Feeding the World in the New Millennium:
The Development of an Open Food System in the Asia Pacific
Ray Cesca
President
GAEA International
Thank you Ken,
Heraclitus, the Greek philosopher, said, "it is in changing that things find purpose." And as the dawn of this new millennium takes hold, we look back upon the historic events over the past century that have dominated our lives and our thoughts. The many heroes and leaders that gave our history a kaleidoscope of voices and faces; the remarkable achievements in medicine, science, and technology. From the discovery of penicillin, landing on the moon, organ transplants, and the marvels of the computer.
On the darker side, wars plagued us, the holocaust, the Berlin Wall, and Hiroshima. Now all part of civilization's memory.
As we enter the new Millennium we have the opportunity to wipe the old slate clean and create a new vision built on a new sense of inspiration and commitment. What a blessed opportunity for us all. There is something magical about a change in time. We will be carrying some baggage along with us though. Things that we do not want to leave our young people as their heritage. Increasing pollution, destruction of the rainforests and ozone layers, perpetual conflicts in religion and above all starvation, poverty and the availability of affordable food in the developing world. Issues like these are the major concerns for us in this room at this session.
Some pundits say that the current food system is broken. There is enough substantial evidence to support that claim.
Can we really think that our food system is working efficiently when over 800 million people go to sleep every night without sufficient food?
Can we think that our food system is functioning when 60% of the world's population live on less than $2.00 a day and we expect them to buy the same variety of nutritious foods that is common place for most of us?
Can we think that our food system is operating at its optimum when three quarters of the world's population does not get sufficient nutrients in their diet to maintain a healthy lifestyle? Almost 415 million children suffer from malnutrition alone.
Can we think that our food system is close to perfect when we protect archaic and stone age methodologies and practices by imposing unrealistic barriers to trade that even if the food could get into a country, the cost would be so high that the majority of people could not afford it -- no less even having access to it.
Sages say that the fruit judges the quality of the tree. In the case of the current food system, what we see is that the tree needs some watering.
But taken from a total food production point of view, we see a different picture. Over the past 50 years, we experienced breadth-taking increases in commodity growth and in productivity, as you can see by this chart. The percentage growth in these major commodities (in blue) against the population growth shown on the right in red is awesome.
According the FAO (the Food and Agriculture Organization), this growth in commodities averaged 345%. Since there are 2x's as many people living on the earth today than in 1950, you would think that this productivity would have been sufficient to feed them all. But again for the more than 800 million hungry people in the world, these impressive numbers mean very little, if anything at all. It never reached them.
Overcoming the disparities in access to food and reducing poverty in developing countries represents the greatest challenge to all of us in this room. Asia Pacific alone has more than 40% of the 800 million people that fall into this category. For in this new millennium it is horrifying to think that this still exists. Obviously, the 30,000-foot visionary plans and political strategies did not work. The situation is chronic. It is debilitating. Our attention must be placed on "down and dirty" grass roots action plans that make a practical difference.
Let's look at the famous McDonald's Big Mac index that appears in the Economist magazine every April. It is an index that is suppose to judge whether currencies are overvalued or undervalued against the US dollar. The indices for emerging markets are generally above the US standard by 15 to 30 percent. What does this mean? Well from an agricultural point of view, it has more to say about the efficiencies of the agricultural community because the index is based on the price of a Big Mac in every country. And the price of the Big Mac is based on the cost of agricultural inputs. So if the index is 125, you can rest assured it is caused by the high cost foods in the country. And when you superimpose purchasing power (or how long it takes you to earn enough to buy the commodity) on top of the index, you have variances as high as 50 to 60 %. It is a wonder that most economies can eat at all. This is a travesty for all of us. We have a huge and growing problem on our hands.
What I just covered is definitely not a reflection of an efficient global food system. Feeding the world in the new millennium is going to be our challenge in this next century. If we do not see substantial reduction in the percent of people living outside the system by the next twenty-five years, we will not see it in this century. For over that time frame the world's population is expected to reach 9 billion from the current 6 billion. The amount of food produced will have to be double today's rate. Meaning that the almost 800 million who do not get enough to eat now will rise to 1.2-1.5 billion even with the vast increases in food production.
Maybe we should discount this group and say they will never be part of the consuming public. But that would not be right either. We need to include them but find a way to make the food system efficient enough to embrace them as well. And how we do this is what this session is about.
The Open Food System is an approach that has at its core a solution. It is a system where a number of critical components work together to create a borderless world for agriculture.
There are five fundamental principles that must be put into to play to make it a system that works.
