Economic and Demographic Forces Affecting the Agri-Food System

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November 30, 2007 - Author: William A Knudson

Introduction

Two economic forces and three demographic forces are critically affecting the agri-food system. The economic forces are the slow but steady growing affluence of U.S. society, and the growing role of women as an economic power. More and more U.S. households now have increasing amounts of discretionary income, and increasingly women are the source that income. The three demographic forces are smaller households, an aging population, and a more ethnically diverse population. While these demographic forces are distinct, they often reinforce their impacts on the agri-food system. This is particularly true for smaller households and the aging population.

These societal changes have led to the development of several drivers in food demand. These demand drivers are as follows: an increased demand for wellness, an increased interest in ethnic foods, indulgence as an attribute, and an increased demand for convenience. The Green movement, a response to environmental concerns is another driver. Concern about global warming seems to be of increasing importance to some consumers. Another attribute of food products, value, is not a new trend but remains an important consideration for many consumers. These trends will be discussed below in further detail.

These societal changes create both opportunities and threats to the agri-food industry. Americans are well fed, as is increasingly the rest of the world. Future agri-food sector growth will primarily be the result of product innovations, new products, formulations, distribution methods, etc. that address consumer preferences especially as they relate to the demand drivers.

Each of the economic and demographic forces will be discussed in turn. Then the relationship between the forces and the demand drives will be addressed. This will include further analysis and definition of the demand drivers.

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