TECHNOLOGY AND INNOVATION PROCESS: SUSTAINABLE DEVELOPMENT OF THE FOOD MARKET (IN CASE OF TAJIKISTAN. PhD student Abdulmajid Bobokhonov

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1 TECHNOLOGY AND INNOVATION PROCESS: SUSTAINABLE DEVELOPMENT OF THE FOOD MARKET (IN CASE OF TAJIKISTAN PhD student Abdulmajid Bobokhonov Scientific Supervisors: Full Prof. Dr. Walter Schiebel, Full Prof. Dr. Fakerov H.N University of Natural Resources and Life Sciences, Institute of Marketing and Innovation, Vienna, Austria Tajik State University of Commerce Department of World Economy, Dushanbe, Tajikistan Abstract Development of innovation and technological process has an accelerating direction to the integration and exchange of the commercial, industrial, scientific-technological information which changes the character and direction of the food production and consumption in the food market. In this paper we consider and evaluate the dynamic changes of the technological development, innovation and sustainability in the food market, as well as some specific characteristics of innovations process in the food industry, link between innovation and market structure, mechanism of revitalization the innovative activities in the food market and present condition of the food market of Tajikistan under the condition of technological changes. Key Words: food market, perspective, sustainable development, food system and production, innovation process, food industry and technological development, agro-industry complex, food security and consumption. Introduction In process of globalization, the technological development and innovation process in the food system and food market is very important, evidently contributes to the economic efficiency, mainly through an implementation of the modern intensive method of production with effectively use factors of production, reduction in product costs, increasing the quality of products, contemporary trade products and the adaptation of products to consumer criteria. However, sustainable development of food production and increasingly the food system on basis of the technological innovation has to answer to broader societal objectives such as production of food products with using of biotechnology and ecological systems. Ecological food production aims to reduce environmental contaminants, conserve resources and provide an acceptable and dependable income for the producers. 1 Therefore, in case of Tajikistan the implications of innovations process and technology development in the food market have to be considered through a sustainability perspective. Innovation through the creation, dissemination and use of 1 Begon, M Ecological food production: a food production policy for Britain Green Paper No. 4. Institute for Public Policy Research: London. 5 knowledge, technology has significant effects upon the food market and recognized as a key driver of economic growth, such as such as passing materials more quickly through the food supply chain; diminishing the impacts of distance for the sourcing of materials; and impacting upon the structure and diversity of the food system. In this regards, these effects have significant implications for sustainability of the food market which the interesting aspect of innovation with its capacity is to participate in reforming current food market and facilitating the development of new models for food production and consumption. Technology and innovation towards sustainable development in the food market: During the last decade, development of high technology progress and innovation process for sustainable development of food industry, agro-food market is one of the most important global phenomenons with high relevance for effective economic output, consumption and employment. Over the past century XX, we can see many profound technological, economic and social transformations and diffusion of innovations but with approximation of new century and looking to the socio-economic development of humanity, two main changes will have an impact on the future development: scientific and technological progress, which increasing the level of agro-industrial

2 development, speed up the transition from traditional to modern agricultural food production and problem of satisfaction of significant demand of the rapidly growing of population with a food and food security; unsuitable socio-economic activities, which are creating the conflicts between humanity and environment (nature) that is a potential threats for sustainable socio-economic development, climatic catastrophes and survival of all humanity in future; From this point of view, the sustainable development of food market and production of food within the framework of innovation and technological development is urgent necessity for Tajikistan, where food security and food production in the country reduced to the critical level. The World Commission on Environment and Development (Bruntland Commission) defined sustainable development as "development that meets the needs of the present without compromising the need of future generations to meet their own needs". 2 Moreover, in order to understand how technological change and innovation might influence in the sustainability of the food market, we need to study the concept of the sustainable development, the means of measuring it and sustainability of the food market on basis of technological development and innovation. The concept of sustainable development lies in the progress towards economic, social and environmental objectives. Principles of sustainable development are described as social progress that recognizes the needs of everyone; effective protection of the environment; prudent use of natural resources; and maintenance of high and stable levels of economic growth and employment. The objectives of sustainable development include: refreshing growth; changing the quality of growth; meeting essential needs for jobs, food, energy, water, sanitation; enhancing and conserving the resource base, reorienting technology and managing risks; integration the environment and economics in decision making, 3 therefore, using the principles of ecological modernization to achieve a broad range of sustainable development objectives. The most popular forms of innovation and technological development that are taking place in the food market are in relation to new food products, effectiveness of production and increasing of product qualitative. 