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Sustainable food security and food supply chain

10 September 20195 min reading

“Following the 2007/08 rice crisis, where a rapid and significant increase in prices caused substantial turmoil, many importing nations aimed for self-sufficiency to limit exposure to international markets. However, the expansion of trade is expected to raise the food security and rural economy links between Asia and Africa over the coming century, at a time when climatic risks to production may only increase. As a consequence, there is a growing need for cooperation in the sector, leading to a market place that is transparent and stable.”

Arnaud Petit Executive Director The International Grains Council (IGC) The International Grains Council (IGC) held its 28th annual grains conference with a focus on “looking beyond uncertainty” in June 2019 in London. The main outcome was that despite the volatile markets and trade environment, grains and oilseeds operators were making decisions based on the main drivers. The growing population which is fast approaching 8 billion and the rising demand from Africa are the main ones. The conference also addressed how the wheat, soybean and rice markets were confronting the challenges of food security and maintaining a sustainable supply chain.

In its five-year supply and demand projections to 2023/24, the IGC identified a sharp increase in consumption of wheat for food due to population growth particularly in sub-Saharan Africa. Given that average yield gains are the main driver of production, it is necessary to increase yields to boost stock-levels and avoid excessive volatility in this market.

Speaking during the special session on sub-Saharan Africa, Mr. Gerald Masila, Executive Director of the Eastern African Grain Council proposed ways to improve intra-Africa trade, namely through market-led approaches to the grain sector, more policy harmonisation, a greater transparency in policy formulation and investment in data and information systems. Dr. Raphael Karuaihe, Head of Commodities at the Johannesburg Stock Exchange expressed the need for further development in price risk management for African farmers and traders and in educational programs. Mr. Jean Charzat, Bunge S.A.’s Managing Director for Agribusiness in Sub-Sahara stated that over the next 10 years Africa’s imports would increase significantly and that African countries would need to develop regional stock markets and alleviate bottlenecks at load/discharge. Better port capacity and inland transport would also be crucial in the future.

Regarding the soybeans market, after heavy expansion in recent years, global production growth is likely to be modest. Following a dip in 2019/20, output is projected to reach 390m t by 2023/24, equating to an average annual rate of expansion of 1.5%. Led by increases in South America, but with relatively smaller producers expected to boost acreage, world harvested area is seen rising to a little above 133m ha by the end of the projection period – an increase of 5% on 2018/19. Based on a model of adjusted trend-yields – which implies a marked fall in 2019/20 – gains in world productivity growth are expected. In order to respond to society needs and requirements, all the food chain is moving to integrate new technologies and to communicate better to the consumer.

The session on how climate change and new technologies would reshape the grains and oilseeds sector highlighted the need for greater cooperation between operators in the value chain and the importance of investing in new technologies and integrated data systems to improve practices along the food chain.

Rice is a staple food in many of the world’s fastest growing regions, with global trade projected to play an increasing role in world food security over the coming years. Demand growth will likely stem from sub-Saharan African markets, where gains in domestic output are expected to be surpassed by higher food requirements from larger populations and dietary changes as the region continues to urbanise. Asia will remain the dominant supplier, with international markets potentially exerting a growing influence over the economic wellbeing of the continent’s rural economies.

Heavy government involvement in the sector can, in part, be attributed to some unique aspects of rice trading. Rice markets lack transparency, partly due to a significant level of fragmentation amid myriad traded grades and varieties. There is no effective futures market, which has also stymied price discovery and visibility, as well as limiting risk management options. With an average farm size of around two hectares, rice is also the most thinly traded of the major agricultural commodities, while the added complexities of trading a processed (milled) product can pose further challenges.

Following the 2007/08 rice crisis, where a rapid and significant increase in prices caused substantial turmoil, many importing nations aimed for self-sufficiency to limit exposure to international markets. However, the expansion of trade is expected to raise the food security and rural economy links between Asia and Africa over the coming century, at a time when climatic risks to production may only increase. As a consequence, there is a growing need for cooperation in the sector, leading to a market place that is transparent and stable.

In conclusion, the grains and oilseeds sectors are using globalisation, integration and innovation to address the challenges of food security and enhance value chain sustainability.

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