[ASC-media] Media release: big changes in world food system

JCA Media jca.media at starclass.com.au
Sun Aug 13 23:54:43 CEST 2006

International Association of Agricultural Economists 26th Conference
Gold Coast Convention Centre, Qld, Australia
August 12-18, 2006	   ph 07 5504 4057


Monday, August 14, 2006						IAAE5


Globalisation is driving a dramatic restructure of the world's food production, processing and trade, with titanic market shifts occurring virtually 'overnight".

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

The key paper on changes in world food chains will be presented by Professor Johan Swinnen of the Catholic University of Leuven, Belgium.

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

"I was in east and west Africa recently, and already you could see the huge buildup 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 now Ethiopia and Senegal have specialized in green beans, and together they now provide one-seventh of global trade, Prof. Anderson says.

India is already the second-largest milk-producing nation after the US. Having raised its share of global production by more than half since 1990, and with the arrival of multinationals driving new efficiencies, it could well emerge as a significant exporter of processed dairy products.

"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."

Prof Anderson said the changes affect the farm sectors of virtually every country on earth. 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, who 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 says.

"The message is that all farmers will need a relationship with people down the food value chain - much as the Australian grapegrowers 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, globalization is literally roaring ahead."

Major issues affecting world food trade include the emergence of biofuels in some countries - which may drive up the cost of food generally - and on-going protection against processed food imports and how this impacts on the farmer.

"One bright spot is that we could see the giant multinational supermarket chains starting to apply pressure for trade liberalization to governments worldwide -that would be a good thing for consumers, but may also mean they can pay higher prices to farmers."

Other major issues to be canvassed in the trade session include the prospects for a successful outcome from the Doha round of world trade negotiations (discussed by Will Martin of the World Bank), and the impact of rising non-tariff trade barriers such as quarantine, beef hormone and GM bans (presented by David Orden of the International Food Policy Research Institute).

The International Association of Agricultural Economists (IAAE) 26th Annual Conference on "The Contribution of Agricultural Economics to Critical Policy Issues" is at the Gold Coast Convention Centre, Qld, from August 12-18, 2006.

More information:
IAAE media centre, Gold Coast Convention Centre, +61 (0)7 5504 4057
Professor Kym Anderson, World Bank, 
Media contact: Prof. Julian Cribb, 0418 639 245

Conference program & details:

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