Resilience in Agri-Food Ecosystem – Adapting for Tomorrow

The European Union, a leading global powerhouse in food and beverage exports, maintains a complex, interwoven agri-food ecosystem encompassing a vast network from farms to manufacturing and distribution. This ecosystem, which includes all operators along the food supply chain, such as agriculture, food processing, and services, is integral to the EU’s economic resilience and societal well-being. Spanning from local farms to multinational food producers and service providers, it generates an impressive 11.3% of the EU’s GDP, with SMEs playing a significant role in its fabric. However, like many high-value sectors, the agri-food ecosystem is facing pressing challenges and opportunities that are reshaping its future.

In terms of structure, the agri-food ecosystem is dominated by two primary segments: food manufacturing and beverage production. Together, they form the industrial core of the sector, responsible for significant added value through processing and retail distribution. Countries like France, Germany, Italy, and Spain lead the EU in production, employment, and revenue within these subsectors. Though SMEs represent 99% of the ecosystem’s businesses, the few large corporations wield significant influence, generating over 52% of turnover and employing 40% of the workforce.

This ecosystem’s value chain also includes raw material producers—crops, livestock, forestry, and fishing—each playing essential roles in maintaining food security, economic stability, and export capacity. For instance, crops such as wheat, maize, and a variety of fruits and vegetables are produced across several EU countries, with France, Germany and Spain being key agricultural hubs. These resources are crucial not only for food production but also for industries that rely on agricultural by-products.

Despite its strengths, the EU’s agri-food sector faces vulnerabilities due to global dependencies and geopolitical tensions. The reliance on imported resources, such as feedstock from South America and fertilizers from Russia, Morocco, and Belarus, underscores risks associated with supply chain disruptions. The 2022 conflict between Russia and Ukraine highlighted these vulnerabilities, causing spikes in energy and input costs, which severely impacted agricultural production and food prices within the EU.

These supply chain pressures are exacerbated by environmental challenges. Climate change has introduced irregular weather patterns and extreme temperatures that threaten crop yields and livestock productivity. The EU’s agricultural sector must adapt rapidly to these changes, using sustainable and technologically advanced methods, which can optimize input usage and reduce waste. Additionally, environmental regulations continue to impose stricter standards, which demand innovative approaches to balance productivity with sustainability.

Consumer demand is changing rapidly, driven by heightened awareness of sustainability and health. Trends such as online food shopping, alternative proteins, reduced food waste, and environmentally friendly packaging are reshaping the market. These shifts present both challenges and opportunities. To cater to consumers’ increasing preferences for transparency and sustainability, producers and retailers are adopting circular economy models, such as AI-driven waste reduction and resource valorization, which allow agricultural by-products to be repurposed within the industry or across sectors.

The European agri-food ecosystem faces a pivotal moment, where its economic stability must be carefully balanced with sustainable and innovative practices to ensure a resilient future. Beside the critical factors identified are the low digital maturity and an excessive dependence on a limited number of suppliers or customers, making the ecosystem vulnerable to disruptions. The pandemic has accelerated the uptake of innovative food business models and digital solutions, however, resource inefficiencies across the supply chain and frequent physical disruptions to infrastructure and logistics present ongoing challenges.

These factors will be consolidated in our Supply Chain Fit Model for the Agri-Food Ecosystem. In the next phase of the project, this will enable us to assess how SMEs have responded during periods of disruption.