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Sector Profiles

Food and Agribusiness Industry

Major Industry Trends

Despite the accelerating industrialization of the globe over the past 100 years, and the rapid growth of manufacturing industry across the developing world over the past 20 years, around four in 10 of the total global population remain involved in agriculture, according to the United Nations Food and Agriculture Organization (FAO). The FAO says that in 2009 more than one billion people, or around one in three workers, were engaged in agriculture. There are huge variations across the globe. In sub-Saharan Africa around 60% of the workforce is engaged in farming. In the United States, by contrast, less than 1% of the population claim farming as an occupation. Until 2000 agriculture was the mainstay of employment around the world. Since then, the services sector has assumed this mantle and the gap between the two has widened.

Food Prices

Food prices remained high but steady in 2013 according to the FAO. It said that food prices during the year were the third highest on record. The FAO Food Price Index (a trade-weighted index that measures prices of five major food commodities on international markets: cereals, dairy products, meat, sugar, and vegetable oils) averaged 209.9 points in 2013—down 1.6% from 2012, and well below 2011’s peak of 230.1. Good supplies depressed the international price of cereals (with the exception of rice), oils, and sugar. In contrast, dairy prices peaked in 2013, and meat also hit a record.

However, in March 2014, the FAO warned that world food prices were rising at their strongest pace since the jump provoked by US drought in 2011, and that this was happening on the back of “brisk demand” and weather setbacks, as well as the Ukrainian crisis. The Ukraine is the world’s third largest exporter of corn, the sixth largest of wheat, and almost all of that is grown in the Crimea and other eastern parts of the country. In November 2013, the FAO warned that food prices would continue to rise in the coming decade, eclipsing the price hikes of 2008—which triggered riots across the developing world.

Western Diets (and Health Problems) Sweep the Globe

Rising living standards and changing patterns of food consumption in emerging countries are other key factors driving the global demand for food and putting upward pressure on commodity prices. Consumption of dairy products in countries such as India and China used to be very low, but is now surging to such an extent that it is driving up prices for dairy products around the world. Similar trends are occurring in meat, vegetable oils, and many other areas.

In January 2014, the United Kingdom’s Overseas Development Institute (ODI) said that the number of overweight and obese adults in the developing world had almost quadrupled to around one billion since 1980. It said that one in three people worldwide were now overweight and urged governments to do more to influence diets. Globally, the percentage of adults who were overweight or obese (classed as having a body mass index greater than 25, where “normal is 18.5 to 25) grew from 23% to 34% between 1980 and 2008. It added that most of this increase was seen in the developing world, particularly in countries where incomes were rising, such as Egypt and Mexico.

The ODI’s “Future diets” report, published in the same month, said that this was due to changing diets and a shift from eating cereals and grains to the consumption of more fats, sugar, oils, and animal products. A total of 904 million people in developing countries are now classed as overweight or above, with a body mass index of more than 25, up from 250 million in 1980. This compared to 557 million in high-income countries. Over the same period, the global population nearly doubled.

The regions of North Africa, the Middle East, and Latin America saw large increases in overweight and obesity rates to a level on a par with Europe—around 58%. Although North America still has the highest percentage of overweight adults, at 70%, regions such as Australasia and southern Latin America are now not far behind, with 63%. The greatest growth in overweight people occurred in Southeast Asia, where the percentage tripled from a lower starting point of 7% to 22%. Among individual countries, the ODI report found that overweight and obesity rates had almost doubled in China and Mexico, and had risen by a third in South Africa since 1980. Many countries in the Middle East also had a high percentage of overweight adults.

The Growing Power of Supermarkets and the Impact on Agribusiness

The growing power of supermarkets around the world is also having an enormous impact on agribusiness and the food chain. The phenomenon has already been well documented in Western countries. Up until the early 1960s, small neighborhood grocery shops, independent butchers, and local fruit and vegetable shops dominated food retailing in many Western countries, such as the United Kingdom.

