The global food system is undergoing a revolution driven by changing consumer demands and lifestyles. Consumers are increasingly empowered and changing what and how they eat at a rapid pace. However, the food system responds slowly due to production cycles. This mismatch presents a major challenge. Additionally, globalization is connecting food production worldwide but local tastes remain, complicating distribution. Ensuring long-term competitiveness will require greater integration and information sharing across the entire vertical food chain to better serve rapidly evolving consumers.

1. HBS@Work Faculty Interview
The Global Food System
Professor David E. Bell, the faculty chair for the Agribusiness Seminar, discusses the implications of
the global food system as it increasingly becomes a single market.
Executive Education (EE): I understand that the Agribusiness Seminar is based on two
realities: the world is in the midst of a revolution—and the demographics and lifestyles of global
consumers are changing drastically. Could you explain the nature of this revolution and how
various changes impact the world food system?
DB: One major change occurring in the food system concerns the eating habits of consumers. When I
started teaching agribusiness over 25 years ago, many of the topics and cases we discussed were about
farmers planting crops, the prices they could get at market, world trade, and imports/exports. Now, we
talk more about what's happening at both the retail level and the consumer level. It's incredible how
dramatically eating habits have changed over time. From 1900 to 2000, big changes occurred in what
people were eating. It had to do somewhat with economics and the fact that countries got wealthier. It
also had to do with production capabilities that made more processed foods available. Another
important factor was the advice that the government was giving at any given time, for example the
Food Pyramid.
The more immediate reality, however, is that consumers today are very empowered about what they
eat. People no longer are accepting that what they ate growing up is what they should eat now. People
are thinking a lot about what they eat. For many, what they eat is becoming almost a fad. Diets come
and go with increasing frequency. By diet, I mean what we should be eating, not just in the sense of
losing weight. Potentially, this has enormous impact because the food system is long cycled by nature.
The minimum response time is a year, if you think of the crop cycle. If you think of the
responsiveness of meat production, that takes considerably longer. So, the food system responds
somewhat slowly, but consumers are changing what they want to eat at a much faster speed. The food
system needs to become more responsive if it wants to become consumer driven, and that's going to
be a major challenge over the next several years.
Changes in lifestyle, such as two-person working families, also are a major factor. In 20 or 30 years
from now, we may drive by supermarkets and wonder, "Do people still buy raw food?" In addition to
eating more packaged foods, consumers increasingly are relying on prepared meals. So, there are
going to be a lot more take-out operations. Eventually, people are not going to look at the kitchen as a
source of food, and kitchens will start disappearing. That would be a radical change for the food
distribution system.
EE: Globalization has changed virtually every facet of business and industry forever. In the
context of agribusiness, what new challenges does it present to food producers, distributors, and
governments?
DB: Food tastes are still very local even though production capabilities are global. Companies will
have to learn how to build global-type production economies, yet be able to market into countries
where food tastes are local. One issue, for example, is simply packaging. Labeling requirements are
different from country to country, so what people expect to see on packages also differs. How you
solve that problem is not easy. Food production may become global, but food packaging is going to
stay local for a long time.
We also have challenges such as genetically modified foods. GMOs, as they're called, hold the
promise to provide plentiful food supplies. Some people, for example, are working on genetically

