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Pres WCF Abidjan 27 Oct Final.pptx
2016 Partnership Meeting & Cocoa Sustainability Trade Fair
Where is the World Heading? What Needs to be on our Radar in the Next 10-20 Years?
Younes Zrikem Thursday, October 27
Pres WCF Abidjan 27 Oct Final.pptx
Pres WCF Abidjan 27 Oct Final.pptx
Planting
patterns
Contract
farming
Autonomous
machines
Fin./ Ins.
smallholders
Farm sizes
New
generation seeds
& CP
Automation
Tillage
practices
Demographic
megatrends
Consumer
trends Political
megatrends
Vertical
integration
Channel
evolution
"New" tools
Distribution as
orchestrator
Digital
transformation
Biologics
New farming
models
Crop pref.
& usage
Precision Farming
Regulations
Regional
growth
Regulatory
frame & License
to operate
R&D
productivity
& pipeline
Must win battles
& market
Leadership
Business
model
Improving education
Consumer protection
Business ethics Environment
protection Organic
GMO declaration
Food transparency
Health focus
Social sentiment (e.g.
production processes)
Rising middle class
Population growth
Changing mobility
Urbanization
Corporate farming
Consolidation of land in China
Labor substitution
Wheat in north Canada
Global warming
Smallholders in Asia
Drones
Internet of things Autonomous
weeding machine
Water usage
& irrigation Strip
tillage
Real Time
Kinematics Labor
shortage
C4 rice
Rust-resistant wheat
Blight-resistant potato
Drought tolerance
CEE introduce GM
RNAi
CRISPR
MAB
Sequencing & annotation
iPS cells
Online
Consolidation of channels
USDA Report
Europe: Greens
Bans
Subsidies
Risk vs. Hazard Trade
regulations
Plant-based plastics
Fuel
Food
Feed
Big data Advanced analytics
New players
NUE/ "Microbiome of the soil"
Yield
increase
Input
optimization
Our view on the AG universe and key influencing factors
Pres WCF Abidjan 27 Oct Final.pptx
Planting
patterns
Contract
farming
Autonomous
machines
Fin./ Ins.
smallholders
Farm sizes
New
generation seeds
& CP
Automation
Tillage
practices
Demographic
megatrends
Consumer
trends Political
megatrends
Vertical
integration
Channel
evolution
"New" tools
Distribution as
orchestrator
Digital
transformation
Biologics
New farming
models
Crop pref.
& usage
Precision Farming
Regulations
Regional
growth
Regulatory
frame & License
to operate
R&D
productivity
& pipeline
Must win battles
& market
Leadership
Business
model
Our view on the AG universe and key influencing factors
Socio-political
trends
Disruption &
dynamics in agr.
value chain
Inputs and
technological
trends
Shift in farming
practices
Shift in farming
structures
Agricultural
demand
Pres WCF Abidjan 27 Oct Final.pptx 4
The Most Influential Trends Affecting Farming Practices and Structures Through 2030
Precision
farming
Precision farming will
become the standard
and further advance
technologically
Automation
Automation will
enable farmers to
manage a farm with
fewer people
Consolidation
The agricultural
sector will further
consolidate
Professionalism
The degree of
professionalism will
increase, especially on
large farms
Labor
shortages
A shortage of
qualified employees
will be a major
challenge in 2030
Farmers citing a trend as influential
44% 40% 36% 28%
60%
Pres WCF Abidjan 27 Oct Final.pptx 5
Planting methods
for vegetables and
fruits
Planting and
tillage
methods
Other fertilizing
compositions and
methods
Aquaponics,
hydroponics
Autonomous
vehicles
Biologic
compositions for
fertilizers and
crop protection
Herbicides and
weeding
compositions
Equipment
components Tractor
components
Various sensors Variable-rate/
depth
components
Microemulsion-
based germicides
and bactericides
Automated
applications for
dairy farms
Connectivity of
sensors and
equipment
Various new active
ingredients
Polymeric
compositions
Disease- preventing
GMOs Corn varieties and
hybrids Soy varieties
Microemulsion-
based insecticides
and other pesticides
Controlled-release
fertilizer
Nitrogen-fixing
biologics
Nitrogen use
efficiency
Various new active
ingredients
Mixtures of
chemical and
biological
fungicides
Crop protection
Precision and conventional
equipment Fertilizer and planting methods
GMO seeds
Seed varieties
Agriculture Patents Registered Worldwide 2010-2014
Sources: Thomson Innovation; BCG analysis.
Note: Analysis based on approximately 16,000 Derwent World Patents Index patent families.
