In this report we explore implications of the COVID-19 pandemic to the Food and Agriculture industry and identify the areas of innovation critical to building a healthier and more sustainable food system. We are sharing this with our partners and investors in hopes that the data and insights will help you navigate this unprecedented time.
Our team spent the last three months researching and monitoring the coronavirus situation and trying to understand the impact on the food system. The research ranges from desktop research to monitoring news outlets and speaking to various experts. We spent time speaking with epidemiologists, healthcare professionals, farmers, entrepreneurs, philanthropists, and other investors to gather insights and develop a perspective to the implications of COVID-19 on food and agriculture.
The first and second sections of this paper largely consist of our research, while the third shares our perspective on the acceleration of trends through this pandemic.
Traditional recessions have varied from pandemic-induced recessions in their duration and pattern of recovery. Social distancing measures put in place during pandemics result in differences in industry performance, and we are seeing the same with COVID-19 with food, healthcare and a select few sectors expected to be most economically resilient. Both traditional and pandemic recessions have spurred innovation. Pandemic economic history teaches us that one of the hallmarks is that innovation plays a critical in the future normal that emerges. As one historian notes, “Disease can permanently alter society, and often for the best by creating better practices and habits. Crisis sparks action and response.”1
COVID-19 is impacting consumer purchasing behavior globally. Restaurants closures and preparations for quarantine initially resulted in panic buying and a surge in online grocery orders. Beyond immediate impact, we believe there will long-lasting, sustained changes in how consumers shop for, prepare, and consume food. Despite high consumer demand, the coronavirus has sparked logistics and systemic issues to the supply chain, including closures in processing facilities, price pressures in certain categories, concern about availability of agricultural inputs and labor, to name a few.
Since World War II, the underlying assumptions that drive how we grow and eat food are now being challenged with this crisis: globalization and the focus on supply chain efficiency, immigration and access to labor, the future profitability of traditional commodity systems as well as the future impacts on the volatility of climate change, increased healthcare costs and a future where we will need to feed over 9 billion people.
The potential common thread that could bridge us to the future is technology. Pre-COVID changing consumer behavior coupled with new innovation were driving increased market changes and pressure. While several trends that were in motion pre-COVID will be further accelerated by the pandemic, we believe four innovation themes are likely to rise in a post-COVID world, including: digitalization, decentralized food systems, de-commoditization, and food as an immunity.