Food and Agriculture Economic Summit: Summary of Major Themes – Kansas City – Federal Reserve

Food and Agriculture Economic Summit: Summary of Major Themes – Kansas City – Federal Reserve

 

Report on Investment Trends in Food and Agriculture: A Sustainable Development Goals Perspective

Introduction

  • A Food and Agriculture Economic Summit, hosted by the Kansas City Fed on June 25, convened approximately 50 industry executives to analyze investment factors within the food and agricultural sectors.
  • Discussions revealed that investment strategies are primarily shaped by emerging technologies, consumer trends, and economic developments, with significant implications for achieving the United Nations Sustainable Development Goals (SDGs).
  • Key constraints identified were the high costs of capital, labor market conditions, and policy uncertainty, all of which affect the sector’s ability to advance sustainable development.

Challenges to Rural Development, Decent Work, and Reduced Inequalities (SDGs 1, 8, 10, 11)

  • Investment in rural areas is hindered by significant challenges that directly impact the progress of several SDGs.
  • Major limitations to operational expansion and the ability to attract and retain talent include:
    • SDG 11 (Sustainable Cities and Communities): Persistent challenges in accessing adequate housing, childcare, and broadband infrastructure.
    • SDG 3 (Good Health and Well-being): Insufficient access to essential healthcare services in many rural communities.
    • SDG 8 (Decent Work and Economic Growth): The combined pressures of rural depopulation and an aging workforce, which constrain economic growth and business viability.
  • In response, employers are adopting strategies aligned with sustainable development, such as investing in labor-saving technologies and, in line with SDG 17 (Partnerships for the Goals), collaborating with community leaders to improve local services and amenities.

Innovation and Infrastructure for Sustainable Production (SDGs 2, 9, 12)

  • Technological advancement is a critical driver for enhancing efficiency and sustainability, directly supporting SDG 9 (Industry, Innovation, and Infrastructure) and SDG 12 (Responsible Consumption and Production).
  • Key areas of technological investment aimed at improving production and distribution include:
    1. Artificial Intelligence (AI): At the farm level, AI offers the potential to improve efficiency and augment decision-making, particularly in livestock production. In distribution, AI-powered automation is being rapidly adopted.
    2. Genetic Advancements: New technologies in genetics are being pursued to refine and improve agricultural production outputs.
    3. Data Infrastructure: Investment in data management and information technology has become a critical component to support these technological advancements.
  • These innovations are fundamental to strengthening food security and promoting sustainable agriculture, which are central to SDG 2 (Zero Hunger).

Evolving Consumer Behavior and Health Outcomes (SDGs 2, 3, 12)

  • Consumer trends are a primary factor in investment decisions, with significant implications for public health and responsible consumption patterns.
  • Notable trends influencing the sector include:
    • Health and Wellness (SDG 3): The increased use of weight loss medications (GLP-1) may shift long-term food consumption towards fresh produce and protein products.
    • Digitalization and Food Access (SDG 2): The continued growth of food purchasing through digital formats requires new investment in customer engagement and loyalty strategies to ensure stable consumer access to food.
    • Value-Added Models (SDG 12): To improve economic returns, some agricultural producers are investing in value-added business models, allowing them to capture a larger share of food expenditures and promote more responsible production-to-consumption chains.

Global Competition and Strategic Realignment for Food Security (SDGs 2, 8)

  • The growth of agricultural production in other regions, particularly South America, has influenced long-term strategies for U.S. producers and agribusinesses.
  • Increased global competition has contributed to lower U.S. farm prices, incentivizing a strategic shift towards models that support SDG 2 (Zero Hunger) and SDG 8 (Decent Work and Economic Growth).
  • Strategic responses include:
    • A heavier focus by growers on value-added opportunities and direct-to-consumer sales to improve narrow profit margins.
    • Expansion by agribusinesses, such as grain merchandisers and equipment manufacturers, into international markets with growing agricultural production.

Investment Constraints and the Shift Towards Efficiency and Resilience (SDGs 7, 9, 13)

  • Policy uncertainty, labor shortages, high capital costs, and infrastructure gaps have collectively shifted new investment focus from growth towards efficiency and resilience.
  • Major constraints delaying long-term investments include:
    1. Policy Uncertainty: Lack of clarity on policies related to trade, energy, and agriculture program funding.
    2. Infrastructure and Labor Gaps: Inadequate rural energy infrastructure (a challenge to SDG 7 and SDG 9) and scarce labor limit industrial expansion.
    3. High Capital Costs: Substantial increases in capital investment costs have challenged the financial feasibility of some projects.
  • Investment is now increasingly directed at building long-term sustainability:
    • Developments connecting agriculture and energy, particularly biofuels and renewables, continue to influence investment, aligning with SDG 7 (Affordable and Clean Energy).
    • A notable focus is on improving infrastructure and adapting production practices to create resilience against increased weather variability, a critical action for SDG 13 (Climate Action).

1. Which SDGs are addressed or connected to the issues highlighted in the article?

SDG 2: Zero Hunger

  • The article’s core subject is investment in the food and agricultural industries, which is central to achieving food security, improving nutrition, and promoting sustainable agriculture. It discusses food production, distribution, farm prices, and producer profitability.

SDG 8: Decent Work and Economic Growth

  • The text highlights labor market conditions, an aging workforce, and challenges in attracting and retaining talent in rural areas. It also focuses on improving economic productivity through technology and innovation.

