Although the agricultural sector has largely been segmented in the past, there appears to be a continued trend of consolidation in the industry. As the global population has grown, so too has the demand for food and associated goods. But the appetite for food is changing rapidly and has fueled the rise of M&A activity. A recent report by KPMG discusses the trends driving M&A activity in agribusiness.
A notable trend involves the rise of health products, which stem from consumer desires to seek more health conscious and sustainability-focused options. The increased focus on health and sustainability has begun to reach developing nations, and this demand has necessitated that that nations without the infrastructure to produce higher quality food be active in the market and pursue opportunities to produce higher quality food.
Food security is also identified as a significant driver of M&A activity, since it boosts domestic production and helps with securing land or imports from other countries. Different nations may use different means to expand and diversify domestic production. Nevertheless, macroeconomic factors may counteract this trend, particularly as some countries implement protective policies. The current trade tensions between the USA and Canada provide a prime example of how larger trends (e.g., the imposition of tariffs on Canadian dairy) can potentially restrict M&A in the agribusiness industry.
Ultimately, the agribusiness industry is rapidly evolving. It will be interesting to track developments in the industry, particularly as the demand for higher quality of food is juxtaposed against larger macroeconomic trends.
The author would like to thank Bikaramjit Sandhu, summer student, for his assistance in preparing this legal update.
About Norton Rose Fulbright Canada LLP
Norton Rose Fulbright is a global law firm. We provide the world's preeminent corporations and financial institutions with a full business law service. We have 3800 lawyers and other legal staff based in more than 50 cities across Europe, the United States, Canada, Latin America, Asia, Australia, Africa, the Middle East and Central Asia.
Recognized for our industry focus, we are strong across all the key industry sectors: financial institutions; energy; infrastructure, mining and commodities; transport; technology and innovation; and life sciences and healthcare.
Wherever we are, we operate in accordance with our global business principles of quality, unity and integrity. We aim to provide the highest possible standard of legal service in each of our offices and to maintain that level of quality at every point of contact.
For more information about Norton Rose Fulbright, see nortonrosefulbright.com/legal-notices.
Law around the world
nortonrosefulbright.com
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
