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Will This Trend Threaten Global Agriculture Companies?

The farm-to-table initiative is a social movement that promotes to consumers the benefits of eating locally-produced organic food as opposed to consuming imported or processed food.

Although the movement was founded in the west, it has been gaining popularity in Asia at large, including Singapore.

Through the internet, consumers are learning more about the process of traditional food distribution and how unhealthy it could be to store fresh food for a long period of time. Many upscale restaurants are also adjusting their food sources in line with the farm-to-table thinking.

That being said, the farm-to-table movement is still insignificant in the grand scheme of things when it comes to food distribution on a global scale. But will this trend slowly threaten large agriculture companies around the world?

Global food production is a free market of small, medium, and large farmers. But, the global food distribution industry is dominated by just a few large corporations. In Singapore’s stock market, companies such as Wilmar International Limited (SGX: F34)Olam International Ltd (SGX: O32), and Golden Agri-Resources Ltd (SGX: E5H) are key distributors of food products in the region.

As society progresses and more people become aware of the farm-to-table movement, would the need for large-scale food distribution diminish over time? Clearly, it is too early to have a definitive conclusion on the issue. It is simply not practical for some crops to be farmed on a small scale locally. Moreover, there are some crops such as oil palm that would need processing that’s hard to achieve on a small scale and in local communities.

Yet, the changing preference of consumers is an interesting aspect to consider. What can influence the decisions of consumers and how companies ultimately react to the changes are things investors should take note of.

When I compared my childhood with what my kids are experiencing now, I came to an interesting observation. When I was young, my parents were very poor. But as my family progressed economically, my parents associated dining at fast-food restaurants as something aspirational. Fast-food restaurants were where I went as a kid for celebrations.

But with my children today, I’m teaching them facts about how unhealthy the food provided in fast-food restaurants can be.

Why would the same event result in such a sharp difference in opinion between different generations? If an entire generation changes their mind about certain things, how would it impact the companies that are still living in the past?

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim does not own any of the shares mentioned.