Reconfiguring the global food system

Reconfiguring the global food system
  • Insight
  • 12 minute read
  • January 10, 2025

It’s time to redesign how we produce, process and consume food.

Today’s business leaders must grapple with a combination of ever-changing short-term crises while considering how their organisations can adapt to five long-term megatrends that are altering the globe: climate change, technological disruption, demographic shifts, a fracturing world and social instability.

These megatrends manifest themselves most clearly in core domains of human activity: How we move. How we care for ourselves. How we power. How we make. How we build. And how we feed ourselves. In food, as in each domain, traditional industries are reconfiguring themselves into dynamic ecosystems—and historical norms are being challenged.

Disruptions to the food supply are increasingly likely, along with rising demand-side pressures. Agricultural industrialisation has fed the masses but strained producer–consumer relationships and damaged the environment. Deforestation, intensive freshwater use and pollutant runoff have had significant impact. In 2020, agriculture emitted 16 gigatons of greenhouse gasses, about one-third of global emissions. If rises in food production accompany population growth, as expected, projections show that these emissions could increase by up to 80% by 2050 compared with 2010 levels.

For companies in the food system, climate change is a critical concern. According to PwC climate specialists, drought and heat stress could severely challenge the production of maize, wheat and rice—commodities that provide 42% of the world’s calories. PwC’s subsequent climate modelling shows that without intervention, key growing regions for popular consumer crops—including bananas, coffee beans and hops—could face significant production losses due to factors such as rising temperatures and increased rainfall.

Consider these additional factors that put the food system under pressure:

The sweeping nature of change in both supply and demand means that a system developed over the course of a century could be transformed in just a decade or two. For instance, the CEO of a major importer recently highlighted the urgent need to evolve their business model. Without overhauling product traceability—tracking origins, ensuring transparency and resilience, implementing robust data systems—the company risks obsolescence. Food manufacturers are demanding extensive farm data, including information on Scope 3 emissions, pesticide use, ethical standards, audit records and more, to meet expanding sustainability targets, consumer expectations and regulatory compliance.

But the evolving world presents both challenges and vast opportunities. We’re on the brink of a seismic shift in value—what PwC calls value in motion—in the roughly US$10 trillion global food system. New value pools will emerge, some existing ones will expand, and others will vanish. Players across all sectors, from start-ups to giants, public and private, will converge. And businesses will be challenged to rethink nature’s role in their sustainable growth. (See ‘Six transitions for change,’ below.) 

An ecosystem perspective

Food and agriculture leaders should no longer think about the value chain as simply upstream suppliers and downstream customers. Rather, their efforts should include (1) recognising the interconnected network of companies, governments, farms and consumers that collectively influence a fragmented market, and (2) developing new ways to exchange value as business models evolve. They also must look for opportunities in adjacent industries that are converging with food, such as waste management, last-mile logistics and carbon marketplaces.

‘The ecosystem needs to be mobilised. We must keep bringing the different industries together, because going at it alone will not work.’

Margaret Henry,VP, Sustainability & Regenerative Agriculture, PepsiCo
A snapshot of the food system

The evolving agri-food industry has multiple players, and novel collaborations among them will shape their collective and individual success.

A snapshot of the food system

Early movers are already realising value:

  • End-to-end (E2E) transparency. A recent farm-to-factory study PwC conducted for a food retailer in the UK showed that greater transparency in the supply chain could lead to a 2–5% uplift to sales if the retailer adopted dynamic pricing campaigns that discounted products close to their expiry date. It could also produce margin improvements by reducing food waste and optimising transport and inventory costs. This includes achieving up to 75% reduction in food waste at the retailer stage and knock-on ecosystem effects of 25% reduction at the processor and producer stage, contributing to a boost in quality and ESG credibility across players.
  • Vertical integration. A German retail and tourism co-operative recently eliminated intermediaries from its supply chains, sourcing directly from Spanish producers—a pivotal vertical integration move in an industry in which time-sensitive commodities such as strawberries can make or break consumer trust. In China, dairy companies have shifted from sourcing milk from individual farms to producing their own. By directly managing milk production, these companies not only ensure quality and food safety but also create a new revenue stream from the excess supply.
  • Ecosystem collaboration. Companies that have embarked on a collaboration journey are seeing tangible benefits. For instance, the top 20% of the most profitable consumer packaged goods (CPG) companies are twice as likely to boost revenues through ecosystem collaboration as are the remaining 80% of their competitors. These top performers report that at least 60% of their revenues already come from ecosystem participation. And they are 1.2 times as likely to engage with adjacent industries, such as waste management, healthcare and logistics, which creates opportunities to test new business models and access new customers, technology and skills.

Six transitions for change

PwC has identified six dimensions critical to driving systemic change in the food domain. These present clear challenges, but they also offer a perspective of the market segments where growth—if done right—may be most impactful and rewarding.