Pres WCF Abidjan 27 Oct Final.pptx 6
Other
North America
China
Europe
Fertilizer
Seeds
15%
6,630
35%
7% 8%
28%
878
11,538
8,556
1%
4%
15%
Precision and
conventional equipment
19%
53%
7%
2%
Crop protection
23%
35%
70% 78%
987 2,407 5,337 6,815 Absolute
number of
patents
Patent Registrations by Sector and Region
Sources: Thomson Innovation; BCG analysis.
Note: Analysis based on approximately 16,000 Derwent World Patents Index patent families registered from 2010 through 2014. Patents assigned to regions based on the location of the filing
company's main headquarters.
1 The quality index is a proprietary BCG metric for evaluating a patent record based on key bibliometric points.
Quality-weighted share of patents (%)1
Pres WCF Abidjan 27 Oct Final.pptx 7
9096118153189275
421
1,526
54 56 66 86 140
362 460 462
609
771 850
1,173
Global input and equipment players also leading in patent registrations
Fertilizer Precision farming Seeds Crop Protection Equipment
GU
AN
GX
I ID
YLL
IC B
IOC
HE
MIS
TR
Y
Ha
ina
n Z
he
ngye
Zh
on
gn
on
g H
igh
-te
ch C
o
JIA
NG
SU
LO
NG
DE
NG
CH
EM
GU
AN
GD
ON
G Z
HO
NG
XU
N A
GR
IC S
CI
SH
AA
NX
I T
AN
GP
US
EN
BIO
TE
CH
SH
AA
NX
I S
UN
GE
R R
OA
D B
IO S
CI
Ha
ilir
Gro
up
Su
mit
om
o C
he
mic
al C
o L
td
SH
AA
NX
I W
ELC
H C
RO
P P
RO
TE
CT
ION
NA
NJI
NG
HU
AZ
HO
U P
HA
RM
SH
AA
NX
I M
EIB
AN
G P
ES
TIC
IDE
Do
w C
he
mic
al C
o
Cla
as
Gro
up
Mo
nsa
nto
Co
BA
SF
SE
Syn
ge
nta
AG
Ba
yer
AG
AG
CO
Co
rp
Du
Po
nt
De
ere
& C
o
10 positions out of the top 10-20 in
companies registering most patents are
already held by Chinese companies
Pres WCF Abidjan 27 Oct Final.pptx
Planting
patterns
Contract
farming
Autonomous
machines
Fin./ Ins.
smallholders
Farm sizes
New
generation seeds
& CP
Automation
Tillage
practices
Demographic
megatrends
Consumer
trends Political
megatrends
Vertical
integration
Channel
evolution
"New" tools
Distribution as
orchestrator
Digital
transformation
Biologics
New farming
models
Crop pref.
& usage
Precision Farming
Regulations
Regional
growth
Regulatory
frame & License
to operate
R&D
productivity
& pipeline
Must win battles
& market
Leadership
Business
model
Our view on the AG universe and key influencing factors
Socio-political trends
Pres WCF Abidjan 27 Oct Final.pptx 9
Consumer trends-health: Increasing health awareness and willingness to pay
Health
& Wellness
Products
Low fat/ diet
products
"Better
for you"
products
Nutra-
ceuticals/
Enhanced
High
performance
products
Aging
population
Lifestyle
illnesses
Regulatory
pressures
More
concerned
demographic
Source: BCG
Health & wellness
• Diet/ obesity
• "Better for you"
• Fortified
• Organic
• Food tolerant
Convenient
• Quick
service
• Easy to
prepare
Good value
• Low cost
• Specials
Indulgent
• Meets
craving
• "Fun for
you"
Variety
• Options
• Choices
Good taste
• Fresh
• Local
• High
quality
Consumers have many desires Trend towards healthy food is durable
Drivers
Pres WCF Abidjan 27 Oct Final.pptx 10
Consumer trends-green:"Responsible consumption" products have captured 2/3 of growth between '10-'13
32
7
610
11
34
0
20
40
60
80
100
Natural
Organic
Social & Fair trade
Environmental friendly
Local
Natural
Traditional
Total
100
Traditional
Local
Social &
Fair Trade
Organic
Environmental
Responsible consumption products
Green & Organic Sustainable
Illustrative example
68%
1. Sum of investigated categories, total market increase in these categories is $8B
Source: IRI Database 2010-2013, BCG analysis
Total US market growth1, 2010-2013 (%)
85% 8% 2% 3% 1% 1% % total sales
(% US, 2013)
1% 5% 25% 8% 33% 18% CAGR 2010-2013
(% US )
Pres WCF Abidjan 27 Oct Final.pptx 11
Consumer & political megatrends potentially leading to more stringent regulation-also beyond Europe
Consumer & political trends … … influencing regulations
Political
mega-
trends
Consumer
trends
Environment protection and
climate change initiatives
Protection of local agricultural
sector
Increasing education standards
Consumer protection
Emerging new super-powers
setting new guidelines, e.g., China
Green & organic
Food transparency
Health awareness
Social sentiment, e.g., GMOs,
meat production processes
Neonicotinoids ban
Bee health
Hazard versus risk evaluation
Redistribution of EU subsidies
Plant protection and residues in food
Ecological land set-aside
Acceptance of GM crops
Glyphosate ban initiative
Medical devices containing DEHP
Endocrine disruptors
Source: BCG analysis
Pres WCF Abidjan 27 Oct Final.pptx
Planting
patterns
Contract
farming
Autonomous
machines
Fin./ Ins.
