Why Sustainable Market Transformation in the agricultural sector

This is the era of Agriculture. Expectations are that due to a growing world population, economic growth and changing diets the demand for food, feed, raw materials and energy will sharply increase. It is expected that in the next 30 years food production will need to double to feed our future population of 9.3 billion people. In order to achieve this, agricultural production needs to become much more efficient and sustainable, offering challenges and opportunities for trade, investments and business.  

Agriculture offers both a challenge and an opportunity: It covers regions where 70% of the world’s poor live. Furthermore, agriculture makes up for 40% of global employment and 25-50% of the Gross Domestic Product in developing countries. On the other side, agriculture is also one of the largest emitters of greenhouse gasses (30%) globally, the largest users of potable water (70%), one of the largest drivers for deforestation, loss of biodiversity and rural poverty*.  

It is clear that we need to get agriculture future proof. 

Systemic cause requires systemic change

The current status of the agriculture sector is not the result of wrong intentions, but of system failure. For most of the products that we consume we don't know where they come from or how they were produced. Our supply chains are long and in-transparent and our global markets are designed to go for the lowest price not taking into account the longer term consequences for the sector.

If we want to make agriculture future proof we need to design market systems that function more sustainable, that reward good practices; systems that are drivers for positive change. This requires systemic change. Besides creating mainstream market demand as driver for change, support services need to be structurally strengthened and rebuild, national government policies need to be reformed and financial institutions need to learn to look at agriculture as a business opportunity and invest in its modernization; it requires a complete market transformation of the current system.

Market transformation in practice

NewForesight has a wealth of experience in sustainable market transformation. We translated this knowledge into practical and comprehensive frameworks and models that can be used to analyze and guide market and sector change. We make a distinction between four different phases of sustainable market transformation, each phase with its own characteristics, drivers, target groups and strategy:

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The Inception Phase 
Sustainability issues in a sector are initially addressed by (development) projects from NGO’s. This phase is important because it has as an agenda setting function and it demonstrates by means of ‘trial and error’ the complexity of the issues. However, projects never solve the situation structurally. The root causes of the problems are systemic and a more permanent solution is needed.

The First Mover Phase
This is an important phase. Market demand for more sustainable raw materials leads to the emerging of sustainability standards and certification models, which in turn leads to more market demand. First movers are looking for first mover advantages to capitalize on their leadership and to differentiate from their competitors. Their market demand power is an important driver from farmers to implement better practices.  

The Critical Mass Phase
In this phase it is recognized that market demand for different standards, premiums and NGO support alone is not sufficient to complete market transformation. It doesn’t lead to inclusive and structural change. Sector stakeholders recognize the need to harmonize the pre-competitive elements of standards and certification models, involve local governments to institutionalize and coordinate the agenda locally and to expand the drivers of change (i.e. link to foot printing, to carbon and water markets, access to finance, etc.).

The Level Playing Field
If successful, the speed of change is accelerating. The joint efforts of market demand and (local) governments working together and coordinated agenda’s remove final barriers lead to the tipping of the markets where sustainability is becoming a market qualifier.