Healthy and sustainable diets. Innovations in personalised nutrition plans and foods with specific health benefits are contributing to an initial shift towards healthier consumer choices. There’s also more demand for eco-friendly foods such as plant-based protein and dairy alternatives. PwC’s Voice of the Consumer Survey 2024 shows that 52% of people want to eat more fresh fruits and vegetables, and 22% are looking to cut back on red meat. If healthier diets are to catch on, consumers need access to affordable new foods. Food companies are key in driving adoption and demand for alternatives. Meanwhile, innovations in healthcare are changing how people think about what they eat and drink. Recent PwC US analysis suggests 30–35% of Americans are interested in GLP-1 receptor agonist drugs for weight loss, potentially shaking up how food companies connect with consumers for years to come. 

‘Consumers are starting to embrace healthier options, supporting a future where health and sustainability create shared benefits. As a retailer, we’re committed to making healthy, sustainable food choices affordable and accessible for everyone.’

Daniella Vega,SVP, Health and Sustainability, Ahold Delhaize

Minimisation of food loss and waste. The World Food Programme estimates that global food waste and loss amounts to US$1 trillion annually and contributes 10% of greenhouse gas emissions. PwC’s own analysis attributes this partly to underinvestment in supply chains, and also partly to slow adoption of digital tech, including precision agriculture and supply chain tracking. Up to 40% of food loss occurs in the post-harvest, processing and distribution stages, and consumer waste accounts for 10–30%. There are regional disparities; consumer food waste is more prevalent in developed countries, whereas in developing countries, losses occur more often during transport due to poor refrigeration. If these issues were fixed, and taken together with changes in people’s diets and successful management of other food security factors, the world could feed an additional 2 billion people, roughly in line with the expected population growth by 2050. 

Effective and regenerative agriculture. The next revolution in farming requires innovation on multiple fronts, combining natural soil management with advanced technologies. Precision farming and regenerative farming practices, such as smart irrigation systems, soil health monitoring and drone-based crop surveillance, are key. These methods rely on detailed farm-level data in order to optimise crop growth, food quality and sustainable production. AI could transform crop breeding through advancements in phenomics, gene discovery and gene editing to boost plants’ natural defences against pests and adverse weather. Programmes such as the Sustainable Soybean in the Cerrado, supported by PwC Brazil, show how targeted support can drive a wider variety of agricultural innovation. 

Conserved ecosystems and strategic land use. Intensive agriculture, erosion and climate change are cutting land productivity, while urban sprawl, overgrazing and improper land use mean growers need to produce more with less land. The UN estimates that a soccer pitch’s worth of fertile topsoil erodes every five seconds; one-third of the world’s soil is already degraded. Palm oil plantations, soybean farms and grazing land for cattle are major deforestation drivers in the Amazon and Southeast Asia, disrupting climate patterns. Food companies can help by ensuring deforestation-free supply chains and investing in new ingredients and technology. For instance, alternatives to palm oil—the world’s most widely used vegetable oil—are being developed from agri-food waste and precision fermentation. 

Clean energy systems. The energy transition is vital to the food system, which currently uses around 30% of global energy. Sustainable farming and the wider adoption of renewable energy can also help cut costs, boost efficiency and open new revenue streams. A circular farm model involves ‘value stacking,’ using biogas from waste and solar or wind power to generate electricity for farm use and surplus to sell back to the grid. Supermarkets have been proposed as community hubs for renewable energy. PwC’s analysis of a global food and beverage company’s data showed that clean energy systems could save and generate nearly US$300 million annually, about 60% of the company’s total electricity costs. 

Healthy oceans and blue foods. Oceans play a critical role in supporting global ecosystems and livelihoods, and practices such as using seafood in feed for land animals. They also offer immense potential for sustainable innovation and climate impact, such as restorative aquaculture, algae farming for CO2 sequestration and low-impact fisheries. A survey by PwC Norway found that closed marine cages, sea-based fish farms that limit waste emissions and help stabilise water temperatures, will outpace conventional salmon production by around 2050. Forty-two percent of industry representatives identified sustainable production as one of the top three drivers for increased seafood demand, compared with 29% in 2017. 

Enabling the transition

Financing

The support systems for these transitions are as important as the technological developments.

And one crucial support is financing that attributes value to nature, accounts for the interplay between different types of financial instruments—including insurance, loans and subsidies—and meets the challenges of fluctuating market dynamics and traditional farming methods. For instance, significant up-front investment in precision farming and soil health monitoring is necessary to scale regenerative agriculture.

PwC’s State of Climate Tech 2024 found that the agriculture, food and land use sector accounted for two-fifths of deals supporting adaptation and climate resilience—more than any other sector. Examples include a start-up using AI to aid the discovery of crop genes that promote resistance to threats such as drought and heat; another start-up is working on technologies to detect stress in plants.

Technology

FarmTech innovations such as sensors, satellites, drones and AI are revolutionising productivity, enabling precision farming, and supporting the selective use of fertilisers and pesticides. Emerging technologies including vertical farming (which so far has been used primarily to produce leafy greens) use AI, the internet of things (IOT), and robotics to optimise growing conditions and boost yields; investment and scale is needed to grow a wider variety of crops. FoodTech is advancing animal-free proteins and other ingredient replacements; leading companies are gaining brand recognition and expanding manufacturing. Some are looking to AI to boost ingredient innovation for better taste and texture.