Today, supermarkets account for more than 90% of food sales in the United Kingdom. Furthermore, four major chains—Tesco, Asda (part of US giant Wal-Mart), Sainsbury’s, and Morrisons—account for around 75% of sales. Similar trends can be seen in other developed countries and, increasingly, in emerging economies around the world. Supermarkets entered Latin America in the early 1990s, and Southeast Asia in the latter part of the decade. They are now sweeping across India, China, Eastern Europe, and parts of Africa. In many countries, supermarkets now account for around 50% of food sales. In the US, supermarket chains account for around 60% of sales.

Whereas suppliers and wholesalers could once dictate prices—and even tell retailers which products they could sell—the balance of power has now shifted decisively to the retailers, which are in a position to demand ever lower prices and improved terms. The major supermarket chains increasingly source their produce from around the world, placing further pressure on local suppliers, which either meet the demands of the major chains or go under. Inevitably, this trend affects the person at the bottom of the supply chain: the farmer. The supermarkets are also using the increasing acceptance and popularity of their own brands to exert pressure on suppliers.

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Market Analysis

The Size of the Global Food Market

According to Frost & Sullivan’s food and agricultural research practice, the cumulative value of all revenue derived from the global food and beverage value chain—“farm-to-fork”—was well over US$20 trillion dollars in 2012, representing nearly 30% of the entire world’s economy.

Global Trends by Commodity


The FAO estimated world cereal production in 2013 (published in March 2014 at at a record 2,515 million tonnes (including milled rice), 13 million tonnes above the February forecast and 9% more than the previous year’s level. The latest upward adjustment mostly reflects a significant revision to the estimates for Australia and some upward revision also of the figures for wheat and coarse grains in China.

The FAO said that it was still too early for even a preliminary forecast of global cereal output in 2014. However, it forecast that world wheat production in 2014 would amount to 704 million tonnes, a fall of 1.7% from the 2013 record harvest. However, it would still be the second largest crop ever. The decrease is expected largely due to a reduction in area and yields in Canada after a record high in 2013, and in the European CIS states, where yields are expected to return to average levels after relatively high levels in 2013. The overall reductions expected would more than offset the few, and less marked, increases that are foreseen this year, mainly in the European Union, India, and the United States, the FAO said.


Rice is the staple food for around 2.5 billion people, or more than one-third of the global population. The global price of rice has been increasing for much of the past decade. According to the International Rice Research Institute (IRRI), a nonprofit research and education center, this is because the world is consuming more rice than it is producing, and global stocks are rapidly becoming depleted (current stocks are at their lowest levels since 1988). A number of factors are causing this imbalance between supply and demand. They include:

  • A slowdown in the growth of the rice yield. In South Asia, for example, average yield growth fell from 2.14% per year between 1970 and 1990 to 1.40% per year between 1990 and 2005, according to the IRRI.

  • In Asia, pressure on land is limiting the scope for increasing the area devoted to the cultivation of rice.

  • Governments are devoting fewer resources to agricultural research and development. The IRRI says that declining rice prices in the 1990s led to complacency by governments about the need for R&D.

  • Rice has become an increasingly popular food in Africa, leading to further pressure on global supplies.

  • Population growth is outstripping growth in rice production, a problem that is projected to worsen.

  • Rapid economic growth is increasing the pressure on agricultural land. The IRRI says that highly productive rice land has been lost to housing and industrial development, or to the cultivation of vegetables and other cash crops.

In its November 2013 “Food outlook” report the FAO said that, after several months of stability, international rice prices plunged in September. Slowing import demand is likely to weigh on the market again in 2014. Despite limited growth in 2012 and again in 2013, world production is forecast to exceed consumption, resulting in yet another increase in world rice inventories. The FAO added that, despite earlier expectations of a bumper season, the outlook for world rice production in 2013 had been downgraded amid a worsening of crop prospects in China and India, the two largest producers. As a result, the forecast for global rice production (in milled equivalent) was lowered to 494 million tonnes, implying only a modest expansion of 0.9% from the revised 2012 estimate.

