Dr John Purchase presented at the Consumer Rights Conference. He addressed the following topics:
Global Food System and Value Chains;
Food Chain and Network Development;
How do we capture value?;
Role of Government and the Case for International Investment.
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ABC Perspective: ‘Access to safe and nutritious food for all’
1. ABC Perspective:
‘Access to safe and nutritious
food for all’
NCF: 2011 Consumer Rights Conference
Dr John Purchase
3 November 2011
2. Theme addresses Food Security
• Many definitions to food security, but the one
we will use is the FAO definition (World Food
Summit 1996):
“A situation that exists when all people, at all times,
have physical and economic access to sufficient,
safe and nutritious food to meet their dietary
needs and food preferences for an active and
healthy life”.
3. Components of Food Security
FOOD UTILISATION FOOD ACCESS
• Nutritional Value • Affordability
• Social value • Allocation
• Food safety • Preference
Food Security
FOOD AVAILABILITY
Complex concept:
• Production
Difficult to measure
• Distribution
and evaluate.
• Exchange/trade
Purchasing power key to access
Stability over TIME
5. Presentation outline
• Global Food System and Value Chains
• Food Chain and Network Development
• How do we capture value?
• Role of Government and the Case for
International Investment
• Concluding remarks
6. Global Food System and Value Chains
From Farms to … No. 1:
Everything! Food & Respect our
Paper Beverages Feed farmers!
Construction
& Furniture Fuel
Shoe &
From Pharma
Leather Ind Farms Medicine
to……
Textiles & Pharma
Clothing Cosmetics
Entertainment/ Electricity
Tourism
Plastics
Environment
Source: Marcos Fava Neves
7. Want to Make More than a Banker?
Become a Farmer!
By STEPHEN GANDEL July 10, 2011
• If you want to become rich, Jim Rogers,
investment whiz, best-selling author and
one of Wall Street's towering personalities,
has this advice: Become a farmer. Food
prices have been high recently. Some have
questioned how long that can continue. Not
Rogers. He predicts that farming incomes will
rise dramatically in the next few decades,
faster than those in most other industries —
even Wall Street. The essence of his
Tools of the trade surround John
argument is this: We don't need more
Willoughby on his 800 ha plot
outside Grand Island, Neb.
bankers. What we need are more farmers.
Photograph by Danny Wilcox The invisible hand will do its magic. "The
Frazier/TIME world has got a serious food problem," says
Rogers. "The only real way to solve it is to
draw more people back to agriculture."
10. Global Food System
• Within IFAMA, major look at increase in global
food consumption – 1 billion people in Asia
alone moving into middle class.
• All forecasts 10 years ago for China/Asia’s
production, imports & exports were wrong.
• If China today intends to be self sufficient in
soybeans, it will need over 35 million new
hectares – but does not have the land for this.
• Thus increased trade & opportunity.
• Will need much better logistics, ports, etc.
11. Global Food System
• Changing food system: Redefining
agribusiness from commodity companies to
consumer companies – worldwide trend.
• Demands of system far more complex and
variable – requires multi-disciplinary
approach and readiness to change.
• Common knowledge South Africa’s agro-
food system competes in the global food
system – thus need to adapt to new trends
and demands to remain competitive and
unlock opportunity. Consumer focus NB!
12. Global Food System
• Retailers, the Giants of the Chains
- Wal-Mart sold €337 billion worth of food
from 8 400 stores in 15 countries in 2010
- Private vs retailers labels/brands
- Powerful: Information about consumers
- Their supply chains incredibly important
- Move to ‘Green Economy’, Fair Trade,
Smallholder procurement, increased
convenience, tasting areas, etc.
