A growing population along with economic prosperity contributes to the emerging market demand for food supply. With more investments in farmland, especially in Asia and Europe, raised M&A deals is making agriculture one to watch for.
By the year 2050, the world’s population growth is expected to reach nine billion, an explosive over 2 billion more people than the present. There will be a significant increase in the demand for meat and dairy. Also, more people will be living in the cities by that time, which means with the growing landscape, reduced farmlands for cultivation could play a serious part. It is a challenge to feed the rising population and considering that at about 1.4% increase in grains produced each year, overall a 30% increase is expected by 2030 and 70% by 2050.
An analysis: Scaling M&A in Eastern Europe and Asia
Productivity in agriculture can be increased tremendously with the use of technology. Weather affects food production and technology plays a vital role in increasing sustainable yields with high level of agricultural solution. A vast amount of data analysis regarding soil and weather is allowing farmers to receive ample advice and recommendations. Such improvements in the sector are hugely responsible for the current involvement of M&A in agribusiness.
The trend has been mostly seen in Eastern Europe and Asia. Despite uncertainties in the political and economic scenarios of these regions, interests in merger and acquisitions is signaling a greater confidence among investors. In 2016, the global M&A activities stood at a huge $3.6 trillion, four times greater value of deals than the previous year.
According to the Willis Towers Watson M&A Risk Consulting Company the change in M&A will be noticeable in the next 3-years time. By 2010, in Asia alone, M&A activities will be at a minimum of 250 occurrences every year. Calculating the surge, that kind of an increase would mean a whopping per cent rise since 2015. Stating the fact, Dirk Roethig, M&A manager of Düsseldorf Germany indicated a significant growth of merger and acquisition business in Eastern Europe. “It (M&A) will only rise, particularly in Eastern Europe and the primary reason being huge cash balances representing a total of 17 percent of assets. The cost of cash will always remain higher due to lower interest rates.”
Agricultural impact leading to increased M&A
Agriculture is an industry that will always remain vital and looking at the M&A trends, it is found that more focus is laid on farming and companies that manufacture seeds, chemicals, and various fertilizers. Since the 35% surge in the beginning of 2014, the exponential rise will continue even in 2018. Such a stability has only aroused the confidence of investors with more integrated technology and rising agribusiness capitals, there has been a steady stream of demand in Eastern Europe and Asia. As the progress with advancements in technology, better seeds and pesticides being used in agriculture, M&A in agribusiness is extremely lucrative.
Uncertainties in agriculture are now becoming more and more minimal and the most emergent leaders are from the Asia and Eastern European nations. The deal-making abilities of individual countries have improved greatly that has led to further sustainability and dependability in the future.