End of the year food blogs, often, focus on trends embraced by the chattering classes, such as Gothic desserts, even more obscure ancient grains, and posit opinions on whether demand for kombucha tea has peaked. However, we thought we’d take the “ground-breaking” FAO 2017 study of global food system trends and pull out some stuff that might be of interest to you whether you are farming, retailing or doing anything in between.
- World Population Growth is Slowing
We’re going to add 2 billion more people to our world over the next 30 years and most of us will be living in cities – that’s handy because it makes them easier to bag with our products and services. By 2050, India will be the most populated country and China will have got old before it gets rich, with too many grumpy batchelors. Notwithstanding the UK’s wingeing about new entrants, Germany’s population growth rate is double our own. Urbanisation brings sharp falls in fertility rates across the globe – who’s going to do the grunt work? A combination of robots and immigrants?
- Dietary Patterns are Changing
Global meat demand is buoyant and the better part of 90% of anticipated increase in consumption over the next decade will come from Asia. Right now, China woofs 25% of the world’s entire production of soya to feed an increasingly ginormous pork herd, but global meat exports will surge – 5 million tonnes per year into China alone. Counterbalancing meat demand growth in emerging markets will be a slow drift down in per capita consumption in richer countries. Mind you, protein intake will grow, driven by pulses, dairy and complex meat substitutes.
- Nutrition and Health
The proportion of the world’s population that is under-nourished is falling, thank goodness, but over-consumption is increasingly pandemic. Under- and over-consumption bring huge avoidable costs to us all. Food culture and history explain astonishing divergences between countries: in Europe, obesity is 3 times higher in the UK than Italy; and it’s 10 times higher in the USA than in Japan! There’s a well-beaten path – first, government departments of health recommend we change our diet and lifestyles. Little happens and the food industry is exhorted to reformulate. Marginal changes arrive but too little, too late. Governments turn to fat and sugar taxes more as a stick to beat industry into accelerated change than to influence significantly consumer behaviour. The health & well-being megatrend is a long-term runner.
- Global Economic Growth, Investment, Trade & Food Prices
Global annual economic growth is projected at 2.7% but it won’t be shared equally around the world. Watch out for hiccups in China, the USA and India – the first two have a disproportional impact on the rest of us, i.e. if they have a sniffle, we catch cold. A slowing China is entirely predictable but don’t forget that a VERY modest 5.2% growth in Chinese GDP is equivalent to adding “Another Germany” every 5 years! When the USA is struggling, China and India account for over 50% of global growth – a frightening reminder that economic performance in these two emerging markets can both make and break us economic minnows. Agricultural commodity prices are expected to remain at relatively low levels which is particularly disappointing for farmers ……
- Competition for Natural Resources, Agricultural Productivity and Innovation
…. because of growing scarcities of natural resources which will drive farm input costs higher. FAO anticipate “intense competition for diminishing resources resulting in further land degradation, deforestation and an unsustainable level of use of water resources”. But, there may be some mitigators: peak oil being pushed further back into the future because of alternative sources of both non-renewable and renewable energy; increasingly AI-driven, high tech agriculture bringing a productivity surge to commercial farming; science-based and societally-approved genetic engineering of plants with consumer and producer benefits such as nitrogen-fixing staple crops, drought- and disease-resistant crops, etc.; transformation of business models in farming fuelled by rewarding productivity increases (and other societal benefits) rather than focussing on slowing the rate of agricultural adjustment (e.g. elements of the CAP).
- Climate Change, Natural Disasters, Conflicts, Crises & Migration
FFAO separate these into 4 separate, gloomy trend boxes but we lump them into 1. Unequivocally, climate-related disasters are escalating causing huge economic damage, viz. $100 bn. per year between 2004 and 2014 and exacerbated by higher global temperatures and erratic rainfall. For many countries, this will mean greater food insecurity – higher income consumers can cope if a staple or a treat leaps in price. But, it’s a different matter for the lady buying food for her family in The Philippines. More than half her family’s income goes on food and, if the price of rice rockets because of a nasty El Niño, she doesn’t buy less rice, probably she buys more and much less of the little treats she was starting to give her family (e.g. imported beef, dairy products). For exporters, anticipate more volatility when you are business planning.
Here’s another crisis in prospect: in Bangladesh, half of the 165 million people live so close to the water that a combination of rising sea level, more frequent and extreme weather events and add in the tragic influx of Rohingya Muslims from Myanmar, then, Bangladeshis and the world have a massive problem. Because when push comes to shove and their feet get wet, they’ll start walking – and in numbers that will make the more recent North African immigrant flow into Europe look like a Sunday picnic. This is a Bangladeshi issue but a problem that the world will have to solve. Mind you, it’s an ill wind etc…. as we’ll be needing the labour.
- Transboundary Pests and Diseases
Global food security is threatened by an alarming increase in the number of outbreaks of pests and diseases in animals and plants. Bird flu is a case in point. Two years ago, there was egg rationing in the USA for goodness sake – a country where they can’t spell rationing, let alone come to terms with food shortages! China’s National Health & Family Planning Board reported 79 human deaths in January, 2017 from Avian Influenza. The worry is that a mutation might allow human to human transfer of AI and that would beget a cataclysmic pandemic. Remember, more than 70% of infectious diseases in humans since 1940 can be traced back to animals.
- Food Losses and Waste
There is plenty of food to feed our world of 7.6 billion. It’s not evenly distributed and close to 800 million people end their day hungry. Yet, one-third of all food produced is lost or wasted! In emerging countries, food is mainly lost in the supply chain before it reaches consumers (e.g. spoils in storage, or in-transit). In “our” world, most of the waste is in the home – we buy too much and throw it away. We’ll all get better at this – better supply chain management and infrastructure in emerging countries and, in the Western world, we’ll be shamed into more sustainable food buying and consuming practices and become savvier about spending our hard-earned money on groceries. Move on to 2050 – Malthus will be proved wrong again as we produce plenty of food for 9 billion consumers. The issue is will we be doing so in a sustainable way?
- Structural Changes within Economies and the Food System
As we travel the world of food, we note the accelerating pace of change in many markets. When David lived and worked in Africa, one huge constraint to smallholder farming was simply them getting paid for their output – payment was slow and poor via a labyrinthine marketing chain. Then, the mobile phone era arrives – Africa skips the need for a land-based telephone system and becomes a world leader in transferring cash safely via the phone. It’s refreshing to note, for example, Cargill’s “Cocoa Promise” to small-scale farmers ensuring rapid and fair prices plus extension support to their mutual benefit – a better deal for farmers and a more secure and higher quality source of cocoa for Cargill. The triple bottom line approach to business is a megatrend and essential for “Big Agribusiness and Food” to regain the trust of farmers and consumers worldwide.
We wonder about the path that grocery retailing will take in some emerging countries. Not necessarily the path of small grocery store (duka) through to large supermarket route characteristic of grocery evolution in our own markets – note the huge attraction of on-line grocery shopping for customers living in global mega-cities in Asia! In short, the evolution of food systems in Western economies is no blueprint for emerging countries. What we’ve learnt is that, for any business person, it’s good to get out more (and go a little further than Tesco and Pizza Hut). Stay home, stay stupid!
Happy Christmas to any readers who have got this far in our last blog of the year. We’ll talk to you in 2018 and reveal all about Gothic ice cream and kombucha tea!