The Top 6 Concerns of the Agricultural Industry in 2023
The agricultural industry faces challenges that threaten business stability and global food security.
A ProducePay survey identified the six primary concerns affecting growers, distributors, and traders throughout the agricultural supply chain in 2023.
These concerns are weather unpredictability, rising input costs, labor cost and accessibility, price volatility, cost and access to capital, and food wastage.
1. Weather Unpredictability
Unpredictable weather has emerged as one of the most significant challenges in agriculture for 2023, with 52% of respondents saying it was their primary business concern.
Extreme weather events such as droughts, floods, and storms have impacted agricultural production, making it challenging to plan harvesting and planting, resulting in significant losses.
The El Niño phenomenon is impacting the industry, especially Latin America. In Peru, temperature increases associated with this phenomenon have already affected blueberry growers and mango production.
These events have also affected logistics. Extended periods of heat can accelerate harvests, forcing marketers to adjust their strategies to ensure their products reach the market. Meanwhile, floods and droughts can disrupt transportation routes, as happened in the Panama Canal, where authorities reduced transit due to drought, affecting the shipment of thousands of tons of products.
Additionally, 54% of respondents believe unpredictable weather is more pronounced this year than the previous one, reflecting a shift in weather patterns, making such phenomena more prevalent. This underscores the need to adopt an adaptive approach and climate-resilient agricultural practices throughout the supply chain.
2. Increased Input Costs
The costs of agricultural inputs have consistently increased since the onset of the pandemic. Geopolitical issues and subsequent inflation created additional challenges for businesses in their pursuit of profitability.
53% of respondents consider this issue more severe than the previous year. Despite some improvement in the inflation issue, input prices have continued to rise overall. This affects both growers and consumers since costs travel through the supply chain, increasing prices.
Investment in technologies and sustainable practices, such as precision agriculture and process automation, is essential to optimize input usage and reduce costs.
3. Labor Cost and Accessibility
Access to qualified and affordable labor is essential in agriculture. More than 53% of respondents reported that the cost or lack of workers is a significant issue.
This problem affects planting and harvesting seasons, directly impacting the supply chain. In Mexico, a shortage of 65,000 workers in the berry-producing regions, one of the country’s most commercially essential commodities, has limited these products’ growth and export potential.
Finding innovative practices and policies that facilitate hiring agricultural workers and greater access to training programs is crucial to solidifying the farm workforce.
4. Price Volatility
Price volatility in produce is a challenge that affects 83% of actors in the supply chain, according to the ProducePay survey. Moreover, 52% of respondents assert it is a more significant problem this year than the previous one.
Prices can fluctuate due to supply and demand, weather conditions, or geopolitical events, making predicting these fluctuations challenging.
Market instability harms both growers and buyers, necessitating effective strategies as the industry seeks more predictable and sustainable trade. Real-time market condition monitoring technologies can alleviate some of these issues.
5. Capital Costs and Accessibility
Access to capital in agriculture is a critical factor affecting farmers’ ability to invest in their operations and adapt to a constantly changing industry. According to the survey, 40% of the respondents report this issue is more pressing than the previous year.
The difficulty in obtaining financing is largely due to the strict requirements of most financial institutions and the associated high costs. This is compounded by these institutions’ lack of understanding of the agricultural sector.
The inability to access capital hinders the adoption of technologies and practices that can help improve the efficiency and sustainability of agribusiness production and marketing.
6. Food Waste
Food waste is another major issue affecting the sustainability and economy of the industry. 60% of the respondents estimate that over 10% of their products go to waste or get damaged due to supply chain inefficiency. This results in significant economic losses, harms the environment, and jeopardizes food security.
Waste can occur at every stage of the chain, from production to distribution, becoming more pronounced as the number of intermediaries increases.
Reducing waste is a critical priority in agriculture, as more efficient food management throughout the supply chain reduces costs, supports food security and contributes to reducing carbon emissions and environmental sustainability. Therefore, adopting better technologies to enhance traceability and a more efficient trade system is necessary.
Concerns About the Future of Agriculture
Most actors in the agricultural supply chain express concerns about the future, anticipating that these challenges will worsen over the next five years.
Moreover, 52% of farmers and 30% of the respondents consider their current business stability less positive than the previous year.
Given the industry’s uncertain future, agribusinesses must take all measures and tools to strengthen their stability and anticipate and act on the numerous unforeseen events that can occur.
In 2023, the agricultural industry faced challenges threatening global stability and food security. These challenges include unpredictable weather, rising input costs, price volatility, access to and the cost of capital, and alarming food waste.
Addressing these issues is essential to ensure a sustainable agricultural future. However, to achieve this, the industry needs greater stability and predictability throughout the supply chain and adopting sustainable technologies and practices. Through this, a more efficient chain can be obtained, reducing waste, mitigating carbon emissions, and improving food availability for a growing population.
ProducePay’s Role to Address the Agricultural Challenges
At ProducePay, our vision is to create a world that feeds sustainably by transforming the agricultural industry. Our focus is to make trade more predictable for all industry stakeholders, eliminating economic and food waste. We aim to achieve this through a variety of services:
- Trade: Our trading platform directly connects buyers and sellers while providing them with real-time market information. This promotes a more streamlined and efficient supply chain, reducing waste and uncertainty.
- Working Capital: Through our Pre-Season Financing, we provide producers with working capital of up to $30 million in just 30 days, allowing them to invest in sustainable practices and technologies to strengthen their production operations and increase business stability.
- Liquidity: With Quick-Pay, growers and buyers can optimize their cash flow during the season, providing greater capacity to deal with unforeseen weather and economic situations.