smallholders
Farm sizes
New
generation seeds
& CP
Automation
Tillage
practices
Demographic
megatrends
Consumer
trends Political
megatrends
Vertical
integration
Channel
evolution
"New" tools
Distribution as
orchestrator
Digital
transformation
Biologics
New farming
models
Crop pref.
& usage
Precision Farming
Regulations
Regional
growth
Regulatory
frame & License
to operate
R&D
productivity
& pipeline
Must win battles
& market
Leadership
Business
model
Our view on the AG universe and key influencing factors
Agricultural demand
Pres WCF Abidjan 27 Oct Final.pptx 13
Global crop demand
Billion tons
Megatrends: Fundamental drivers increasing crop demand
World population
Global bio-fuel production
306 350268
+1%
Billion
Million
tons
+4 %
2030
4.6
2020
3.5
2010
1.9
Global meat consumption
+1%
8.4 7.7 6.9
Million
barrels
per day
+3%
2030
2,668
2020
1,892
2010
1,580
Urbanization &
rising middle class
Changing
mobility
Food
Feed
Fuel
Megatrends impact demand for… … food, feed, fuel... ... and thus for crops
Source: FAO "World Agriculture: towards 2015/2030 and 2030/2050"; IHS Global Insights Agriculture Division; EIA; Renewable Fuels Association; US Dept. of Agriculture; BCG analysis
Population
growth
Pres WCF Abidjan 27 Oct Final.pptx 14
Rising income and urban lifestyle linked to changing preferences substituting rice against
more proteins, fruits and vegetables
53
131
95
0 50 100 150 200 Cities
250–500k
1M+
500K–1M
23
40
25
0 50 100 150 200 Cities
250–500k
1M+
500K–1M
Urbanization & rising middle class in emerging markets changing eating habits
2010: ~90 cities with more than 250K
middle class and affluent population
2020: ~280 cities with more than 250K
middle class and affluent population
Ʃ = 88 Ʃ = 279
Middle class & affluent population
1M+ 500K–1M 250–500K
China China
The Chinese population
is leaving poverty and
entering middle class:
In 2015, more than 40%
of Chinese have an
income of > US-$10k p.a.
Note: Only 650 official cities included. ~1,600 counties are not included in analysis
Source: BCG analysis
Pres WCF Abidjan 27 Oct Final.pptx 15
Changing preferences in Asia: Fruits, vegetables and animal products on the rise
30 26 2735
22 29 32
34
2828
27
22
20 17 13 9
80
60
40
20
0
100
Animal products
Veg & Fruits
Grains
Others
1990 2000 2010 2020
6760
4028
13
2740
24 2426 23
6 95
20
100
0
60
80
40
Animal products
Veg & Fruits
Grains
Others 3
5
1960 1990 2010 2020
Calories
/ capita/ day
Consumption of chicken and pork relative
to total consumption in China (%)
28% 19% 11% 4%
Calories
/ capita/ day 2,468 2,730 3,283 2,427 2,705 3,200 3,505 1,950
2020: 1/3 of expenditures
spent on animal products
Diet shifting towards more
meat, less vegetables and grains
% of consumption % of consumption
Source: Euromonitor; Economist Intelligence Unit; BCG analysis
Pres WCF Abidjan 27 Oct Final.pptx
Planting
patterns
Contract
farming
Autonomous
machines
Fin./ Ins.
smallholders
Farm sizes
New
generation seeds
& CP
Automation
Tillage
practices
Demographic
megatrends
Consumer
trends Political
megatrends
Vertical
integration
Channel
evolution
"New" tools
Distribution as
orchestrator
Digital
transformation
Biologics
New farming
models
Crop pref.
