Looking back to look forwards
During 2013, in our role as international value chain consultants, we worked in some 41 countries in Europe, Asia, the Americas, Africa and the Middle East on a whole range of assignments involving the meat and livestock sectors. While everyone starts with the view “we are very different”, we see many things that can bring a diverse set of countries and regions together – more so than they might think. So what is it that brings these countries and regions together in so many ways? How about the following factors:
• Government attention on agriculture and food
Huge amounts have been written about the demands that will be put upon the world’s food sector by the nine billion consumers we will have by 2050 and, more locally in the UK, the 70m we will probably have in another decade or so. Governments all over the world appear to have woken up to the fact that enhanced food security is a key strategic issue. Assuming that the supply of food is endless and will be cheap is misplaced.
The world seems to be awash with strategy documents on how to deal with this situation – from government agencies, NGOs and international bodies such as the FAO, OECD and World Bank. The common thread is: “there is a serious issue here and we need to deal with it”, as well as “for those that get it right, there is a big opportunity too”. Agriculture and food have never been as high up the political agenda as they are at the moment.
• Focus on the environment and social responsibility
What started out as a “nice to have” attribute a few years ago has now become virtually a mainstream requirement. Both NGOs and retailers claim to be articulating a concern from consumers about the reality of modern-day livestock farming, but over which there still appears to be a good deal of misunderstanding as to what really happens and why.
As a result, however, livestock and meat suppliers are now required to have a battery of policies in place to deal with issues such as labour utilisation and terms and conditions of employment, water, animal welfare, carbon footprinting and the use of power and energy. Investment in social and environmental projects is now being seen as an important part of the overall mix of factors that suppliers are judged against.
This is no longer the sole preserve of “concerned consumers” in Western Europe and North America. Similar sentiments are being expressed by consumers in Asia, Africa, Latin America and the Middle East. Just saying one has a good environmental and/or CSR policy is not good enough any more; farmers and suppliers all around the world have to be able to demonstrably prove it too.
• Switching of attention in international markets
In Asia, work has normally been focused on the likes of India and China to begin with, for obvious reasons. But there is now interest in other markets across the south-east Asian region. And in markets such as China, the need for understanding the first-tier cities, such as Beijing and Shanghai, is being replaced by getting a really strong feel for what happens in the rest of the country. In China alone, there are 160 cities with a population of over 1m. This represents a huge task.
In the Former Soviet Union, attention used to be focused on Russia, Poland, the Czech Republic and Hungary, but we are now seeing interest in markets such as “the Stans” [Kazakhstan, Kyrgyzstan etc] and a more dedicated approach to the Adriatic and Balkan markets – most of which are quite small on their own, but when taken together can present an interesting opportunity.
• Emerging markets are not emerging any more
There are still lots of opportunities in BRIC-type markets. The more experienced international players in these markets, however, have been operational in them for some 15, even 20 years now. Many of the larger international food businesses we work with are talking along the lines that, in five years’ time, these markets will not be treated as “special cases”, but will have been integrated in to the normal mix of global markets they deal with. They will no longer be emerging, but will have “emerged”.
• Dealing with volatility
In the past 12 months, dealing with uncertainty has become a fact of life for all involved in the supply chain. This might range from weather conditions around the world – which, in turn, have affected both supply and demand for meat and livestock products – to wider macro-economic and political issues. A few years ago, the phrase was coined to describe this set of circumstances as “the perfect storm”. The storm seems far from blowing out at the moment.
While world commodity prices for most foods seem more stable than, say, a year ago, dealing with this sort of uncertainty is now almost taken for granted as part and parcel of doing international business. And that will not change in the next 12 months – in fact, it appears to be something we will have to contend with for some time. Again, the bold and better-prepared have spotted that these sorts of changeable conditions also present opportunities too. The phrase of “embrace the change” has never seemed more apt.
• Never saying “never”
Sometimes we get what might appear, on the initial face of it, to be somewhat unusual client enquiries. No two projects are ever the same, but some are more alike than others. We often see similar issues for clients all over the world coming up, but maybe at different stages of development and in a different context.
What we have learnt over the last 12 months – if not before – is to treat all enquiries “for real”. Governments, farmers, processors, exporters and investors are all looking at a wide spectrum of factors, such as food security, CSR and good environmental practice, markets close to home and, in some cases, further afield and dealing with – and, in some cases, taking advantage of – a period of ongoing change in macro and micro circumstances. And there is often a good deal more to these sorts of enquiries than might at first meet the eye. We have learnt to “never say never”.
This is a phrase we expect to hear repeated in 2014 and beyond. It might well see us working in 42 countries in the next 12 months. Best get packing...
* John Giles is a divisional director with Promar International, a leading agri food value chain consulting firm and a subsidiary of Genus plc, and can be contacted at the following email: john.giles@genusplc.com.