4 Hence, we now examine in more detail 2 Bruntland Commission see World Commission on Environment and Development, Bartelmus P Environment, growth and development: the concepts and strategies for sustainability. Routledge: London, New York. 4 Stewart-Knox, E. and Mitchell, P What separates the winners from the losers in new food product development. 6 how the food system and food market is constituted in the Republic of Tajikistan, and especially how technological change will have implications for sustainability of the food market. The common areas of technological and organizational innovations in the food market include the following: 5 a) -food ingredients and food processing; b) -formulated foods and food manufacturing; c) -fresh foods and distribution; d) -packaging; e) -retailing; f) -food qualities, including nutrition and safety. Development of high technologies and innovation process in the food market for the food supply chain will impacts on the temporariness, involve a shortening or prolonging of the duration of one or more stages as distribution, processed, storing, transporting, selling and consumption, which leads to fresher products for consumers and efficient movement of materials for primary and secondary processing of agricultural products, and increasing the level of productivity with modern method of production, which reduce cost and price of products. Sustainable development and food market of Tajikistan: The food market is fairly dynamic market on the development of national and regional economy. In the food market, the financial-commodity relations between the consumers and producers will take place under conditions of commodity production and development of the purchasing power of population. Moreover, development of the modern food market under the conditions of global financial-economic crisis and world food shortage which happens the decline of food and agro-food production, rising unemployment, increasing food prices, declining incomes of population, that setting a complex of tasks for all the countries, based on the necessity of implementation new anti-crisis measures, the modernization of all sectors of the economy on basis of technology development, investment and state support of the agro-industrial sector and protection of domestic market as food market. The food market is a diverse and dynamic one, which is characterized by several trends 6 : a) rapid changes in technology; b) Trends in Food Sciences and Technology. Vol. 14, No. 1-2, pp Earle, M.D Innovation in the food industry. Trends in Food Science and Technology. Vol. 8, No. 5, pp _Cowell, S.J. and Parkinson, S Localisation of UK food production: an analysis using land area and energy as indicators. Agriculture, Ecosystems and Environment.

3 changes in markets and marketing strategies; c) changes in industrial infrastructure; d) globalization of markets; e) changes in consumption patterns; f) evolution of consumer demands; g) increasing environmental concerns; h) concerns about food crises; and, i) consolidation and reduction in the number of organizations at all stages in the system. The food consumption and production system in the food market of Tajikistan is objective of governmental due to concerns about its unsustainability development in the transformation period. These concerns are not insignificant since the food market is one of the largest economic sectors in the Republic of Tajikistan and has a number of significant effects on its economy, society and environment. But, the balance of impacts upon these three measurements indicates pursuit of economic growth and relative disregard for environmental and social issues. In terms of the economic dimension of sustainability, the food market of Tajikistan makes a significant contribution towards economic growth, productive employment and business development in the country. However, current macroeconomics situation of Tajikistan, shows that development of retail trade and commodity turnover in the local food market is high depend from remittance inflows, which estimated about 3,721 billion US$ or 50, 2% of GDP in It should be noted that a substantial part of this remittances are spent on consumption (for purchase of essential goods). In this context, low level of domestic food production in country and growing inflows of remittances impacted on growth of import of the food products which, share of food consisted 22.7% of total import or around 798 million US$ in The GDP annual growth in average consisted over 106.8% during but production of agro-food products were 1,424 billion US$ or 19.8% of GDP, and the household consumption expenditure increased about 17.1% in 2012 compared to previous year In other hand, at the same time growing up the income of population, particularly in recent years, in parallel the prices on consumer goods are also growing rapidly, which negatively influenced on the purchasing power of population that CPI in average was 110.8% over last seven years. (Table 1) 2_MAFF (Ministry of Agriculture, Fisheries and Food) 1999a. National food survey 1999: annual report on food expenditure, consumption and nutrient intakes. Stationary Office: London. 3_Wagner, W.C Sustainable agriculture: how to sustain a production system in a changing environment. International Journal of Parasitology. Vol. 29, No. 1, pp