& usage
Precision Farming
Regulations
Regional
growth
Regulatory
frame & License
to operate
R&D
productivity
& pipeline
Must win battles
& market
Leadership
Business
model
Our view on the AG universe and key influencing factors
Shift in farming structures
Pres WCF Abidjan 27 Oct Final.pptx 17
New farming models changing grower landscape: "Morrisons" supermarket chain integrates backwards
Source: http://www.morrisons-corporate.com/About-us/Company-history/; http://www.retail-week.com/topics/supply-chain/analysis-why-food-retailer-morrisons-opted-for-vertical-
integration/5045407.article; Company websites, BCG analysis
Flowers
Crops growing
Bakery
Warehouse
Integrator setting guidelines for
growers (seeds, CP, fertilizers,
practices) and buys centrally
industry shifting from individual to large-scale company
• Increased buying power
• Higher professionalization
• Price pressure
• Need for integrated offerings
Slaughterhouse
Pres WCF Abidjan 27 Oct Final.pptx 18
Contract farming is increasing smallholder market access and productivity in developing countries
Source: FAO, Web research, BCG analysis
Pork production
China
Cacao
Honduras
Bio-diesel
Brazil
Citrus
South America
Vegetable
Tanzania
Basmati rice
India Agricultural production carried out according to a
upfront contract between smallholder and food
processor
Increased market
access, better access to
input and production
support
Increased security of
supply in quality,
quantity and timing
Varying levels of agreements and buyer investment:
• Seasonal contract on quality, quantity, price,
• inputs, embedded services (financials and non-
financial)
• production techniques, buyer owning/controlling land
Pres WCF Abidjan 27 Oct Final.pptx 19
Climate change affecting both crop yield and land area suitable for agriculture
30-20% 20-10% 10-0% 0-10% -10-20% -20-30%
Avg. percentage change of arable land1
Earlier florescence in
Central Europe
Increased rainfall
and flood intensity
affect crop yields
Growing wheat in
North Canada
Arable land through
thawing permafrost
Increasing frequency of
droughts
Tropical
and sub-
tropical
regions
may suffer
a loss of
arable land
Russia,
China and
North
America
may expect
an increase
of total
arable land
1. Based on model for 2050
Source: WWF; Environ. Res. Lett. 6 (2011) 014014 (8pp); Food Security and Sociopolitical Stability, Chris Barrett; BCG analysis
Pres WCF Abidjan 27 Oct Final.pptx
Planting
patterns
Contract
farming
Autonomous
machines
Fin./ Ins.
smallholders
Farm sizes
New
generation seeds
& CP
Automation
Tillage
practices
Demographic
megatrends
Consumer
trends Political
megatrends
Vertical
integration
Channel
evolution
"New" tools
Distribution as
orchestrator
Digital
transformation
Biologics
New farming
models
Crop pref.
& usage
Precision Farming
Regulations
Regional
growth
Regulatory
frame & License
to operate
R&D
productivity
& pipeline
Must win battles
& market
Leadership
Business
model
Our view on the AG universe and key influencing factors
Shift in farming practices
Pres WCF Abidjan 27 Oct Final.pptx 21
Precision farming: Conventional agriculture is changing towards a future state of data-rich precision agriculture
IT Infrastructure Sensors & Software Harvesting robots GPS, UAV High-tech machinery
Moisture
data
Servers
Yield and sensor
data
Planting
prescription
Ag
robots
Moisture sensor Parcel of land
Data
cloud
Weather and
forecast data
Parzel of land
Satellites
• Optimizing crop yield by near real-time data capture of terrain features/ topography, organic matter
content, moisture levels, nitrogen levels, pH, micro-climate and subsequent decision making
• Data collected by a range of equipment: UAVs, field/ on-the-go/ remote sensors, robots
• High level of automation of applied high-tech equipment
Source: BCG
Pres WCF Abidjan 27 Oct Final.pptx 22
• EU in the process of relaxing existing
restrictions on the use of civilian
drones
Autonomous farming machines enable precision farming: Agricultural drones gather data and enable fast reaction
Advantages of agricultural drone usage Legal situation of civilian usage
• Crop and farm
monitoring
• Determine the size
of plants, weed
infestations,
insect problems
and drainage
issues
• Autonomous delivery of herbicides and
pesticides to troubled areas
I think it's going to change agriculture as
we know it (...)
It's definitely going to allow producers to
become much more efficient.
