 common key indicators for farm-level sustainability offers a good example of how to get there.
4. A more collaborative approach to sustainability learning is crossing competitive spaces. A trend that rose briefly in the past, it has taken on new forms and new value. Our collaborations toward standardized metrics with leading organizations such as FAO, ISEAL, and the Sustainable Food Lab began more than a decade ago and have now led to active industry-led platforms. These dynamic efforts are manifesting in smarter approaches such as the Farmer Income Lab (led by Mars, Danone, and ABInBev), the IDB-LAB’s SAFE (with dozens of partners in coffee and cocoa), the Sustainability Accounting Standards Board (SASB), and efforts at the International Cocoa Organization. All are ushering in an era of collaboration to transform challenges bigger than any one company or organization can solve.
We see greater openness to such platforms precisely because they are coupled with systems for learning so they can more viably replicate or scale innovations. They can also help understand returns on sustainability investments so that limited resources are used to good effect. An important factor in such platforms may be the credibility that comes with having a MEL system that works as well as any business system when applied. We expect to see more focused impact investment in both public and private initiatives and an increasing appetite for real results as we demonstrate that we can use data-driven knowhow to better design and continuously improve our investments and to push for performance. Trying is just no longer good enough.
5. Convergence on climate action driven by financial reporting, risk valuation, and new US support. This may be the biggest trend with the very real possibility for this to take on a prominence not yet seen. Our connectedness, for better or worse, is more evident than ever and the financial sector’s ‘aha’ moment on real ESG related to climate impacts suggest that both politics and practice may align to move forward with needed controls. We may be at the cusp of real change and as the Economist writes: “the world could turn a corner on climate change.”
 Robert S. Kaplan and David McMillan, “Reimagining the Balanced Scorecard for the ESG Era”. Harvard Business Review, Feb 3, 2021.