Global trends in agri-food

The Greek Agri-Food sector faces challenges and opportunities

• By 2050, the global Agri-Food sector will need to feed 40% more people, while arable land per person will have decreased
• At 4.7% the contribution of the Greek agricultural sector in terms of Gross Added Value
• The quality of Greek agricultural products and the ideal production conditions, the strengths of the primary sector in Greece
• The high cost of production and small and fragmented farms, the areas that need attention

The importance of the Agri-Food sector, for the Greek economy and society, the challenges it has to manage, but also the opportunities that emerge in view of a very different tomorrow, is analyzed by an extensive study prepared by jointly by EY Hellas and Piraeus Bank, under the title: "How can the Agri-Food sector face the challenges of tomorrow, today?"

The main findings of the study were presented, for the first time, on Saturday, April 9, 2022, in the context of the 7th Delphi Economic Forum, by Mr. Thanos Mavro, Partner in the Consulting Department of Services of EY Greece and Head of EY's Consumer Products and Retail Sector in Southeast Europe, and Mr. Alkis Alexandrou, General Manager of Rural Banking at Piraeus Bank.

The Agri-Food sector is crucial for the global and local economy. In Greece, the food, beverage and tobacco industry maintains the first place in the number of companies among the various branches of manufacturing (16,263 companies out of a total of 57,014) and is the largest employer in domestic manufacturing, at 39%. At the same time, in 2020, the agricultural sector contributed 4.7% of the total Gross Value Added (GVA), while it employs over 400 thousand people, or a percentage that exceeds 10% of the total employed human resources in the country. At the same time, the Agri-Food sector, as a whole, also contributes significantly to Greek exports, presenting, for the first time after several years, in 2020, a trade balance with a surplus of €207 million.

Important challenges at global and national level

Globally, the Agri-Food sector is facing enormous challenges, linked to demographic changes, the climate crisis and changing dietary habits. By 2050, the sector should feed 40% more people and increase food production by 70%, while at the same time arable land will have increased by just 10%. By then, 68% of the world's population will live in urban areas, while an estimated 12% will be undernourished, with arable land per person estimated to have fallen from 2.3 hectares today to 1.5.

At the same time, the climate crisis leads to the urgent need to take immediate measures to address serious issues related to agri-food, such as food waste, reckless use of water resources , greenhouse gas emissions, soil degradation and biodiversity loss. Today, the quality of 75% of the planet's terrestrial soils is degraded - a percentage which is expected to increase to 95% by 2050.

The war between two of the world's largest grain producers – Russia and Ukraine – has come to further intensify the issue of food sufficiency and wider challenges in the Agri-Food sector.

Eating habits are also changing rapidly, as consumers are today more aware, both in terms of health, wellness and nutrition, as well as in environmental and social issues, as he had highlighted and EY's consumer research, Future Consumer Index Greece 2021. Their access to websites, mobile apps, as well as their participation in social media, provide consumers with the possibility of faster and more complete information, influencing their attitude and loyalty them in the products they choose.

In Greece, the agricultural sector is characterized by low productivity compared to the European average, which is attributed to a number of pathogens, among which:

•  
• The level of agricultural education of farmers in the country, which is one of the lowest recorded in the EU, a phenomenon also linked to the old age of farmers
• The small size of geofarms and the low level of cooperation
• The low level of technological innovation adoption

Digital innovation, genetic and production innovations, create significant opportunities

Productivity improvements seen over the past fifty years are expected to accelerate thanks to developments, notably in digital technology and genetics. The agricultural holding of the future will take advantage of digital innovation, through a wide range of connected devices, sophisticated data collection technologies (e.g. drones, robotic field scanners, etc.) and machine learning algorithms.

At the same time, production innovations will continue to create new possibilities, which will help reduce costs, exploit new resources and limit the environmental footprint of the Agri-Food sector. The study presents, among others, developments such as vertical farming, the development of plant-based meat products, cell-based meat and "green" packaging.