Scott Shearer, a professor at Ohio State University and an expert
in precision agriculture
• FAA plans to start allowing drones by
2015
Drones preventing agro fraud
Drones tried out
in vineyards in the
south of France,
to check that
"grubbing up" of
vines is done
legally and
ecologically
Pres WCF Abidjan 27 Oct Final.pptx
Planting
patterns
Contract
farming
Autonomous
machines
Fin./ Ins.
smallholders
Farm sizes
New
generation seeds
& CP
Automation
Tillage
practices
Demographic
megatrends
Consumer
trends Political
megatrends
Vertical
integration
Channel
evolution
"New" tools
Distribution as
orchestrator
Digital
transformation
Biologics
New farming
models
Crop pref.
& usage
Precision Farming
Regulations
Regional
growth
Regulatory
frame & License
to operate
R&D
productivity
& pipeline
Must win battles
& market
Leadership
Business
model
Our view on the AG universe and key influencing factors
Inputs and technological
trends
Pres WCF Abidjan 27 Oct Final.pptx 24
• Bio-control: e.g. viruses in
insect control
• Bio-fertilizers: e.g.
symbiosis between plant
and rhizobium
• Bio-tolerance: increased
crop tolerance to drought,
salt, high temperature
Biologicals: A potential answer to "green & organic" consumer trends
Use of microbes that live in the roots of a
plant/plant tissue to positively impact a plant
trait in a way similar to plant breeding
Symbiosis with inoculants to increase
efficiency of fertilizer through nitrogen fixing
& the facilitation of phosphorus absorption
Enhancing the ability of a plant to tolerate
stress unlocks big potential to
debottleneck yield up to an extra of 30-50%
A new paradigm from crop care to crop
enhancement
Microbiome of the soil
improving crop performance
Source: Bioagricultural Sector UBS; BCG analysis
Pres WCF Abidjan 27 Oct Final.pptx 25
Bio-fertilization: An alternative to conventional minerals
Conventional
world-wide
fertilizer
market growing
at historic rates
Use of microbial
inoculants as an
alternative to
conventional
fertilization
Promising bio-
fertilization
developments
Symbiosis with inoculants to increase
efficiency of fertilizer through nitrogen fixing
and the facilitation of phosphorus
absorption
>70% fertilizer consumption in China, India,
USA, EU & Brazil
Strong environmental impact on soil fertility
and water body quality, food chain poisoning
Fertilizers are increasingly regulated
Nitrogen fixation enablement for corn and other monocots
Leverage genomic technologies to better select symbiosis in
legume crops: e.g. use of rhizobium in soybeans
Bio-delivery: e.g. microbes could be used to promote plant
growth by stimulating plant hormone production
Source: Potash Corp; FAO; customer interviews; Umweltbundesamt; BCG
Pres WCF Abidjan 27 Oct Final.pptx
Planting
patterns
Contract
farming
Autonomous
machines
Fin./ Ins.
smallholders
Farm sizes
New
generation seeds
& CP
Automation
Tillage
practices
Demographic
megatrends
Consumer
trends Political
megatrends
Vertical
integration
Channel
evolution
"New" tools
Distribution as
orchestrator
Digital
transformation
Biologics
New farming
models
Crop pref.
& usage
Precision Farming
Regulations
Regional
growth
Regulatory
frame & License
to operate
R&D
productivity
& pipeline
Must win battles
& market
Leadership
Business
model
Our view on the AG universe and key influencing factors
Disruption & dynamics in
agr. value chain
Pres WCF Abidjan 27 Oct Final.pptx 27
Orchestrators leveraging digitalization to build integrated offerings for growers—Example WinField
Source: Winfield; BCG analysis
Agricultural inputs
• Seed, fertilizer, crop
protection
Expertise
• Planning support & advice
Insights via IT solutions
• Satellite supported data
• Individualized
recommendations for inputs
• Monitoring
Orchestrators tapping into multiple value pools locking in growers
• Seeds, fertilizer, CP, IT and expertise better attuned • Further opportunities from precision farming, integrating equipment and technologies
Pres WCF Abidjan 27 Oct Final.pptx 28
Vertical integration: Value pools in poultry value chain shifted to integrators
Processing Slaughtering Growers/
Egg producers
Hatcheries
(Breeders)
Breeders/
Poultry genetics
Value pools shifted to integrators:
• Profits from whole value chain
• Decreased costs by better attunement of value chain steps and scale
• Tighter value chain control increases safety & transparency
• Non-integrated companies under pressure
Source: Company websites, BCG analysis
Thank you
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