4 Macroeconomic indicators of Tajikistan in period Table GDP( billions of US$) 2,954 3,865 5,161 4,978 5,641 6,522 7,365 Agricultural goods production (millions of US$) ,275 1,116 1,203 1,356 1,424 Consumer goods production (millions of US$) *** *** Household consumption expenditure (millions US$) 2,312 3,125 4,53 4,326 4,885 6,342 7,423 Consumer Price Indices, in % to the corresponding period of the previous year 111,9 119,7 111,8 106,4 106,5 112,5 105,8 Price Indices for food products in % to the corresponding period of the 113,6 125,5 113,0 105,2 105,9 117,0 103,6 previous year Share of food in total imports, in % 12,6 13,8 14,1 17,6 18,6 20,2 22,7 Share of food in total exports, in % 2,9 3,5 4,2 5,9 5,2 4,4 9,5 Migrant Remittances (billions of US$) 1,019 1,693 2,541 1,754 2,313 3,061 3,721 Migrant Remittances in % of GDP 34,5 43,8 49,3 35,1 41,0 46,9 50,2 Source: Agency on Statistics under President of the Republic of Tajikistan and World Bank Database, ***unable information Nevertheless, despite some positive socialeconomic developments in country, the food market of Tajikistan still needs structural-sectoral modernization and development of high technology, innovation process remain as the main key factors for sustainable development. The main purpose of sustainable development of food market and food production in the Republic of Tajikistan, is to ensure a stability socio-economic development while preservation a favorable environment and rationally use of natural resources, and comprehensive utilization of production potential of the country. According to present socio-economic condition of Tajikistan for effective development of economic strategy and sustainable of food market within framework of formation of innovative potential, the solutions of next initial task are necessity: -development of modern and civilized of the competitive environment on the basis of balancing economic interests of the market subjects; -improving the competitiveness of domestic products with targeted at import substitution goods in the food market; -creation contemporary condition of the investment climate in the regional level in purpose to increase the innovation potential of the agro-industrial complex, formation of the modern market infrastructure and implementation of modern management, financial and production technologies; -providing of the support of economic development on the basis of modified market system and technological development; 8 -formation of the modern market infrastructure, adequate development of agribusiness in the region and economical environment an according to requirements of the foreign market; -technological change in the food market, agricultural production, industry food system and its implications for sustainability and providing population with guaranteed high quality food with corresponding medical norm; -creation of a multi-level system of the wholesale food markets in the region with a common organizational and technological model and operating instruments for regulation of the mechanism of products flows and stabilization of conjuncture in the food market; However, in purpose to achieve effectiveness of the sustainable development, the exploitation of natural resources and production process, investment direction, and the orientation of scientifictechnological development, humanity development and institutional changes must be coordinated with each other, in order to strengthen the current and future potential for effective economic output, creation new place for employment, sustainable consumption and with high quality and safety products to satisfy human needs and aspirations. Sustainable development of the innovation potential the subjects of food market: Formation and mechanism of implement the strategy of sustainable development of the innovation potential the subjects of food market should be

5 focused on the technological modernization of agrofood industry, improving the competitiveness of national agro-industrial complex, formation of the modern market infrastructure, improving food security and living standards of population. The proposed model about mechanism of the formation of innovation potential the subjects of food market consists from the availability economic mechanism of the government regulations which adapted to sustainable socio-economic development of the country. Figure 1 Figure 1. Mechanism of the formation of innovation potential the subjects of food market Purpose of Sustainable Development of the Market: Food Security and Improving the Living Standards of Population Sustainable Development Factors: Innovative development of market subjects Socially oriented development Effective mechanism of the formation of innovation and technological potential Import substitution and optimization of export-import flows Sustainable Development Tasks: Guaranteed providing of population with high quality food Formation of modern market infrastructure on principles of logistics Improving product competitiveness Optimization of inter-regional exchange and export Creating transparent instruments for stabilization of market conjuncture -conditions Preemption and insurance risks and threats on the basis of prediction the market stability Mechanism of Providing the Sustainable and Innovative Development of the Food Market Monitoring of market sustainability and food security i. Potential of adaptivity to changes in the environment ii. Stability of agricultural production iii. Sustainability of the consumer market iv. Food security in the region Evaluation of destructive factors and threats of the food security in the region Prediction of development and