*Originally posted on June 19, 2018
We hosted our third Agrifood Supply Chain Conference on April 18 and 19 together with
Solidaridad and other wonderful sponsors. The conference was hosted at the Energy
Biosciences Institute (EBI) building in Berkeley, which houses cutting-edge institutions –
the EBI and Innovative Genomics Initiative – that create new technologies affecting
supply chains around the globe. The key premise of the event was that a high rate of
innovation is triggering supply chains to evolve to create new products or new ways of
producing existing products , in ways that are economical and meet environmental and
social objectives.
The conference emphasized some of the tensions and contrasts within agricultural supply
chains, and how policies can resolve or exacerbate these tensions. For example, the
contrast between the supply chains for two important crops, cocoa and blueberries, was
quite apparent. Cocoa originated in the Americas and production practices were
established by Franciscan monks. This system has remained mostly in place to date. The
crop is grown mostly in Western Africa where yields are low, trees are tall and require
significant harvesting efforts. Modern inputs are rarely used, and there are concerns about
labor practices and environmental ramifications. Yet, there are small, specialized
producers who are producing high-value, refined varieties. Researchers have discovered
new varieties that can improve productivity in the cocoa sector, but adoption of these
varieties is limited due to credit constraints faced by farmers, as well as lack of investment
in extension services and constraints imposed by government. Some of these constraints
may be motivated by the concern that an increase in supply may lead to a drastic
reduction in the price of cocoa, which is low already. One possibility that would allow
improvement in productivity is to invest in nurseries that introduce higher yield cocoa
varieties, and expand outreach to improve production methods, while simultaneously
converting some of the land to other crops, such as palm oil. This would allow to maintain
cocoa production levels, generate new sources of income, and overcome price
stabilization concerns.
While cocoa is an established crop grown by traditional smallholders in developing countries, blueberries have emerged as a commercially significant crop recently. Demand for blueberries increased partly due to studies showing that they contain strong antioxidants. At the same time, supply increased as research efforts allowed for a uniform, high-quality product. Harvesting is labor-intensive, and as minimum wage rises and constraints on immigration grow, the industry is seeking out methods of automated harvesting. Blueberries, for processing, are already harvested mechanically in some cases. But there is hope that with increased precision, harvesting of blueberries for the fresh market will also be automated. In addition, there are continued efforts to increase the efficiency of production and availability to consumers, in part by designing smaller plants that can be grown in vertical farming systems.
Both the emergence of the blueberry sector and the desire to produce high-quality and
sustainable cocoa reflect the agrifood sector’s emphasis on addressing consumer demands.
The emergence of the organic sector is a prime example of this trend. Whole Foods has
been a major promoter of organic, and their success has led other companies, like Costco
and Walmart, to invest in building supply chains for organic products. The organic
industry emphasizes that organic is “clean” and “natural” even though there is no
significant scientific evidence of the superiority of organic products from a health
perspective. Regardless, many consumers prefer organic, which leads to a price premium
for these products. It also reflects a societal tension between science and ideology that
may affect attitudes to agricultural biotechnology as well as climate change . Some of the
people most concerned about climate change also oppose the use of biotechnology in
agriculture, but modern biotechnology can be an effective tool to help address the
potentially negative effects of climate change related to agricultural production. For
example, genetic tools can be used to modify crop varieties to withstand changes in
climatic conditions, such as droughts, floods, etc. With the introduction of gene editing
tools, such as CRISPR, the capabilities of biotechnology are being enhanced even further .
The likelihood of their adoption will increase if the regulation of gene editing in
agriculture will balance benefits and risk. It’s clear that the major beneficiaries of many of
these technologies are developing countries that suffer from food deficiencies, and are
more vulnerable to the impacts of climate change. The major challenge is to develop the
capacity to create crop varieties and systems that will be appropriate for various locations
and be adopted when needed given the impending consequences of climate change.
One of the major features of modern supply chains is product differentiation. It is
becoming evident that food markets are bifurcated between foods that target the affluent
and foods that target the rest of the population. Very often, people who can afford the
price premium tend to purchase and consume organic-certified products. For some, it is
because of presumed health benefits, while for others it is due to taste. Others cite more
environmentally friendly practices (restricted pesticide use), or animal welfare
considerations. We are now seeing the emergence of restaurant chains, including fast food
chains, that emphasize organic products. From the farmer’s perspective, this is desirable
as it increases farm income. From a global perspective, it may be problematic because the
supply of organic products is limited and may be taxing on the environment .
Furthermore, the misleading demonization of non-organic food products may lead
consumers to misallocate resources, spend extra money while gaining minimal benefit,
and actually harming the environment.
