In a world of mounting food safety concerns, environmental challenges, technological advancements and trade tensions, the agribusiness sector is a priority across the globe. Governments are intentionally creating market conditions to increase production and exports while being mindful of the mounting global awareness of environmental issues and consumers’ growing desire for greater transparency about where their products come from and what those products contain.
Numerous countries are investing in their food and agricultural sectors to increase exports, and many governments are subsidising their agricultural sectors to that end. For example, Mexico has prioritised investment in its agriculture and livestock sectors through its National Development Plan by implementing programmes to promote small and medium agribusinesses, boost production efficiencies, set up guaranteed prices for producers and provide special financing terms to certain agricultural operations. The Netherlands, Australia, India, the United States and other countries continue to provide certain economic subsidies to support agricultural producers during droughts and economic downturns. Malaysia also subsidises its seafood sector, providing special financing and capital assistance to fishermen and aquaculture producers and processors.
Many countries have adjusted regulations in an effort to increase production, as well as encourage food and agriculture exports. India, for example, has set significant goals for increasing its agricultural exports by attempting to modify its regulatory environment to foster productivity and growth within the meat and poultry sectors, while also aiming to stabilise commodity prices for certain crops. Similarly, Argentina’s current administration has loosened restrictions for agricultural producers and processors along with actively lobbying foreign countries to accept Argentine food exports. In Australia, where a three-tiered government system creates a complex regulatory scheme, a movement to streamline agricultural regulations is emerging. Only time will tell whether streamlined regulations will boost production and whether food safety will be addressed within movement.
Some countries see investments in innovation and new production technologies as the key to expanding their agricultural sectors. The Netherlands, India, Canada and Malaysia, among other countries, are actively supporting research and development, new technology and upgrades to existing technology to enhance their agricultural production and efficiency.
But will countries’ efforts to increase agricultural exports make headway amidst increasing trade tensions? Despite a flurry of tariffs and trade restrictions, many countries are making strides in increasing agricultural trade and reducing trade barriers. The South American Mercosur trade bloc is moving toward greater regional integration of food standards with the goal of creating a common area that will boost trade and investment opportunities. Argentina has been actively negotiating new markets for Argentine products — making recent headway for Argentine food products in both Chinese and US markets. And after more than 20 years of negotiations, the European Union and four founding Mercosur countries reached a commercial trade agreement in 2019 meant to facilitate the trade of food and agricultural products amongst the countries.
Environmental concerns pose additional barriers for long- and short-term agricultural trade and food production. The EU plans to phase out imports of Malaysian palm oil for transportation fuels – driving Malaysian leaders to encourage more sustainable palm oil production in hopes of winning back the EU’s business. The Netherlands has taken a forward-looking approach with a new agribusiness vision aimed at protecting natural resources, reducing environmental impact and decreasing the use of pesticides. Similarly, Australia has spent three decades modernising its water laws to provide long-term protection of its water resources. With climate change concerns looming, some US states are considering regulating methane emitted from animal agricultural operations.
In the biotechnology realm, the regulatory regimes in some countries are addressing new crop technologies, including genetically modified (GM) crops. Australia, for example, requires pre-market approval and mandatory labelling of GM foods, while Malaysia requires prior written government approval to import, prepare, advertise or sell GM foods. However, Malaysia is also supporting programmes to educate producers about different crop varieties and new plant technologies.
As consumers demand greater transparency about the foods they consume, organic certifications and regulations have become more important than ever. India is looking to increase organic production of foods by implementing organic certification regulations as well as implementing an organic seed verification system. Multiple countries, such as the US and countries within the EU, continue to regulate food labelling claims such as organic, ‘non-GMO’ and other labels that provide signals to consumers of how certain foods are produced. This trend is likely to continue in a world where consumers are becoming increasingly aware of how their food is produced.
The push for greater transparency intersects with increased attention on food safety. The US and Canada have both undergone extensive revision of their food safety regulatory programmes. The US’s Food and Drug Administration, which regulates 80 per cent of the US food supply, has shifted its focus from responding to food safety issues after they occur to preventing food safety events from occurring in the first place, and the US’s Food and Drug Administration also requires foods imported into the US to be produced and manufactured in accordance with US food safety regulations. In that vein, Canada’s Safe Food for Canadians Regulations overhauled Canada’s food safety regulations to streamline the prior food safety regulatory system, while also aligning with US food safety regulations.
Economic conditions will almost certainly affect whether the agricultural sector thrives or shrinks in the coming decades. While economic growth has been steady in recent years, in late 2019 the International Monetary Fund’s managing director warned of a coming global slowdown expected to affect 90 per cent of the world. She noted that emerging economies like India are expected to feel the effects most strongly. In a complex world, where food is a necessity, environmental, economic, technological and political factors affect food production and supply. Those in the food and agribusiness sector would be well advised to keep their finger on the pulse of these issues.