Trends in Agribusiness and Food Systems Global Challenges, Local Solutions

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Transcription:

Trends in Agribusiness and Food Systems Global Challenges, Local Solutions IAMA Forum 2009 Hans Jöhr Corporate Head of Agriculture Budapest, June 2009 1

Topics Food supply challenges From past to current... with expected outlook : turbulent times Where to focus on Use of natural renewable and non-renewable resources A practitioners' approach: The Nestlé Roadmap on Sourcing Agricultural Materials Practices, Processes and Human Resources 2

3

Turbulent times: Commodity - Food - Price Volatility Europe Spot Brent Price FOB (per/bbl) 140 130 120 110 100 90 80 70 60 50 40 30 Oil Price in US-$ in Euro per 100 kg feed 40 35 30 25 20 15 10 World Feed Price in US-$ in Euro per 100 kg milk ECM 60 55 50 45 40 35 30 25 20 15 World Milk Price US-$ in Euro 20 10 0 1996-2006 annual 2006 monthly Jan - March 2009 2007 monthly 2008 monthly 5 0 1996-2006 annual 2006 monthly 2007 monthly 2008 monthly 10 5 0 1996-2006 annual 2006 monthly 2007 monthly 2008 monthly Source: IFCN 4

Outlook: World Population 2050E Source: Worldmapper By 2050 it is estimated that the earth's human population will be 9.07 billion. 62% of the people will live in Africa, Southern Asia and Eastern Asia - numerically this is the same as if all the world's current population lived just in these regions. All numbers shown here are estimates - estimates are never perfect. 5

Food / Groceries Exports (2007) Source: Worldmapper Groceries include sugar, honey, cocoa, chocolate, tea, mate, coffee (a tea-like drink) and spices. Almost half of this category, when measured in US$, is oils from vegetables and meats. Net exports including commodities tend to come from more southern latitudes (2007). 6

Groceries Imports (2007) Source: Worldmapper 62% of all territories have net grocery imports, which means that the remaining 38% meet their demands (2007). Net exports tend to come from more southern latitudes: Asia Pacific and South America. There are however anomalies such as the United States, Canada and France. Further, Southern Africa has neither large net imports, nor large net exports.the highest value of net grocery imports is to Japan. Imports to Japan are one and a half times the value of those to the second largest importer, China. Further,the population of China is ten times larger than Japan. So, per person living there, Japan imports (net) sixteen times more groceries than China. 7

Constraints: Land / Water / Energy How can we double calories output by 2050, where... There is at most 10% more arable land available that isn't presently forested or subject to erosion or desertification - and degradation of many soils continues, Water for agriculture in some parts of the world is already today scarce, Most production systems are dependend on heavy fossil-energy based inputs e.g. fertilizers, chemicals, transport, cooling, packaging, etc....???? 8

Expected Demand triggers Change in Production Methods and Production Systems (1/2) Productivity and efficiency increase at farm level using natural resources sustainably means to produce with no waste, no pollution and no destruction, staying competitive, meeting global food needs and offset impacts of climat change and climat policy. Most critical topics for volume and quality growth are: Water, energy, technology (i.e. genetic potential, fertilizer,etc.), knowledge and know-how (farming practices and management) 9

To focus on... LAND WATER ENERGY CLIMATE PEOPLE...to ensure supply we have to smarter use natural ressources, Not wasting Not polluting Not destroying...and a good start is by erradicating the worst and promoting the best of Agricultural Practices 10

Watch achievements of technical assistance to farmers: Ghana 11

Primary Education Spending Source: Worldmapper In 2005 US$784 billion were spent on primary education around the world, when adjusted for purchasing power. The territory where the largest amount was spent is the United States; the spending was 28% of all spending in the world. In contrast, in Nigeria only 0.28% of all world spending was spent on primary education. 12

Expected Demand triggers Change in Production Methods and Production Systems (2/2) Re-vitalizing extension services (Primary Education) to disseminate better production practices and engaging in technology transfer to farmers have biggest impact on both: productivity, volume and quality growth & substantial income securing!...creating Shared Value getting ensured supply... 13

Benefits of Adequate Roads and Extension Services Why do road and extension services matter so much? Roads provide a critical link to local market towns, where most economic activity takes place (Dercon and Hoddinott, 2005) Half of households purchasing crop inputs do so in local market town Most artisanal products (especially those produced by women) tend to be sold locally Improvements in road quality... Increase of purchasing crop inputs by 30%, and Increase of women selling artisanal products by 39% Probability to link into interregional-international supply chains by 84% Source: 14

Return on Extension Services A ERHS survey asked farmers (from selected African countries) to describe the most important activities of extension agents (2006). Answers Being a source of knowledge about use of modern inputs (production methods), Ranked highest by 72% of farmers Being the source of knowhow about better cultivation practices Ranked highest by 46% of farmers Many case studies on Improvements due to extension services are available and prove correlation of visits by extension agents and farms' productivity increase, e.g. cocoa productivity rose almost three-fold between 1994 and 2004 on selected project.. Rates of return (ROR) to extension worldwide are between 13-500% (more than research (R&D)!!!!) Extension is a cost-effective tool 15 Source:

Watch achievements of technical assistance: Pakistan 16

The Nestlé Roadmap of Sourcing Agricultural Materials Creating Shared Value SAIN projects are creating value in the areas of: Farm income generation Crop and yield improvements Animal health issues Logistic support / Transport Water management & irrigation Farm management guidance Technical training Etc. Rural Development and Water 17

Wrapping up Develop farmers & suppliers building capacity for growth Secure availability of adequate agricultural raw materials CREATE SHARED VALUE Nutrition, Water Rural Development SUSTAINABILITY Protect the future Ensure safety & quality of raw materials COMPLIANCE Internal: Nestlé Corporate Business Principles External: Laws, Regulations, Codes of Conduct 18

Conclusions Matching expected food demand requires carefull use of natural resources to start at farm level Efficient and effective resource use implies knowledge and knowhow: Training farmers, securing minimum skills and competences to combine technology with better practices is a must Open food trade system to supply consumers compulsory Back to basics in rural development inevitable to achieve food security, nature stewardship and social peace 19

Creating Shared Value and Sustainability are the most important concepts in sourcing agricultural materials at Nestlé. The future & the knowledge are here. It's just not widely distributed and applied yet. Thank you for your attention! 20