The Greek Agri-Food sector through the "eyes" of its professionals

EY and Piraeus Bank also recorded, through online and personal interviews, the opinions and concerns of over 400 professionals connected to the entire chain of the Greek Agri-Food sector. These are farmers, representatives of agricultural cooperatives, professionals in the processing and packaging industries, as well as trade.

Among other things, the field research revealed that:

•  
• The great importance of the Agri-Food sector is attributed mainly to its contribution to food security and food consumption worldwide (76%) and its contribution to economic development (55%).
• li>
• Strengths of the primary sector in Greece are the quality of Greek agricultural products (74%) and the ideal production conditions (54%), while the high cost of production (70 %) and small and fragmented agricultural holdings (42%).
• The most important consumer trends, which directly affect the operation of the Agri-Food sector, are the increased importance that consumers now attach to transparency in the source and origin of products and the priority that attribute to healthy products.
• Among the changes, which could improve the operation and strengthen the performance of the Agri-Food sector, financing on more favorable terms with the use of financial tools and the improvement of services offered by the State.
• The most important effects of the new Common Agricultural Policy (CAP) for the sector in the coming years are the support for the implementation of investments for the modernization of production units (41%) and the facilitation of new farmers entering the profession (28%).
• The most important global trends, which will affect Agri-Food as a whole in the future, are considered to be changing consumption habits (46%) and the effects of climate change and new environmental conditions (36 %).
• E-commerce (57%) and the development of Contract Agriculture and Livestock ( 37%).

Conclusions and proposals for the Agri-Food sector

The research results in the formulation of a series of proposals for the shielding, strengthening and transformation of the Agri-Food sector in Greece. Specifically:

1. Holistic approach to the Agri-Food chain, through the development of resilient and sustainable value chains
2. Formulating a modern and integrated development plan
3. Organizational, functional and digital transformation of all businesses that belong to the value chain of the Agri-Food sector, with people at the center
4. Facilitating the development of synergies, partnerships, commercial distribution platforms, as well as a cooperative spirit, among all members of the Agri-Food sector
5. Emphasis on training and strengthening the skills of human resources and effective attraction of new producers
6. Developing extroversion with coordinated and professional export marketing
7. Effective and modern branding
8. Implementation of important infrastructure projects, which will facilitate all parts of the Agri-Food sector
9. Protection of the environment, by adopting modern production methods and technology throughout the value chain
10. Use of all available financial tools, with an emphasis on the CAP and the Recovery and Resilience Fund
11. Reducing food waste

On behalf of EY Greece, Mr. Thanos Mavros, in the context of the presentation of the study, said: "The Agri-Food sector is a catalyst for economic development, strengthens social cohesion, supports the efforts to eradicate poverty, while being directly involved in the battle we are all fighting to deal with the environmental and climate crisis. In an era where consumer needs are rapidly changing, the next wave of agribusiness will require investment and transformation of businesses in the sector and related industries, with an emphasis on sustainability, innovation and new business models. In this national effort, EY will support with its know-how Greek agri-food businesses, in all phases of the value chain – from agricultural production, processing and packaging, to logistics, distribution and retail – with the ultimate goal, productive transformation and the creation of added, long-term value for the economy and society as a whole".

On the part of Piraeus Bank, Mr. Alkis Alexandrou, emphasized: "Looking to the future - and in the midst of a war conflict and a pandemic - we understand that in the increased pressure for food production, due to the swelling of the world population, a number of changes are added, such as the effects of climate change and the introduction of digital methods in agricultural production, changes in distribution networks and transport, the internationalization of markets, the further urbanization of the population , changing consumption patterns, changes in the way agri-food value chains are organized. Given that the agricultural sector is a key pillar of our national economy, as it contributes 4.7% of Greece's total Gross Value Added, Piraeus Bank supports an innovative and integrated development of the Greek agri-food sector, through improving the sustainability and competitiveness of healthy farms and the creation of "excellent" agricultural enterprises. Green investments with a reduced environmental footprint, as well as growth trends of export-oriented units, demonstrate key characteristics of the businesses in the agri-food sector of our country targeted by Piraeus Bank".