Global food revolution 'roaring ahead'

Wednesday, 16 August, 2006

Globalisation is driving a dramatic restructure of the world's food production, processing and trade.

This is among the key issues in the world trade session at the International Association of Agricultural Economists annual conference on Australia's Gold Coast, according to session chairman Professor Kym Anderson of The World Bank and Adelaide University.

"Personally I'm staggered at the ability shown by some developing countries to buy into the global supermarket chains," Anderson said.

"I was in east and west Africa recently, and already you could see the huge build-up in delivery of fresh vegetables and flowers to European and other markets. Though mainly large firms were involved, smallholders and local seed companies are also getting in on the act."

Peru has virtually cornered global trade in asparagus, raising its exports 25-fold since 1990 such that it now supplies more than one-third of global exports " causing France and Greece to more than halve their exports. Similarly, first Kenya and currently Ethiopia and Senegal have specialised in green beans, and together they now provide one-seventh of global trade, according to Anderson.

"Almost overnight huge transformations are taking place as supermarket supply chains integrate worldwide. These are causing dramatic changes in where food is produced and sold and hence in the pattern of global food trade," Anderson said.

Anderson also noted the changes affect the farm sectors of virtually every country. They are leading to an expansion in contract farming, with participating growers contracted to deliver on strict time schedules, to rigorous quality, hygiene and appearance standards set by the buyers.

As production shifts rapidly to low-labour cost countries which prove they can meet these exacting standards, it places rising pressure on producers in high-cost developed countries such as Australia, which will face a rising tide of quality agricultural imports at low prices.

"Australian farmers will have to meet the challenge by producing even higher quality, and by using more automation and biotechnology to reduce costs," he said.

"The message is that all farmers will need a relationship with people down the food value chain " much as the Australian grape growers have with wineries and, through them, with major supermarket firms at home and abroad.

"In some ways this is an advantage, because it means you have fewer people to deal with and you get a clearer signal about what the market wants.

"But it also means you are subject to relentless cost and quality pressures, as buyers can quickly switch to the farm next door, or to the next country or even the next continent to satisfy their consumers.

"In the food business, globalisation is literally roaring ahead."

Other issues to be canvassed in the trade session include the prospects for a successful outcome from the Doha round of world trade negotiations and the impact of rising non-tariff trade barriers such as quarantine, beef hormone and GM bans.

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