The FAO added that world production was expected to exceed utilization in 2013 and 2014, resulting in a further accumulation of stocks. As a result, the stock-to-use ratio is predicted to rise from 35.7% in 2013 to 36.0% in 2014.

Meat and Meat Products

Global demand for meat has risen more than five-fold in the past 50 years, according to the FAO. In its November 2013 food outlook report the FAO said that the global trade in meat is forecast to hover around 30 million tonnes in 2013—or 10% of total production. At this level, it would be 1.1% higher than in 2012, representing a reduction in growth compared to 2012, and well below the growth rates of 6% and 7% seen in 2010 and 2011, respectively. The slowdown is a reflection of improved national supplies in a number of importing countries and a fall in production by some of the principal exporters. However, there are marked differences in trade in the different varieties of meat, with moderate growth forecast for bovine meat and a substantial increase for ovine meat (sheep/lamb), while trade in poultry may remain unchanged and pig meat may decline.

Fish and Fish Products

Fish is the main source of protein for around 1 billion people. As with meat, demand for fish is increasing rapidly, driven by population growth and rising incomes. Indeed, global per capita consumption of fish increased from 9 kg in 1961 to an estimated 16.5 kg in 2003, and to around 17.1 kg in 2008, according to the FAO.

In 2011, trade volumes and prices both saw a positive uplift, sustained by dynamic demand globally, but particularly from emerging economies. Supply fell short of demand for many farmed species, including Atlantic salmon, trout, sea bass, and sea bream. In addition, growing domestic consumption of local fish products, especially in Asia and South America, is constraining their availability for export. In its November 2013 food outlook report, the FAO said that both values and volumes entering the international fish markets are showing moderate growth. The market situation overall continues to be difficult, in particular in traditional developed country markets. The slightly higher prices for some farmed species are more an outcome of supply shortages than strong demand.

The FAO fish price index shows that overall price levels remain high, although they have receded from the top levels of late 2012. Supply problems for farmed salmon and shrimp have boosted aquaculture quotations, whereas prices of wild-caught whitefish species, tuna, and pelagic species have weakened. Prices of other farmed species, such as sea bass and sea bream, have fallen due to supply increases far exceeding immediate market requirements.

Dairy Products, Eggs, Oils, and Fats

World milk production in 2013 is forecast to have grown by 1.9% to 780 million tonnes—a rate similar to that in previous years. Asia and Latin America and the Caribbean are expected to account for most of the increase, with only limited growth elsewhere.

In its November 2013 food outlook report, the FAO said that world trade in dairy products is projected to fall by 0.9% in 2013 to 53.0 million tonnes of milk equivalent amid supply limitations. This compares with an annual average increase of 7% in the previous four years.

Asia will remain the main market for dairy products, accounting for some 55% of world imports, followed by Africa, with 15%. Significant additional demand is expected from China, the Islamic Republic of Iran, Singapore, and Pakistan. Elsewhere in Asia, Saudi Arabia, the United Arab Emirates, Indonesia, Japan, the Philippines, Malaysia, Vietnam, and Thailand remain important markets, but their import levels are not expected to change markedly and in some cases may decrease. In Africa, elevated international prices are projected to reduce imports as a whole. The principal importers that may be affected are Nigeria, Libya, and South Africa. In Latin America and the Caribbean a number of significant milk powder importing countries, including Venezuela, Cuba, Colombia, Brazil, and Peru, may also see purchases constrained by high prices. By contrast, imports by the Russian Federation are expected to increase.

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Further reading on the Food and Agribusiness industry



  • Food and Agriculture Organization of the United Nations (FAO):
  • International Food Policy Research Institute (IFPRI):
  • International Rice Research Institute (IRRI):
  • Key Note provides research on a wide range of markets, including food:
  • US Department of Agriculture (USDA):

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