‘Food start-ups need guaranteed purchase commitments to help them grow and secure funding. We don’t expect buyers to pay substantially more for alternative, eco-conscious inputs, but they do need to take a longer-term view and invest today for an advantage tomorrow.’

Lars Langhout,Co-Founder, NoPalm Ingredients

At the same time, there is a significant need for technology tailored to small and marginal farms, often in the developing world, which account for 84% of the world’s 570 million farms. Farmers in the poorest parts of Africa still lack access to basic 20th-century agricultural technologies such as fertiliser, tractors and irrigation. A just transition is crucial in this context, ensuring that farmers and rural communities are provided with the resources, training and support needed to adopt sustainable practices without economic disadvantage, including equitable access to much-needed technology.

In India, where smallholdings are prevalent, less than 50% of agriculture is mechanised, compared with 75% in other developing countries. Small farms need affordable, appropriately sized equipment to boost productivity without the financial and logistical challenges of large-scale machinery. The ‘Uberisation’ of farm equipment is starting to improve access by offering on-demand rental farm machinery through mobile apps or call centres.

Government

Tax breaks, subsidies and guarantees have already resulted in major investments in renewable energy and clean transportation worldwide. The food transition will require similar levels of support, with a focus on outcomes-based policies that reward sustainable results, such as improving soil health and reducing water use.

Carbon credits for sustainable farming and subsidies for agri-food tech innovation can motivate companies to act. Farm assessments that give sustainability certifications can help farmers access premium markets and extra funding. Awareness campaigns about healthy diets, food waste reduction, and clear labelling for sustainability and nutrition can help consumers make better, more informed choices.

Support for investment in infrastructure is also needed, including R&D to develop new solutions such as pilot farms that show innovation in action and food-processing zones to attract private investments. In the UAE, publicly backed aggregators provide training, quality controls and added services to farmers, improving transparency and cutting out middlemen.

Taking action

By embedding themselves within collaborative ecosystems and leveraging technology and data differently, companies can prepare now to drive innovation, transparency and value creation in the future.

Below are four key actions for executives to consider:

1. Understand future ecosystems

Executives should anticipate how the global food system will evolve as a result of environmental pressures and technological advancements. Embracing the power of technology and data will help leaders map out scenarios and identify key players, dynamics and vulnerabilities across the ecosystem. Come to grips with regional disparities and how they affect your business. Talk to your R&D organisation, which often can see these trends better than others; challenge procurement on which suppliers to work with. Strategic foresight will help build resilience into supply chains in an increasingly complex landscape.

2. Decide how to play

With a clear vision of future ecosystems, executives should determine the best ways to participate and create value. This involves identifying core capabilities and exploring various roles—whether as innovators in food production, providers of precision farming services or leaders in health and nutrition. These decisions will guide deals and investments to access new talent, capabilities and markets.

3. Reinvent business models

To thrive in the reconfigured food system, companies are considering transitioning from traditional, linear models to integrated, circular ones that prioritise climate resilience, resource optimisation and data-enabled transparency. Making business model reinvention real might include shifting from product-based to services-based value propositions, such as a retailer focusing on providing weekly meals, or a fertiliser company shifting to offering farming-as-a-service. Innovative business models, such as those used by new players scaling regenerative agriculture globally through global soil data, will enhance profitability and contribute to environmental stewardship and social equity.

4. Build momentum

Embedding scenario planning and strategic foresight in the business is not a one-off exercise. Establish continuous monitoring to remain agile, as disruption is the only certainty in today’s volatile market. Strategically decide when to scale investments in new business models and strengthen supply chains by diversifying and building resilient relationships. Trade-offs are unavoidable: clearly articulate when and how you make them. Leading companies are already partnering within and beyond the food sector, engaging stakeholders including employees, customers, retailers, financiers, insurers and governments.

A collaborative approach not only enhances value but also drives business models that emphasise environmental stewardship and economic viability. Businesses that work together can adapt and thrive, ensuring a robust, equitable and resilient global food system.

Shrinking the consumer trust deficit

PwC’s Voice of the Consumer Survey 2024 finds that companies can strengthen consumer confidence by executing on six key imperatives.

How we feed ourselves

Capturing value in the new agri-food ecosystem.

Follow us

Contact us

Sabine Durand-Hayes

Sabine Durand-Hayes

Global Consumer Markets Leader, PwC France

Harald Dutzler

Harald Dutzler

Global Consumer Goods Leader, Strategy& Austria

David McGee

David McGee

ESG Leader, Partner, PwC Ireland (Republic of)

Stuti Sethi

Stuti Sethi

Strategy&, Director, PwC Netherlands

Tel: +31 (0)6 23802271

Owen McFeely

Owen McFeely

Director, PwC Ireland (Republic of)

Tel: 353 86 417 4381

Hide