The Future of Agribusiness

The agribusiness model is changing, demanding new thinking from industry leaders.

Agribusinesses are being challenged to meet the globally increasing demand for food, fuel, and fiber, while balancing economic and environmental realities. Agribusiness is evolving from a local and regional model to a global structure, making this sector of increasing interest to corporations, public agencies, and society at large.

New technologies are helping agribusiness increase efficiency and cut costs. But government regulation, historical practices, and poor training can slow technology adoption. Agribusiness leaders must find new answers to challenges such as:

  • How to attain or improve access to markets
  • How to secure reliable commodity supplies
  • How to adjust to megatrends and manage uncertainty
  • Where to play along the value chain
  • How to build organization and operational capabilities to support new strategies
  • How to diversify or specialize along commodities and activities

Despite Challenges, Agribusiness Subgroups Perform Well

The agribusiness industry as a whole came through the Great Recession with strong total shareholder returns at just over 13%. The gains were spread across all five of the subsectors that make up the bulk of the sector, led by fertilizer producers.

Many agribusinesses benefited from a substantial rise in commodities prices. But higher prices don’t explain the results for all these companies. Some companies executed shrewd acquisitions that reshaped the competitive landscape of their sector. Others pursued promising R&D investments while their rivals were retrenching. Still others made a science of reducing their expenses.

Where Can Agribusiness Go from Here?

No one knows exactly how the new tax code, NAFTA negotiations, and immigration will impact the future of the agribusiness industry. But since the health of agribusinesses’ bottom line could be at stake, executives must factor them into their strategic-planning efforts right away. Three practices are critical:

  1. Forecast the future. Do scenario planning to get a good understanding of how each issue may impact not only your business and operating models but your competitors’ as well.
  2. Keep contingencies in mind. Develop detailed operational plans for every scenario that could have major ramifications for your business.
  3. Regularly revisit your scenarios. Actively monitor the status of each policy and adjust your scenarios as needed.

Meet Our Agribusiness Experts

  • Co-leads BCG's global work in agribusiness
  • Crop protection, seeds, and fertilizer
  • Digital farming
  • Chemicals
  • Co-leads BCG's global work in agribusiness
  • Mergers and acquisitions
  • Growth strategy
  • Private equity
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