2. modified crops that can grow with less water. To me, that sounds like a natural for Africa. Yet, many
governments are being lobbied to reject them. Brazil has been struggling with whether or not farmers
should be allowed to grow genetically modified foods. The precise content of GMOs also may vary in
acceptance by country. Maybe the EEC will come up with one solution, which would make that
market much easier. But until then, countries are going to solve those issues in different ways.
The fact that governments have absolute authority over their own food systems brings up other issues.
You have the growing pains of Europe where countries accustomed to controlling their food systems
for 500 years are having run-ins with the EEC. British chocolate is a good example. The EEC says
that it can't be called chocolate because it doesn't meet the requirements for cocoa content. But the
country's post-war generation grew up liking chocolate that way. As local food tastes run up against
standardization, similar conflicts are being replayed in every European country. That is a big barrier
to global food distribution.
EE: Based on various news reports, the growing concern about terrorism around the world also
extends to food safety. In your opinion, how real is this threat?
DB: I think that most large food companies have pretty good protection against terrorism, and that
protection comes from employee screening, careful checks as food goes out, and quality standards in
operations. The Tylenol affair many years ago and other incidents since have taught companies to
shut things down at the first whiff of trouble. The real weakness probably is in small companies where
fewer controls are in place. Fortunately, the potential for disaster from a small company is
considerably lower.
The food system certainly should be concerned about the prospect of food terrorism. But I actually
think it's not that big a concern, particularly with the communication system in place in the U.S. If
there is a problem, people will hear about it very quickly.
EE: Forces such as these certainly must have played a part throughout the history of
agribusiness. As you think back over the more than 25 years you've taught in the program, can
you recall other revolutions and consumer trends that have been equally powerful in
transforming the industry?
DB: That's a difficult question because many are ongoing, but I'll discuss several that come to mind.
One force is the liberalization of trade. More and more countries are trading food, so the
import/export business worldwide is in a state of flux. Countries usually regard food production as a
strategic industry. England believes that it should be self-sufficient in food, but global trade works
against those concerns. In the U.S., soybeans, which are the country's leading crop, may no longer be
grown domestically because Brazil can do it cheaper. Citrus growers face the same issue. The
globalization of production will further this movement toward free trade.
Another force we discussed earlier is the GMO or agriceutical trend intended to enhance the food
system. So far, science has concentrated on improving growing capabilities rather than nutritional
qualities.
A third force, I believe, is private labeling. In the old days, stores sold flour, sugar, beans, and the like
of a generic nature, and people bought them in bulk. Then came the era of branded foods. Companies
started to communicate directly with end users via TV, and people were trained to ask for foods by
brand. As time has gone by, people have realized that the invention behind those foods no longer
warrants the premium prices those brands are charging. So, retailers are having foods manufactured
under their own names. In Europe today, 40 percent of packaged foods sold have supermarket names
rather than manufacturer labels.

3. Last but not least is traceability. Many foods are commodities that are untraceable. Take a piece of
meat, for example. Most of the time, there's no way to find out what kind of cow it came from, what
kind of food the cow ate, or how it was prepared. There's no record keeping. So, if someone gets sick
or dies, there's no easy way to find out what went wrong. Last spring, such an incident caused a huge
panic that shut down the entire Canadian beef system. Fortunately, they did have available records,
the authorities identified the source, impounded the herd, and then traced where all the cattle from that
farm were in the food system. This issue of traceability ties back to both food safety and food
improvement. The industry has made major inroads, but further steps are needed.
EE: Looking ahead, how do you envision agribusiness changing in the next decade?
DB: Going forward, I think there will be more value-added products. This value adding will be in two
areas—the actual physical benefits of food, and food convenience. With consumers becoming more
empowered, they are desperate for foods that will improve their health. Many people today would
rather eat a special kind of food than take a pill for an ailment. Ongoing lifestyle changes such as
these only will increase the demand for packaged and prepared foods over time.
EE: Perhaps most important, what actions can all the players in the vertical food chain take
now to ensure long-term competitiveness?
DB: A supply chain mentality has existed for decades. The idea was that food started with farmers
who grew the crops and then the processors thought about how they could use these raw foods to
make products for customers. Consumers went to the store, saw the items available, and decided what
they would eat.
Now, it's become much more driven from the consumer end. Industry players have to get closer to the
customers and become more responsive to their needs. In order to do that, the vertical food chain must
become more integrated. By this, I don't mean having one company grow the crops, process the food,
and build a store for selling it. Instead, retailers must become more integrated with their suppliers, and
suppliers must become more integrated with the farmers. The real thrust is for the information loop to
move much faster so that the time between identifying a product consumers want and being able to
grow, process, and put it on the shelf is much shorter. Everyone is going to have to work more as
partners than competitors. Global success will be driven by the capacity to establish seamless
partnerships that serve customers.
As you can see, the global food system is becoming increasingly complex.