Pericles said the key is not to predict the future, but to be prepared for it. 2016 saw some epic power shifts and new ways of doing business. Here are the six big trends that will shape next year for farmers and consumers and give us another chance to get it right:
1. Domestic food price rise will slow down on the back of normal harvests of grains and pulses.
Weather-wise, 2017 will be another very warm year globally but is unlikely to be a new record due to the absence of additional warming from El Niño, says the UK Met Office. Higher acreage for cash crops will compensate for static crop yields. Farm wages, that have risen 15% since 2014, will correct due to the reverse migration after demonetization. But rising crude oil prices, helped by some OPEC restraint, will offset gains. Irrigation is heavily dependent on diesel gensets. So is transportation.
Farmers will be reluctant to invest capital in farm and machinery because of continued stress from unpaid crop loans and credit sales. Most leased farms are anyway starved of capital. India’s 138 million farms are highly leveraged. Discretionary spends will also falter until a good monsoon. The ripple effect will be felt by FMCG, consumer durables, automobiles, and farm machinery companies. Rural demand contributes almost 40% of their sales.
2. The stronger dollar will turn food imports expensive.
The US dollar, currently at a 14-year high, will rise further if the US Federal Reserve raises interest rates to curb inflation. All imported foods, from pulses and cooking oil, to processed foods, cheese, apples, and almonds, will become expensive. Retail prices of imported foods are typically two to three times higher than FOB export prices after adding tariffs, excise, margins and transportation costs. A stronger dollar typically pushes down global commodity prices. But Indian consumers may not see the benefit. India imported agricultural, fishery, and forestry products worth $25 billion in calendar year 2015.
3. The push towards digital payments will encourage rural financial literacy, tighter supply chains to reduce counterparty risk, and electronic mandis. Digitization will open opportunities for cost-saving automation, accuracy, speed and vastly-improved efficiency in agricultural trade documentation, storage, finance, and risk management. Supported by the right policies and market infrastructure institutions, it can transform Indian agriculture’s financing models, risk mitigation models, and distribution models.
4. Digital agriculture will begin to take root.
A combination of mobile devices (allow real-time data gathering and information dissemination), satellites and drones (provides a spatial and temporal dimension to information), Internet of Things (stitch together diverse sources of information and support delivery of farmer specific information), analytics (turn vast amounts of data into actionable information and knowledge), messaging apps, breeding informatics (accelerates R&D for genetic gain), and cloud computing (enables seamless data storage and real-time reporting across the value chain) will expand delivery of targeted and timely information and direct-to-farmer m-commerce platforms. Venture capitalists have invested $179 million between 2014 and 2015 into Indian agri-tech start-ups.
5. Organic, eco-friendly, socially responsible, and healthy will remain the big food trend.
Patanjali’s success shows consumers are making their food decisions based on where and how their foods are made, grown, raised and by whom. India spends 31% of its budget on food and grocery. Smart brands will broaden their thinking around sustainability and find creative new ways to eliminate any wasted resource. “Going back to your roots” – whether through Ayurvedic diets, traditional grains, or authentic ethnic foods and spices – is another big theme. Look out also for more vegan foods and craft beer.
6. Street-food inspired dishes in restaurants, delivery-only restaurants, home-delivery online grocery portals, meals-on-wheels, and food trucks will capture greater consumer attention. Convenience, seamlessness, relevance, value-for-money will remain important, while companies employ algorithms and machine learning to understand our habits and idiosyncrasies.