SDG 9: Industry, Innovation, and Infrastructure

  • A major theme is the role of technology (AI, genetics, automation) and infrastructure (broadband, energy, data management) in the agriculture sector. The article explicitly mentions that “limited rural infrastructure” and the need for “information technology infrastructure” are critical components of investment.

SDG 11: Sustainable Cities and Communities

  • The article addresses challenges specific to rural communities, such as “rural depopulation” and the lack of access to essential services like “housing, childcare, healthcare and broadband.” These issues directly impact the sustainability and inclusivity of these communities.

SDG 13: Climate Action

  • The article touches upon climate adaptation by mentioning that “adapting production practices to create resilience towards increased weather variability has also been a notable focus” for investment.

2. What specific targets under those SDGs can be identified based on the article’s content?

SDG 2: Zero Hunger

  • Target 2.3: By 2030, double the agricultural productivity and incomes of small-scale food producers. The article relates to this by discussing how growers, facing “narrow profit margins,” are “incentivized to focus more heavily on pursuing opportunities that add additional value to farm products” and sell directly to consumers to “capture larger shares of food expenditures.”
  • Target 2.4: By 2030, ensure sustainable food production systems and implement resilient agricultural practices. This is supported by the mention of “adapting production practices to create resilience towards increased weather variability” and using technology like AI and genetics to “improve and refine production.”

SDG 8: Decent Work and Economic Growth

  • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. The article extensively covers this, stating that “artificial intelligence (AI) has the potential to improve efficiency” and that “many businesses also continue to pursue technology-based solutions to address workforce availability challenges.”
  • Target 8.5: By 2030, achieve full and productive employment and decent work for all. The article highlights barriers to this target, citing “labor availability,” “an aging workforce,” and “scarce labor” as serious limitations to expanding operations in rural areas.

SDG 9: Industry, Innovation, and Infrastructure

  • Target 9.1: Develop quality, reliable, sustainable and resilient infrastructure…with a focus on affordable and equitable access for all. The article directly identifies gaps, stating that “Access to…broadband has been persistently challenging in many rural communities” and that “lack of adequate energy infrastructure” limits industry expansion.

SDG 11: Sustainable Cities and Communities

  • Target 11.1: By 2030, ensure access for all to adequate, safe and affordable housing and basic services. The article explicitly points to this issue: “Access to housing, childcare, healthcare…has been persistently challenging in many rural communities” and limits the ability to attract talent.

SDG 13: Climate Action

  • Target 13.1: Strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries. This is directly referenced in the article’s statement that “improving infrastructure and adapting production practices to create resilience towards increased weather variability has also been a notable focus.”

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

  1. Pace of technology adoption and productivity growth: The article includes a chart titled “Technology adoption and productivity growth has been faster than the previous decade for most participants.” This directly serves as a qualitative indicator for SDG Target 8.2 (economic productivity) and Target 2.3 (agricultural productivity).
  2. Access to essential services in rural areas: The article mentions “Access to housing, childcare, healthcare and broadband” as challenges. The proportion of the rural population with access to these services would be a direct indicator for SDG Target 11.1.
  3. Investment in infrastructure: The text points to the need for investment in “data management and information technology infrastructure” and “energy infrastructure.” The level of capital investment in these specific rural infrastructures is a measurable indicator for SDG Target 9.1.
  4. Labor market conditions: The article cites “labor availability,” “scarce labor,” and an “aging workforce” as constraints. Metrics such as the labor force participation rate, unemployment rate, and age demographics of the workforce in rural areas are implied indicators for SDG Target 8.5.
  5. Producer profit margins: The mention of “narrow profit margins” for growers implies that farm profitability is a key metric. This can be used as an indicator for progress towards SDG Target 2.3, which aims to increase the incomes of food producers.
  6. Adoption of resilient agricultural practices: The statement about “adapting production practices to create resilience towards increased weather variability” implies that the rate of adoption of these specific practices by farms is a measurable indicator for SDG Target 13.1.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article.

SDGs Targets Indicators Identified in Article
SDG 2: Zero Hunger 2.3: Double agricultural productivity and incomes of small-scale food producers.
2.4: Ensure sustainable food production systems and resilient agricultural practices.
– Producer profit margins.
– Adoption of value-added business models.
– Use of technology (AI, genetics) to improve production.
SDG 8: Decent Work and Economic Growth 8.2: Achieve higher levels of economic productivity through technology and innovation.
8.5: Achieve full and productive employment and decent work.
– Pace of technology adoption and productivity growth.
– Labor availability and workforce participation rates.
– Demographics of the workforce (e.g., aging workforce).
SDG 9: Industry, Innovation, and Infrastructure 9.1: Develop quality, reliable, sustainable and resilient infrastructure. – Level of investment in rural infrastructure.
– Access to broadband in rural communities.
– Adequacy of energy infrastructure.
SDG 11: Sustainable Cities and Communities 11.1: Ensure access for all to adequate, safe and affordable housing and basic services. – Access to housing in rural communities.
– Access to childcare and healthcare services in rural communities.
SDG 13: Climate Action 13.1: Strengthen resilience and adaptive capacity to climate-related hazards. – Rate of adoption of production practices resilient to weather variability.

Source: kansascityfed.org