17. SAARF LSM Segments: Proportion of SA adult
population and average monthly household
income in 2009
Source: SAARF (2010a) & BFAP, 2010
18. LSM class mobility: All adults during the
period 2004 to 2010
Source: SAARF AMPS data for the period 2004 to 2010, as quoted by BFAP
19. BRIC(S) to drive Modern Retail growth
2006 2010 2014Forecast
Rank Country €bn Rank Country €bn Rank Country €bn
1 US 612 1 US 638 1 China 761
2 China 328 2 China 529 2 US 745
3 Japan 297 3 Japan 345 3 India 448
4 France 206 4 India 279 4 Japan 360
5 India 190 5 France 205 5 Russia 322
6 UK 188 6 Russia 186 6 Brazil 284
7 Germany 150 7 Brazil 185 7 France 228
8 Italy 127 8 UK 170 8 UK 198
9 Russia 116 9 Germany 160 9 Germany 168
10 Mexico 112 10 Italy 130 10 Indonesia 167
2,326 2,827 3,681
Note: 2010F and 2014F are calculated using fixed exchange rates based on the average rates of 2009
from www.oanda.com (01.01.09 to 07.12.09).
Source: IGD Research, December 2009
20.
21. Germany: The Melander family of Bargteheide
Food expenditure for one week: $500.07
Source: Peter Menzel www.menzelphoto.com
Hungry Planet: What the World Eats
22. USA: The Revis family of North Carolina
Food expenditure for one week $341.98
Source: Peter Menzel www.menzelphoto.com
Hungry Planet: What the World Eats
23. Egypt: The Ahmed family of Cairo
Food expenditure for one week: $68.53
Source: Peter Menzel www.menzelphoto.com
Hungry Planet: What the World Eats
24. Chad: The Aboubakar family of Breidjing Camp
Food expenditure for one week: $1.23
Source: Peter Menzel www.menzelphoto.com
Hungry Planet: What the World Eats
25. Food Chain
and
Network Development:
14-Point List
26. Food Chain: 14-Point List
1. Chain Design, Governance and performance
2. Chain Waste
3. Food risks and chain integrated risk management
4. Sustainable chains and certification
5. Chain and network impacts, and adaptation
6. Chain and networks legislation and regulation
7. Food and health communication
27. Food Chain: 14-Point List
8. Climate change and chains adaptation
9. Chain information management
10. Biomass based chains
11. Metropolitan agriculture chains
12. Chain and network intermediaries
13. Chain and network entrepreneurship and
innovation
14. Chain inclusion and social innovation
28. How do we capture value?
• Innovation in integrated food chains:
input suppliers & farmers
• Innovation for Food Industry and Retailers
• Creative Pricing Strategies – framework
method: 3 phases
• Value capture trilogy:
- Costs
- Differentiation
- Collective action
30. Strategy for International Investment
• Considerable debate globally on pros and cons.
• However investment mostly positive and
should be promoted, but some limited and
transparent form of regulation necessary.
• Wal-Mart issue, for example, big debate in SA.
• Can evaluate Multi-nationals contribution to
economic development: Environment, Human
resources, Taxation, R&D, Financing, Policies on
market access, JV’s for farmers/suppliers,
and governance structures.
31. Role of Government
• Acknowledge agro-food industry is private
sector business, where markets have to work.
• Create facilitating and enabling environment
for competition in an open, competitive
market.
• Provide infrastructure at competitive pricing.
• Market development (PPP with Private Sector)
• Trade and tariff policy, etc.
• Assist in incorporating smallholders into
commercial value chains.
32. Agribusiness Executive Survey:
Competitiveness: Factor analysis
Cost of doing business
Aids 3 Labour
2.5
Crime Infrastructure
2
1.5
Labour policy Capital
1
0.5
Land reform policy 0 Technology
Trade policy Market size
Local suppliers of… Market growth
Electricity supplies Financial institutions
Scientific research…
2004 2008 2010
Source: Agricultural Business Chamber
33. SA economic growth: Tradable goods
sectors lag the non-tradable goods sectors
GDP % per Sector of Economy
300
250
GDP
200 Agric
Mining
INDEX
150 Manufacturing
Construction
100 Trade
Transport
50
Finance
0
20002001200220032004200520062007200820092010
Source: StatsSA
Graph: ABC
34. Concluding remarks
• Value chains compete globally, and our agro-
food value chains are part of that serious
World Cup competition. Ref not always fair!
• Generally fairly well developed value chains,
but by following a more strategic and
networking approach, together with
government, we can improve access of safe,
affordable and nutritious food for all.
• Our approach must be pro-active, and our
focus must be on people to make it happen!
