Analysis on the trend of Sustainable Farming and the impact it has on F&B

Companies – Products, prices, branding and sales channels.

(500 words)

Today, the traditional farming systems account for about 15% - 26% of global Greenhouse Gas (GHG)
emissions due to excessive use of chemical fertilizers, pesticides and genetically modified crops. The
progress made in the field of agricultural technology coupled with an increase in the global population
and per capita income has laid foundation for the deployment of innovative and sustainable farming
techniques to ensure continuous supply of food resources. Recent trends suggest a rise in demand for
organic products cultivated by employing one or more sustainable farming techniques. Collaboration
made between public and private sectors has encouraged farmers to transition to organic farming to
accommodate the rising demands of global population and reduce GHG concerns. Achieving
sufficiency food production volumes with least impact on environment are the major objectives of
sustainable agriculture. In the recent years, several food and beverage (F&B) companies have
identified that sustainable farming has great potential to increase farm production while minimizing
environmental impact encountered through destructive/traditional farming.

Globally, retailers, governments, and consumers are creating huge demand for sustainable grains,
vegetables and other related products. Despite the progress made by the F&B sector, climate change,
water scarcity, insufficient resources, over production and other sustainability challenges are likely to
have a profound financial and operational risk on profitability. Private and public companies in F&B
sector have started to prioritize sustainability in their business practices to reduce GHG emissions.
This trend has made companies in the food supply to make investment, and set ambitious goals and
commitments to implement sustainable businesses practices across their supply chains. Companies
have started to develop relationship with farmers to support best practices, improve procurement
policies, and set up a variety of independent organizations to assure the sustainable production of key
ingredients.

Companies in the F&B sector are prioritizing sustainability in at least some aspects of their business
practices and profitable business models to protect ecosystem. For instance, companies such as Coca-
Cola Company and PepsiCo have undertaken “Sustainable Farming Initiative” to increase
performance in key crops by providing guidance on water and soil management, crop protection, and
implementation of appropriate supply chain systems. To develop sustainable agriculture, suitable
supply chain collaborative measure are helping farmers with securing investments, better profitable
returns with reduced expenditure on chemical fertilizers and pesticides. Production costs for organic
foods are typically higher compared to conventional products due to greater labor inputs per unit of
output.

In the recent years, United Stated has witnessed a tremendous growth (increase by app. 53%) in the
sales of organic food products. By creating an economically sustainable business model (direct sales
and wholesale sales), farmers are benefiting through premium product pricing with growing value-
added markets. To effectively differentiate the product, branding and competitive pricing are
essentially important for commoditization of organic products. Small scale sustainable farming leads
to higher product pricing in comparison to large scale production. The understanding of the food value
chain and supply chain still remain a challenge inspite of several public and private initiatives.