I am delighted to share the 2022 IFPA Future Trends Report. We have worked with EY to deliver this report to our members annually for several years now, but this is the first time we have produced it as part of the International Fresh Produce Association (IFPA). IFPA is the largest and most diverse international association serving the entire fresh produce and floral supply chain and the only to seamlessly integrate world facing advocacy and industry facing support. We exist to bring the industry together to create a vibrant future for all. We grow our member’s prosperity by conducting advocacy; connecting people and ideas; and offering guidance that allows us all to take action with purpose and confidence.
This report is a tool to help you and your team understand and stay ahead of the ever evolving changes that continually impact our industry. In reviewing this years report the IFPA team has identified the following points of interest:
- Agtech is going to be huge. Work out what this means for your business
- In recent years Sustainability has become increasingly in the radar of companies and consumers. Looking ahead we see ESG and Biodiversity becoming more prominent focal themes in this space
- Technology is moving fast so think about how you balance investment in what is here now vs what is coming
- Personal health will stay a focus for consumers and offers several opportunities for the fresh produce industry
- As the impact of COVID 19 lessens what will the new normal be?
When you read this report, you are likely to see many trends that seem familiar or intuitive. This is not unexpected as the data that informed this report was taken from the world that we all live, work and play in. This report does not have “the one” trend or answer, however it is a great tool to test your own personal understanding of the coming trends and to start a conversation with your colleagues and peers to build your own view of the trends that will shape the future of your world.
International Fresh Produce Association
EY undertook desktop research to explore future trends that are shaping the fresh fruit, vegetable and floral supply chain. IFPA and EY held a co facilitated workshop which discussed the short, medium, and long term trends with IFPA members. This report lists the key trends, based on the research and discussion with workshop participants.
The main short term trend drivers are the continued life style changes post COVID 19, inflation and the conflict between Ukraine and Russia. These drivers impact supply chains, workforce, trade and prices. Interestingly, these factors have changed consumers focus away from preference to affordability and access to products.
Medium term trends are driven by both supply and demand side factors. Demand is largely in relation to an increased focus on Environmental, Social, and Corporate Governance (ESG) and a continued shift to E commerce. Supply is driven by technology advancements and ongoing workforce access issues across the supply chain.
The key drivers of long term trends are generational change, the increased focus on sustainability by consumers, how carbon credits can be used by farmers as a revenue stream, artificial intelligence advancements and increasing opportunities in the export market.
The EY Future Consumer Index tracks changing consumer sentiment and behaviours across time horizons globally and identifies the emerging consumer segments. It provides a unique perspective on which changes are temporary reactions, which point to more fundamental shifts, and what a future consumer might be like.
Affordability: Six in ten Australians and New Zealanders (60% AU and 61% NZ) plan to be more aware and cautious of their spending in the longer term and (65% AU and 76% NZ) say price will be the most important purchase criteria for them three years from now.
Health: Over in one two (55% AU and 52% NZ) want to make healthier choices in their product purchases in the longer term; (34% AU and 39% NZ) say health or ‘what’s good for me’ will be the most important purchase criteria for them three years from now.
Sustainability : 45% AU and 40% NZ will prioritise the environment and climate change in how they live and the products they buy; for 24% AU and 26% NZ sustainability will be their most important purchase criteria three years from now.
Social impact : Over one in two (51% AU and 58% NZ) will be more likely to buy from companies that ensure what they do has a positive impact on society; 36% AU and 31% NZ will buy more from organisations which benefit society, even if their products/services are more expensive.
Source: EY Future Consumer Index March 2021 Sustainability
Impetus for change
The impetus for change has been driven from consumer and government pressure, physical and transition risks associated with climate change, and increased biodiversity and nature loss (e.g. Great Barrier Reef).
Farmers play a unique role in Australia’s transition to a low carbon economy. The sector accounts for a significant portion of Australia’s emissions. While the horticulture sector might not be a significant contributor to emissions, it has the opportunity to adapt and mitigate risks of climate change through income diversification, productivity and market access and through long term regional resilience.
Biodiversity is facing destruction at unprecedented rates globally. Biodiversity is an emerging ESG issue, with Australian investors seeking to understand how to manage and address the financial risks to businesses they invest in. The continuation of biodiversity loss could present a material financial impact for many companies, in particular, companies who have a dependence on biodiversity related benefits, such as the horticulture sector.
Modern slavery is a violation of human rights, and the horticulture sector is considered high risk and has seen high non compliance rates in the past. This is largely due to the widespread use of labour hire contractors, and significant sub contracting arrangements.