Agrifood Sector Risk Report

The agrifood sector plays a vital role in global food security, connecting agriculture with food production and distribution. Despite its essential nature, the sector faces rising challenges from climate change, supply chain disruptions, and shifting consumer demands.

Strengths & Weaknesses

Market Growth Driven by Population

The market continues on a steady upward trajectory, primarily fueled by an increasing global population.

Strong Pricing Power Among Producers

Many companies and producers possess significant pricing power, enabling them to maximize profits effectively.

Diversifying Consumer Demand

There is a growing interest in alternative products, including plant-based proteins and other innovative food options.

Climate Change Impact on Agriculture

The agricultural sector faces rising risks due to climate change, with extreme weather events like floods and droughts threatening crops and livestock.

Rising Operational Costs

Food-processing and packaged-food companies are dealing with surging costs for energy, transportation, and raw materials, which are cutting into profitability.

Labor Shortages Affecting Production

A notable shortage of labor, especially in the upstream sector and across Western Europe, is creating challenges in maintaining production and efficiency.

Inflation Intensifies Pricing Pressures

Global inflation has increased the intensity of price competition, making it harder for businesses to preserve their profit margins.

Sector Overview

What to watch ?

The food and agriculture industry is facing major shifts due to global events, climate change, and evolving consumer habits. Here are the key trends:

The Ukraine conflict has pushed many countries to secure their food supplies through stockpiling and export restrictions, reshaping global trade dynamics.
Irregular weather patterns and events like droughts, floods, and wildfires—fueled by El Niño and La Niña—are disrupting farming and reducing yields.
Despite easing energy pressures, high fuel and fertilizer prices continue to squeeze profit margins across the sector.
Rising use of weight-loss drugs, growth in plant-based diets, and increased online grocery shopping are forcing the industry to adapt quickly.

Global Agrifood Market: Growth and Key Insights

The global agrifood industry is growing rapidly, driven by population growth, innovation, and shifting consumer demands. However, global events like the Ukraine conflict and price fluctuations continue to influence the market.

The market grew from USD 8.3 trillion (2021) to an expected USD 9.1 trillion (2024) and is projected to reach USD 12.5 trillion by 2029, with a CAGR of 6.5% (2024–2029).
Expansion is fueled by population increase, technological advancements, and changing consumer habits.
The Ukraine conflict has added uncertainty, disrupting trade and supply chains.
While most food prices stabilized in 2023, coffee and cocoa hit record highs. Overall, prices still exceed pre-pandemic levels.

Subsectors in the Agrifood Industry

Upstream (Agricultural Production)

Covers businesses involved in growing crops and raising livestock, including grains, fruits, vegetables, and animals.

Downstream (Food Processing & Distribution)

Includes companies that process, package, transport, and transform raw agricultural products into ready-to-eat foods.

Beverages Sector

Encompasses producers and distributors of non-alcoholic drinks (juices, sodas, tea, coffee, water) and alcoholic beverages (beer, wine, spirits).