Global Agrifood Report

Agrifood-Global-Report

What to watch ?

 

  • Agricultural commodities should eventually report a slight pick-up after bottoming out in 2016
  • Recovering would enable agrifood companies to improve operating surplus by +2% on average in 2017 after -2.5% in 2016
  • Series of deregulation policies to support trade continues with the termination of production and export quotas of sugar in the European Union

agrifood id card

Fragmentation
Fragmentation-3 
Internationalization
Internationalisation-2 
Capital Intensity
Capital-intensity-2 
Profitability
Profitability-2 

Sector risk map: Agrifood

 

Recovering prices should be a boon to margins

Food prices have stopped plunging in 2016 with a contained -1.5% drawback of the FAO Food index. This is the lowest decrease in five consecutive years. The sharp improvement of Sugar (+34%) and Vegetal Oils (+11%) are the two drivers for this limited drop. Total agrifood nominal output hence steadied at -0.6% to USD12.1tn in 2016 while exports decreased by -3% to USD1.3tn, after a -10% decrease in 2015, reflecting the lack of stamina of demand.

 

Yet we expect an upswing of exports of +3.5% to USD1.4tn in 2017, thanks to the slightly higher global GDP growth (+2.8% vs. +2.5%) and continued deregulations in the sector. The most remarkable one, scheduled in September 2017, is the termination of the sugar production and exports quotas in the European Union.

 

The Agrifood sector indeed ranks among the three most regulated sectors for trade as it gathers 19% of total trade barriers. But this trend is reversing: we noted that the number of trade barriers issued in 2016 is a third lower than in 2015.

 

This should eventually help companies’ operating surplus to recover as we forecast a +2% increase in 2017.


KEY PLAYERS

Country

Role

Sector Risk

UNITED-STATES #1 Exporter
#1 Importer
#2 Producer
Dot-Risk-Low
GERMANY #3 Importer
#3 Exporter
Dot-Risk-medium
CHINA #1 Producer
#2 Importer
Dot-Risk-Medium

Strengths

  • Strong long-term prospects thanks to relentless population growth and burgeoning middle-clas
  • Sound financial structure with little indebtedness, high solvability and correct earnings

Weaknesses

  • Sector performance reliant on exogenous factors: climate (e.g. El Niño) and health  hazards such as restrictive sanitary measures 
  • High dependency on agricultural commodities’ prices, which in turn hinge on climate and financial conditions

agrifood Subsectors insights

Agriculture: Farming activities are the hardest hit by plummeting agricultural prices which hamper the yield of harvesting surfaces and entail revenue decline.

 

 

Food Industry: Global activity is steadily growing, underpinned by the demographic growth momentum. The important feature is the dietary shift towards ‘finer food’ by the growing middle-class (40% of world population by 2020 vs. 25% currently), at the cost of basic food producers.

Global Sector Report

picto-aeronautics
Aeronautics
picto-agrifood
Agrifood
picto-automotive
Automotive
picto-chemicals
Chemicals
picto-construction
Construction
picto-energy
Energy
picto-household-equipment
Household Equipment
picto-information-communication-technologies
Information & Communication Technologies
picto-machinery
Machinery & Equipment
picto-metal
Metal
picto-paper
Paper
picto-pharmaceuticals
Pharmaceuticals
picto-retail
Retail
picto-textile
Textile
picto-transportation
Transportation
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