innovation strategy Level and Instruments of Regulation Strategic Regulation stimulation of the rational food consumption at the household level; deepening of the production specialization on basis of competitiveness of the products; development and implementation of innovative development strategy of the food markets; formation of multi-level system of the wholesale food markets; development of the exchange trade in the food system; improvement of the economic mechanism of regulation of the food market in the regional level; Operational Stabilization formation of regional reserve funds and conducting the commodity and purchase interventions realization of the commercial mechanisms of regulation of the price in food products regulation of trade flows with principles of logistics in the regional system of wholesale food markets Source: Institute of System Studies in Agro-Industrial Complex, HAH Belarus"- The main direction of the development of innovation strategy is development and implementation innovative technologies, modernization and high equipmentization the process of production in the agro-food industry, in order to increase its competitiveness. Effective government regulations of the food market allows, in a first step the formation of primary and secondary processing in agro-industrial sector, changes in the environmental context of food production and distribution, economic incentives of the sustainable development of food production and also provide long-term stability of the 9

6 regional food market. From this point of view, improving organizational and economic mechanism of regulation in the food market will create the integration of comprehensive utilization of the production potential, formation a modern market infrastructure, increasing specialization of production and providing the subjects of the market with information technology. Conclusion The present situation of the food market of Tajikistan shows that the problem of food security and development of the national food market originated, in particular, because of not efficiency socio-economic development, underdevelopment of the domestic agricultural production. Furthermore, using mainly, extensive factors in the management of agro-industrial complex that in result, provides the low productivity in the agro-industrial sector. It is, however, formation and functioning of the food market in high level depend from economic, nature-climatic factors and sustainable development of the agriculture sector. Agricultural productivity growth contributes to better nutrition through raising incomes, especially in country where this sector constitutes for a large share of the economy and employment, and by reducing the cost of food for all consumers. Thus, a sustainable development of the food market can be assessed in terms of extended regional and national scientific-technology progress, development of innovation potential and ability to increase investments environment in the sectors of agro-business, and primary secondary of food processing. The stabilization of the comprehensive utilization of the natural resources and factors of production depend from these arguments as development of technology, creation modern production environment and agro-industrial policy of the government. Therefore, successful implementation of clearly innovation and technology strategies of the development, where innovation could bring maximum sustainability benefit for increasing productivity without compromising of environment and intensive method of production, provide an increasing the level of consumption with high quality of goods, economic development on the basis of modified market system and technological development, and improving the economic mechanism for sustainable development of the food market in purpose rapidly exit from the socioeconomic difficulties and improving the living standards of population in the Republic of Tajikistan. survey, report prepared by Merit for the SPRINT Programme (European Commissionm DG XIII, Luxembourg). 2. Bartelmus P Environment, growth and development: the concepts and strategies for sustainability. Routledge: London, New York. 3. Bundesminsiterium für Bildung und Forschung (BMBF) (2006): Bundesbericht Forschung 2006 (BMBF, Bonn) 4. Begon, M Ecological food production: a food production policy for Britain Green Paper No. 4. Institute for Public Policy Research: London. 5. Bruntland Commission see World Commission on Environment and Development, Cowell, S.J. and Parkinson, S Localisation of UK food production: an analysis using land area and energy as indicators. Agriculture, Ecosystems and Environment. 7. European Commission (2006): Regulation (EC) No 509/2006 of the European Parliament and of the Council of 20 march 2006 on agricultural products and foodstuffs as traditional specialities guarenteed. 8. Earle, M.D Innovation in the food industry. Trends in Food Science and Technology. Vol. 8, No MAFF (Ministry of Agriculture, Fisheries and Food) 1999a. National food survey 1999: annual report on food expenditure, consumption and nutrient intakes. Stationary Office: London. 10. Stewart-Knox, E. and Mitchell, P What separates the winners from the losers in new food product development? Trends in Food Sciences and Technology. 11. Wagner, W.C Sustainable agriculture: how to sustain a production system in a changing environment. International Journal of Parasitology. Vol. 29, No Institute of System Studies in Agro-Industrial Complex, HAH Belarus " Food and Agriculture Organization of the United Nations Agency on Statistics under President of the Republic of Tajikistan World Bank, Database of the World Bankwww.worldbank.org References: 1. Arundel A.; van de Paal G.; Soete L. (1995): Innovation strategies of Europe`s largest industrial firms. EC: Results of the PACE 10