A growing aspect of the food system is access to information and transparency about the
supply chain. More affluent consumers are generally more interested in and are more
willing to pay to be more familiar with food ingredients, and even food production
methods and working conditions. The cost of providing this information is declining with
information technology and there is a growing reliance on certification systems. However,
developing metrics for certification systems that adequately measure positive change,
such as poverty reduction and improved market access for farmers, and reduced
environmental impact of farming processes is a huge challenge in itself. This is a work in
progress – the track record of certification systems to date is mixed. Some indeed may
reduce deforestation and eliminate forced labor, but others may be costly to farmers and
won’t necessarily lead to meaningful change. Certifiers themselves need to be scrutinized
in terms of their impact and their cost. Much of the certification is conducted by NGOs,
but these are temporary solutions that need to be upscaled by sound regulatory systems
that are enforced by national governments and integrated into a global system.
Some useful insights on certification were shared by keynote speaker Nico Roozen of Solidaridad, our conference partner this year. Solidaridad is a global not-for-profit organization working for over 45 years in the area of sustainable agrifood supply chains. Solidaridad was, in fact, the first creator of fair trade labeling. In the 1980s, Nico witnessed first-hand the social unrest and brutal massacres of the civil wars in Central America. He realized that violence can be reduced through economic empowerment to improve the lives of poor communities striving for justice and equality. He learned from farmers that what they truly wanted was a better price for their coffee, not more aid money.
These experiences inspired him to create the first fair trade label ( Max Havelaar ) for
sustainably produced coffee in 1988, and thereafter for bananas in 1996. Nico encountered
resistance from both supermarkets and activists (who were against working with
business) in establishing the certification program Max Havelaar. Solaridad continues to
partner with businesses and national and regional governments in their work. Despite its
long history with certification, Solidaridad agrees that it’s simply not possible to certify
farmers out of poverty, or stop deforestation by certifying relatively small market
segments. It recognizes the limitations posed by third-party certifications and emphasizes
the need for innovation to overcome their shortcomings and eventually replace them by
well-functioning regulatory frameworks.
The growing demand for organic food also seems to reflect a sense of dissatisfaction
among consumers with the existing agrifood system. However, the food system is
evolving. The changes in the food system are outcomes of relentless innovations that tend
to originate in new knowledge and development and commercialization efforts resulting
in new food products and methods of production and consumption, and provide growing
capacity to deal with heterogeneity.
One of the biggest problems in the agrifood system is food waste and spoilage. A
significant portion of food produced in the tropics is wasted due to high moisture during
harvest and storage. It results in the growth of mycotoxins, including aflatoxin, which is a
source of childhood stunting, liver cancer and other medical conditions. A solution to this
problem is the concept of the “dry chain” where equipment and procedures are designed
to dry produce after harvesting and preserve it in a manner that protects it . While the
technical components of such a system are readily available and applied in many parts of
US and Europe, the main challenge is to implement similar solutions in developing
countries. This entails developing the production of affordable equipment, establishing
mechanisms for finance, and providing promotion and education that generate demand
and result in appropriate use of the new technologies.
While there is a lot to be done, the world has witnessed immense ‘quiet revolutions’ over
the past fifty years, that have improved the quality, convenience, and diversity of food
throughout the world, and especially in developing countries, through the introduction of
enhanced value chains. We have been witnessing a process through which many
technologies introduced in the US and Europe in the 1950s and 60s (e.g. refrigeration,
improved storage, processed foods, supermarkets) have been transferred to Latin America
and Asia in the 1980s/90s and to many parts of Africa and South Asia in the past 20 years .
The diffusion of these technologies is still only partial, but it is moving very quickly, and
has had significant impact on farms and agribusiness supply chains. The well-being of
many farmers has drastically improved, while many others have lost, at least in relative
terms.
Some of the drudgery and waste associated with food preparation is being reduced by
processing, in the forms of prepackaged salads and pre-cut meats. Consumers can enjoy
the process of cooking and save time with meal kit services, which deliver directly to their
doors. Precision agriculture embodied by technologies like drip irrigation and new
applications of information technologies and robotics allows for variable application of
farm inputs at different locations and over time and improve harvesting.
All these changes are associated with the development of new creative agrifood supply
chains. Many of these changes rely on local resources, yet almost all of these changes
affect interdependent global supply networks. These systems can be threatened by
protectionist policies that erect barriers on the transport of goods or knowledge to protect
local interests. Climate change is another threat; failure to mitigate it and adapt
production systems and logistical facilities to changing conditions may endanger food
security and safety globally. Understanding and improving agrifood supply chains and
policies are works in progress, and we will continue to engage through this workshop, that
aims to provide education and exchange of knowledge in the coming years.