Food and Agriculture Economic Summit Highlights Factors Influencing Investment in Food Production and Distribution

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Future investments in food production and associated supply chains are influenced heavily by recent and ongoing economic developments. Sharp changes in consumer buying behaviors during the pandemic—combined with significant disruption of supply chains, geopolitical turmoil, and severe weather events—led food and agricultural product prices to increase rapidly. More recently, upward pressure on food prices has persisted alongside elevated costs associated with the production and distribution of various products. These economic developments, as well as emerging trends, have influenced recent and planned investments across the food and agriculture supply chain. At the Kansas City Fed’s Food and Agriculture Economic Summit in June, industry experts discussed both the current drivers of long-term investment decisions and potential constraints on future investment.

Emerging technologies such as automation and artificial intelligence (AI) have been particular targets for investment as producers seek to improve efficiency, increase productivity, and solve labor-related challenges. As Chart 1 shows, 75 percent of summit participants indicated that technology adoption and productivity growth at their organizations was currently faster than in the previous decade. For agricultural producers, AI has the potential to improve efficiency by improving production practices, particularly for livestock, and by augmenting employee decision-making with data. Other technologies, such as advancements in genetics, also have the potential to improve and refine production. Food distribution networks have quickly adopted automation powered by AI, and food retailers are expanding the use of AI to better track consumer buying patterns and connect and engage with customers. Many agricultural businesses also continue to seek technology-based solutions to address workforce shortages. Along with these advancements, data management and information technology infrastructure have also become critical components of investment.

Chart 1: Technology adoption and productivity growth has been faster recently than in the previous decade for most participants

Investment in new technologies could be particularly important for rural communities responding to ongoing economic, demographic, and infrastructure challenges. From July 2020 to June 2024, the population in most non-metro counties not adjacent to metro areas or without a concentration of recreation declined by 4 percent or more (USDA ERS 2025). At the same time, affordability and access to housing, childcare, healthcare, and broadband has also been persistently difficult in many rural communities, limiting their ability to attract and retain talent (McCoy 2024; Gallagher 2025). Adding to the challenges, many rural areas lack adequate energy infrastructure, constraining some forms of industry expansion. In response to these challenges, employers in rural communities have adopted labor-saving technologies and, in some cases, collaborated with community leaders to invest in programs that improve access to services and other amenities. Investment focused on improving rural services, amenities, and infrastructure to attract workers and business are likely to continue in the coming years.

In addition to new technologies, changing consumer trends are also spurring investment decisions. For food processors and retailers, increased use of weight-loss medications—specifically, GLP-1 drugs—could shift food consumption toward fresh produce and protein products over time. Around 6 percent of U.S. adults reported taking a GLP-1 drug in 2024, and this percentage is likely to grow as both awareness and production of the drug continue to rise (Montero and others 2024). If 10 percent of U.S. adults take GLP-1 dugs, total caloric demand could drop by as much as 3 percent and food spending could drop by $50 billion annually (Roe 2025). At the same time, grocery purchases through online and mobile formats are likely to grow further. Consumer spending on food has remained firm through 2025 with support from steady wage growth, but retailers have deployed promotional pricing and customer loyalty strategies more heavily in recent months as shoppers have become more price-conscious.

Competition from global producers has also spurred investment plans. Increased production of key farm commodities in Brazil and food security strategies in some nations have increased global export competition. Despite high food prices, strong global production has contributed to an ample supply of crops and relatively low U.S. farm prices. In response to narrow profit margins, many U.S. growers have been incentivized to pursue opportunities linked to upstream grain processing that add additional value to farm products as well as strategies that might allow sales directly to consumers. Agribusinesses such as grain merchandisers and equipment manufacturers have focused on expansion into markets with growing agricultural production that may also be located outside the United States. Throughout the supply chain, developments related to the connection between agriculture and energy also continue to have a significant influence on investments (Kauffman and Kreitman 2024).

While participants discussed several factors influencing their future investments, they also highlighted notable risks, such as capital costs, labor market conditions, and uncertainty in a variety of policy developments. In some cases, investment has been constrained by both the high costs of capital and policy uncertainty. Throughout all areas of the food and agriculture supply chain, substantial increases in capital investment costs over the past five years have challenged the financial feasibility of some projects and led producers to focus on investing to improve efficiency rather than to expand their operations. Policy uncertainty has also been a constraint. Chart 2 shows that about 30 percent of summit participants reported being at least somewhat uncertain about today’s investment decisions. Uncertainty about the path of policy related to trade, energy production, and funding for certain agriculture-related programs has caused delays in some major long-term investments.

Chart 2: Food and Agriculture Economic Summit participants were split about the level of certainty surrounding long-term investment decisions being made today

Investment in food production and distribution in the near term is likely to remain focused largely on improving efficiency and reducing costs. Ongoing and emerging economic, demographic, and consumer trends are the primary focus of strategic investments in the food and agriculture sectors. Labor market conditions, costs of capital, policy uncertainty and access to essential services in rural communities remain key constraints that have also influenced decision-making. Across the supply chain, plans are underway to use technological advancements to address labor challenges, improve efficiency, and increase productivity. The deployment and outcomes of recent and anticipated investments are likely to shape food and agricultural commodity markets in the years ahead.