The Future Of Food And Food Operations
Friday, September 22nd, 2017
Peter van Deursen, chief executive officer, Asia Pacific, Cargill, shares more with APFI.
What do consumers today expect from their foods and food manufacturers?
We are seeing a cultural revolution in the way people view the food they eat.
In developed countries, consumers, especially the younger generations, are increasingly associating their food with their values and beliefs. ‘What goes into my food? Were animals harmed in the production process? Was there consideration for the environment?’ In addition to requiring their food to be healthier and more nutritious, people want to know just how that food was produced.
In less developed and developing countries, this revolution is coming in the eating habits of consumers. As cities accommodate growing populations and as income levels continue rising, people start are moving away for a carbohydrate-based diet to a more protein-based diet with an increase in the consumption of oil.
In Asia Pacific, demand for animal protein is clearly on the rise. Poultry in particular is growing fast as it is one of the most affordable choices of animal protein.
How is this impacting food companies and how consumers shop for food?
Ultimately, the direction taken by food and agriculture companies is largely driven by consumer trends.
In developed markets, as people demand more transparency about the nature of the food they eat, the way food is being produced, packaged and sold is undergoing a transformation. We can see it in our daily lives.
Fast food companies now offer healthier options; packaging comes with more detailed labelling and made of sustainable material; food is sourced strictly from responsible and sustainable supply chains.
I see this as a positive trend. People should care about what they eat and how their food is produced. As someone in the food business, I feel we owe it to our customers and the people they serve to establish responsible supply chains, to address the impact of agriculture on the environment, and to ensure that farmers’ can make a decent living to sustain the industry.
In less developed and developing markets, consumer eating patterns are driving the change. As demand for protein products increases, the industry moves to accommodate. For example, for Cargill in Asia Pacific, we have well-established poultry businesses in China and Thailand which serve both domestic and export customers with marinated raw chicken products and full-cooked chicken products that are sold at food chains and convenience stores.
This year alone, an increase in demand has led us to enter the poultry processing industry for the first time in Indonesia and the Philippines. We also have plans to increase production elsewhere in the region.
In addition, as people live much busier lives in cities, their shopping patterns are changing. People are switching from shopping in wet markets and finding quicker alternatives. In many parts of Asia Pacific, supermarkets are fast becoming the preferred shopping venue. Down the road, we can expect online grocery shopping to become a lot more popular, a trend we are already seeing in China.
We are also seeing consolidation taking place in agriculture. Governments acknowledge the importance of addressing quality, nutrition and food safety concerns. Consolidation means the ability to do just that through adequate enforcement. Consolidation also means higher efficiency which generally brings the cost of food down.
What challenges do these pose on manufacturers, and what can be done?
There is no doubt that all these changes are bringing forth challenges for food manufacturers; however I believe food manufacturers should embrace these changes.
The world is fast changing. Consumers are increasingly demanding to know more about the food they eat because of genuine concerns. The impact of agriculture on the environment; the nutrition that goes into the food we eat; how safe are the ingredients, all these are valid concerns. In the end, sustainability and creating responsible supply chains for the food that are produced is critical.
At Cargill, we’ve identified four focus areas where we believe we can best have a lasting impact: land use, climate change, water resources and farmer livelihoods.
For improving land use, this refers to our work to end deforestation—and that work continues with a commitment to protect forests in our supply chains. In the area of climate, we’ve been working for over a decade on efficiency and renewable energy targets. Today, 14 percent of the company’s energy comes from renewable sources and we’re on track to increase that to 18 percent by 2020.
We’re improving freshwater efficiency in our operations and working through farmer training programs and NGO partnerships to improve farmer livelihoods. As a result of these efforts, we’re reducing costs, farmers and supply chain partners are benefitting from increased productivity and access to markets, and we’re building sustainable supply chains to meet the needs of both today and tomorrow.
When it comes to food safety, there should never be a compromise, regardless of who is consuming the food or where. We take this extremely seriously and we go to great lengths to ensure that all our food products meet the highest standards in food safety.
We also invest in innovation to ensure that our food is nutritious. In India for example, where oil is staple in 99 percent of households, regardless of income, we infuse our oils with essential vitamins as a solution to malnutrition. Research had shown that fortified oils were more cost-efficient than pills: not only were they easier to distribute to large populations, the oils also integrated more naturally into consumers’ daily lifestyles.
What can you expect of the future of food products, ingredients and operations in 5 or 10 years?
The world keeps growing, and ever faster. Today, Asia Pacific is home to nearly 60 percent of the world’s population. Where will we be in 2050? By then, there will be hundreds of millions more mouths to feed in this region alone.
Food production and agriculture will need to become more efficient and supply chains will inevitably need to become sustainable. We have to move with our times and adapt to the changing world. Sustainable food production should be at the core of a food business.
For example, we have we’ve introduced sustainable cocoa, rapeseed oil, soybean oil, and coconut oil, as a few examples. We’re working across our supply chains, from farm to fork, to come up with new solutions. And it’s not limited to food—we also have a bio-industrial product division that is producing bio-based substitutes for petroleum-based materials.
Companies in food and agriculture will need to reassess how sustainable their business and the supply chains they serve are if they want to be relevant in the future.
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