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Supply, demand shift ‘largest risk to farm sector’

Dubai, July 24, 2014

The fundamentals of supply and demand are causing concern, with increased consumption in emerging market, climate change and natural disasters affecting supply, while urbanisation in emerging markets lead to a decline in agricultural workforce, according to a survey.
 
The survey on food and agri-businesses by legal practice Norton Rose Fulbright, titled ‘Risks and opportunities in a changing global market,’ revealed that despite the concern, about 59 per cent of respondents expected to increase their investment in agribusiness in the next 12 months, which 48 per cent considered investing in transport and other infrastructure to support food production.
 
About 71 per cent of respondents believed that there will be an increase in take-up of genetically modified food over the next two years as consumers and retailers become more receptive.
 
About 51 per cent noted that they had noticed an increased availability of finance in the last 12 to 18 months. The varied sources of capital included private equity, bank debt and sovereign wealth funds.
 
A vast majority of respondents, that is about 97 per cent, said that BRIC nationsl will continue to have a significant impact as producers and consumers and noted that the roles of Africa and Asia are becoming increasingly prevalent.
 
The respondents pointed to the huge demand coming from China, while also expecting China to be the biggest investor in the global food and agribusiness sector, followed closely by the US.
 
Martin McCann, global head of infrastructure, mining and commodities, said: “Clearly there is an increasing global demand for food and agricultural products, which continues to be principally led by rising middle class in emerging markets. Alongside this are factors such as natural disasters which are causing concern in the global industry. 
 
“While there are a number of challenges, there can also be rewards. Increasing participation from Africa and Asia will play a key role in global growth of the market.”
 
Glenn Hall, a partner, said: “Increasing access to diversified sources of finance is encouraging for the agri sector. Further investment and the rise in popularity of innovative products will continue to support the industry. 
 
“Africa is still seen by the industry as a risky place to do business, although there is growing appreciation of the variation between different parts of the continent. But the long term potential is clear as both a producer and a consumer market for agribusiness.” - TradeArabia News Service



Tags: agriculture | Supply | demand |

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