The Role of Food Value Chains in the
Global and Local Supply of Food
… and how they can help to identify innovative food
policy solutions to poor health
Corinna Hawkes
New York City Food Policy Center. Food Policy for Breakfast September 21 2015
http://globalnutritionreport.org
The problem
794 million are undernourished
161 million children under age 5 are too short for their age (stunted),
51 million don’t weigh enough for their height (wasted).
Millions of women have diets insufficient in Vitamin A, iron, iodine and zinc.
42 million children under 5 and 1.9 billion adults are overweight.
Over 12 million deaths due to chronic diseases linked with poor diets. inadequate pa
3. Food systems
2. Food
environments
Policies that affect the food system
affect food environments
1. People e.g. food skills
Entry points for food policy for better nutrition
Agricultural policies
Input policies
Production policies
Trade policies
Agricultural production
Food Availability
Food Affordability
Food Acceptability
Policies/ that affect the food supply chain
Storage
Primary
processing
Secondary
processing
Distribution
Retail
Marketing
Consumer food environment
Availability
Affordability
Diets
Acceptability
“Value Chain”
Conceptualising a supply chain from
the perspective of adding, creating &
capturing “value” from food by the
different actors in the chain
How much economic value created at each step?
Source: http://www.slideshare.net/FrostandSullivan/mega-trends-review-growth-strategy-optimization-in-the-global-food-beverage-industry-value-chain
How to create value for business?
Source: http://www.nestle.com/asset-library/documents/library/documents/corporate_social_responsibility/nestle-csv-full-report-2014-en.pdf
Who has the power to gain value?
Sourcehttps://www.unido.org/fileadmin/user_media/Publications/Pub_free/Global_value_chains_in_the_agrifood_sector.pdf
How to
reorient value
to poor
farmers?
Source: http://www.mercycorps.org/sites/default/files/photos/mercycorps_haiti_farm2market.png
How to bring in different types of “value”?
“It’s a “value” chain because the goal is not the lowest price or
fastest convenience but the most embedded value for the food
we eat. That value may include nutrition per dollar; climate
change value per dollar; non-monetary celebratory values in
ceremonies and food events; or the added value of more
revenues circulating in the local community.”
Source: http://www.dreamingnewmexico.org/food/ff-local-foodshed
Why “Value Chain”?
1. Diverse applications but unified by understanding
of interaction between chain
2. Most applications assume consumers “drive”
supply
3. Not used as a tool to achieve nutritional goals
4. “Modern” value chains driving unhealthy food
supply
Driven by………………...Producers
State
Private
Minimal use of
input generated
by producers
Intensive use of
input subsidized
by state
Intensive use of
external inputs,
privately traded
Short distances;
transport limits
trade
National/regiona
l; high trade
barriers
Extensive
networks; low
trade barriers
Food processing
Min processing
into edible form
e.g. flour
More complex
processing, &
then traded
Global ingred’ts
for local “ultra”
processing
Food retailing
Own
consumption or
local markets
Diverse stores
buying from
wholesalers
Supermarkets
buying from
producers
Minimal, local
information
Advertising
Highly
sophisticated
global marketing
Food production
Food transport/trade
Food marketing
Food
supply
Value chain evolution: same basic steps; value capture by
different actors, activities to create value, have changed
Private-driven, “competitive” & “efficient” value chains
characterised by global web of interactions between
multiple actors from farm to fork
… Leading to changes in the global food supply
Greater availability & lower cost of calories from:
• a smaller number of staples and oilseeds;
• feed for larger livestock operations;
• ingredients for processed foods
Lower costs of doing business by large scale
private agribusiness and food companies
In turn, increased consumption of refined
carbohydrates, meat, vegetable oils, processed
foods; uneven influence on fruit & vegetables
Vegetable oils
Availability for consumption
Food consumption, 1000MT
35000
= more trans
fats
= more sat
fats
30000
Oil Soybean
25000
Oil Palm
Oil Rapeseed
20000
Oil Peanut
Oil Sunflowerseed
15000
Oil Coconut
Oil Cottonseed
10000
Oil Olive
5000
0
Source: USDA FAS PSD
Indonesian policy = “we
will produce 40 mil
tonnes palm oil by 2020”
Agricultural
inputs
Agricultural
production
Trade
M
o
r
e
c
o
n
s
u
m
p
t
i
o
n
o
f
• Publicly funded research&development into new
varieties (Brazil, Malaysia, Indonesia)
• Fertilizer subsidies
• Increased yield
• Subsidies for soybeans, not other oilcrops (US)
• Increased incentives for private sector investment
• Opening of new and degraded lands for cultivation
• Lower limits on plantation size
• Increased production of intensive livestock
• Increased incentive to produce
• Lower export taxes (Malaysia, Indonesia)
• Lower import barriers (India, China)
• Increased ability to export
More oils
v
e
Lower
o
prices
g
l
e
s
t
a
More
b
differentiate
d marketing
l
e
Title of Conference to go here
Processing
Marketing/la
belling
• Privatization to attract foreign investment
• Excessive liquid oil = hydrogenation
•Trans fats labelling
•Soy health claim (US)
•Product/pricing/packaging differentiation
Meat
Availability for consumption of leading meats, world,
kg/capita/yr
40
35
30
25
Pigmeat
Poultry Meat
Bovine Meat
20
15
10
5
0
1961 1966 1971 1976 1981 1986 1991 1996 2001 2006
Source: FAOSTAT Food Supply
Argentina
•
Trade/financi
al
liberalization
policies
Food
supply
chain
Environmen
t in which
consumers
make food
choices
•
•
•
Still many trade barriers (safeguards, anti-dumping, special treatment, food safety, animal
health), but barriers lower in regional & bilateral agreements
Animal feeds (yellow corn, soybean meal, sorghum) widely traded goods, dominated by United
States, which subsidize production, & technology transfers
Policies in developing countries to enable imports of high-yielding genetic stock
More liberal regimes for foreign investment by TNCs into developing countries
Agricultural
production
Distribution
Chicken
availability
Imports &
exports
Chicken
affordability
Process
-ing
Retail
-ing
Chicken
acceptability
AVAILABILITY:
1990-2005:
availability
of
chicken
meat
doubled
infrozen
ACCEPTABILITY:
AFFORDABILITY:
Increase
declinedCalorie
offaster
packaged
for chicken
& processed
than
beef,
meat
(e.g.
(e.g.
chicken
packedin
-developing
Colombia
chicken
now sold
countries
pieces,
at half MDM
the
from
price
sausages,
15of
tobeef
30 Kcal/capita/day;
fast
or pork;
foods),
dramatic
through
nearly
price
supermarkets
as
decline
high as
in beef;
Brazil;
and fast
most
huge
food
striking
declines
outlets
increases
in
rather
developed
than
in
countries
live/whole
countries)
that
birds
traditionally
from markets&
consume
smallbeef
stores
(e.g. Latin American countries)
Increased chicken consumption (switch
from beef)
Food systems
Modern “value
chains” are not
“valuing” nutrition:
-not enough value to
be gained from
supplying the right
foods to people
- too much value
gained from
supplying less
healthy foods
The nutritional perspective
1. Define what value you want to create for nutrition and other
goals, and work back up the value chain to identify bottlenecks
& disincentives to creating this value
2. Remove policy barriers that prevent producers who can
deliver this nutritional value from capturing value for
themselves – and correct policies that enable producers of “eat
less” foods to capture too much value
3. Implement policies for coherence through the value chain
Implications for smarter food policies
to improve the food supply
The case of Brazil
1
2
• “Family Farmers”
clearly defined in law
• Exemptions to 1993
procurement law
3•
Support for producers – financing
through National Programme for
Strengthening Family Agriculture
• Support for consumers - Bolsa Familia
cash transfer program
• Procurement - Programa de Aquisição
de Alimentos; school food law plus
resolution on school food standards
• Logistics – Continued evolution of
operational rules & procedures
Potential policies to reduce
trans fats in India
Source: Downs SM, Marie Thow A, Ghosh-Jerath S, Leeder SR. Aligning food-processing policies to
promote healthier fat consumption in India. Health Promot Int. 2014 Jan 7.
Sector
Potential policy options to advance coherence
Agriculture
Processing









