08/11/2017 – Trends in Trade / Asia-Pacific / PwC
Creating efficiencies, building trust
Home to the world’s largest food producers, importers and exporters, the Asia-Pacific region presents important market opportunities and diverse challenges for the food industry. PwC’s wide-reaching survey reveals that CEOs across the region are looking for ways to create efficiencies across the value chain, as well as to build and maintain consumer trust in their brands.
The demographic and economic changes that are driving new market opportunities are tied to an important challenge for society: by 2050, there will need to be a 60-per-cent increase in global food production to feed an estimated 9.7 billion people. Simply put, in an increasingly resource-constrained environment, if current trends continue, demand for food is projected to grow faster than production, which will put pressure on food security across the Asia-Pacific – the world’s fastest growing region, and expected to remain so for the foreseeable. However, this trend will likely have a significant impact on the region’s long-term economic growth – and most importantly, on the well-being of its citizens.
By facilitating an Executive Dialogue on Food Security between food industry executives and ministers from the 21-member economics of Asia-Pacific Economic Co-operation (APEC), and by taking the pulse of business leaders through its annual APEC CEO Survey, PwC is on the front line of this important conversation. Here are PwC’s thoughts on what food CEOs are thinking about and what the professional services firm predicts the future holds for the region’s food sector.
Managing data from farm to fork
The need to address market-specific requirements and preferences is growing. In some cases, consumer markets are being created where none have existed before in emerging economies. For example, APEC economies with large Muslim populations (such as Malaysia and Indonesia) contribute to the need and opportunity for Halal-specific solutions in supply chains – a US$1.1 trillion dollar market globally. However, missing or incorrect information presents a problem throughout the food supply chain – and when globalisation mixes established and trusted systems with new, untested systems, disruption becomes a real concern. In addition, as consumers become increasingly sophisticated, connected and wary as a result of high-profile food scandals, there’s an increasing need for solutions to both manage risk in complex supply chains and provide transparency for customers.
For the food industry, this means investment in better technology and data management from farm to fork, which has a very large role to play in optimising both future production needs as well as management of food safety models. Indeed, roughly half of the food industry respondents in PwC’s APEC CEO Survey felt that leveraging the Internet of Things in areas related to customer relationships, supply chain responsiveness, operational efficiencies and cost reduction will generate benefits for their businesses in the next three years. CEOs are investing in technologies related to traceability and ensuring integrity of their supply and processing systems. Data is being collected and used to inform consumers and provide assurance as to the safety, providence and – in some instances – the sustainability of products.
Regional food security pressures
The topic of food security is playing an increasingly prominent role in APEC’s mission of promoting sustainable economic growth and regional prosperity. Accordingly, PwC is observing increased engagement from industry leaders, who think a better trade and regulatory environment is part of the solution. Last September, its experts facilitated the forum’s first executive dialogue with ministers responsible for food security.
“Industry is telling us that there is a natural intersection between the region’s trade and regulatory landscape and the private sector’s capacity to contribute to the region’s food system. Yet the challenge is significant – complexity and uncertainty create delays, added costs and barriers to investment,” the professional services firm noted in its report.
Indeed, PwC found that over half of food sector respondents to its APEC CEO Survey believed that regulatory environments in the Asia-Pacific region will have a greater influence on their investment decisions in the coming years. This suggests that new frameworks are needed to address industry concerns related to issues like quality assurance, such as supply chain traceability to prevent food fraud – a US$30-40 billion global issue. A more consistent approach to food safety and quality standards across borders would benefit regulators, food producers, sellers and consumers.
Production can also be expanded at the farm level with new agricultural technologies, such as drones, smart farming and biotech, suggested PwC’s report. However, regulations and education will need to keep pace with technology. New infrastructure will also be vital. The need for new and better ports, roads and cool chains is slowing the movement of imports and exports, contributing to supply issues, price increases and food wastage.
For more insight, visit: www.pwc.com