Retail


Mandatory rain harvesting for government buildings to be used for irrigation
Subsidise high quality seeds for healthier oils
Guaranteed access to (low interest) credit for farmers
Subsidise farm equipment
Mandatory intercropping of oilseeds with legumes (natural fertilizer)
Government support for cluster farming
Remove government regulated mandis (markets) (repeal APMC Act)
Establish mega food parks for oilseeds
Subsidies for investment in technology for product reformulation using
“healthier oils”
Government grants for food technology research for product reformulation
Mandatory discard of oil every 12 hours




Establish and maintain a food composition database
Mandate easy to understand front-of-pack labelling
Increase stringency of scientific evidence required for health claims
Ban advertising of energy dense (low nutritional quality) foods to children
Supply Chain
Promotion and
Labelling
Source: Downs SM, Thow AM, Ghosh-Jerath S, Leeder SR. The feasibility of multisectoral policy options aimed at
reducing trans fats and encouraging its replacement with healthier oils in India. Health Policy Plan. 2014 May 14.
1 (of 3 leading global companies)
Implications for SSB policies
• Huge gross profit margins (63.9% in
2007)
• Low capital costs in a consolidated
market (Softdrink Interbrand
Competition Act 1980)
• = huge funds available for marketing
300
scores
millions
• Lower ( 38.1%) due to more capital costs
• Schools as a “high-margin” channel –
vending make up 15% of sales, but can
represent over half the Bottler’s profits
• Schools in weak position to bargain the
Bottlers down on price
• = huge incentive to stay in schools
What leverage points would value
chain analysis of throw up at the
level of urban governance?
Thank you!
@corinnahawkes
corinnahawkes1@sky.com