The first is the assurance that technological advances in food production and processing reach all economies equally. We cannot have technology in one part of the world to the detriment of the rest. The use of precision farming techniques has the potential to dramatically increase productivity in areas with high variability in land and climate. Biotechnology also has the same potential with the added benefit of reducing the use of harmful chemicals and fertilizers and increasing the nutritional levels and quality of food -- not to mention the environmental benefits. The use of advancements in food processing and retailing give us a safer food system that will protect the consumer from adverse effects. There is no reason we should prevent these technologies from crossing borders whether by decree, by barriers, or by the business climate created by policies.
The second fundamental principle is the alignment of domestic prices with world levels, allowing them to converge over time. Let's face it, to compete and grow and add economic value to the country they must be players in the game. You never get anywhere standing on the sideline. Get out on the field. The World Cup was never won in the stands watching, but on the field playing. And to play on the field, you must have the tools to work with and be driven by the challenge. Going toe to toe is being in the game.
The third principle is free trade and investment. Economies must shift their paradigm relative to trade barriers for barriers are just that barriers; they hurt the people we are trying to help. We are all so shortsighted when it comes to protectionism. Protectionism, fostered by government policy, is the biggest irritant of all. This is definitely not tough love as one author puts it. There is not much you can do if you cannot trade. The nomads had an easier time doing business 2000 years ago than we do today. Can you imagine how much we could do creatively if we did not have inhibitors in the form of protection?
Fourthly, rural development, or the basic foundation on which to build the open food system. This is real rural development, which goes well beyond agriculture, even though agriculture is a main component of it. It is "extending the market place beyond urban boundaries" where economic advancements need to take place.
And finally, food security where economies must be willing to treat foreign consumers like domestic consumers, providing assured access to food in a non-discriminatory manner. It is achieved when an economy produces or purchases its food needs and makes them readily accessible to all members. There is nothing that will negate an open food system faster than a violation of this. A violation will cause suspicion and distrust in the entire system.
Of course this is still practical theory and not practical exercises.
This is where we come in.
If we try and tackle agriculture in its totality, we are doomed to failure from the beginning. It is too large and to complex of an industry. Even on a local scale it is awesome, no less trying to broaden it to encompass the Asia Pacific Region. So to tackle the industry head on would be an arduous task. One that is destined to long delays, burn out and wasted dollars and resources. But if we narrow our focus to a specific agricultural sector and pool our resources to take on one sector at a time. We have a better chance of seeing some progress in the near term.
As Chair of the International Food Products Committee for the Pacific Basin Economic Council we decided to tackle this arduous task by first identifying the agricultural sectors that are important in the region. Sectors that everyone participates in and ones that are important as a major food item. Poultry, Oil Seeds (including palm oil), Beef, and Sugar are among the top priorities.
PBEC's initial approach was to pick one product, and in this case poultry was selected. Why? Because it is a sector that is important and has a high level of interest to all the economies in the Pacific Basin. It is a primary protein source for most all peoples.
The approach we took was to look at the entire value chain for poultry from the grower of grains at the beginning of the chain through to the consumer at retail. Looking at each of these links along the chain we were able to determine the best management practices for a particular link. Additionally we included the associated services, finance, legal, and marketing, that make the industry function and the associated responsibilities that make the food safe and environmentally friendly.
We had six areas of concentration. Each area was evaluated for potential inefficiencies. They included Logistics, Financing, Trade, Production and Processing, Food Safety, and Feed Grain Distribution, Poultry Transportation, and Distribution. Then we consolidated the entire study into one working document that is now a guideline to achieving a competitive poultry industry. One that will compete with the best players in the global industry.
Six member economies participated in the study and all made major contributions to it. We are grateful to them for their outstanding and generous help.
This study will now be put into practice or applied in four countries in the Pacific Basin -- Malaysia, the Philippines, Mexico, and Colombia. It will not be limited to these alone, but we had to start somewhere. We will then monitor the progress in each of these countries as we apply the best practices that will be tailored to the specific needs of the country.
But more importantly, we will superimpose on top of the value chain for poultry the five fundamental principles to achieve an open food system; technology, alignment of prices, free trade and investment, rural development and food security. We will measure and record all the learning's over time to gain insights into the process and then leverage this experience to help in the other agricultural sectors that will follow.
The important thing for the Committee is the way we are going about this. Focusing our attention in one agricultural sector at a time and developing the best practices can be a catalyst in achieving the open food system. Additionally, the best practices also include those factors outside the borders of each economy, which influences the value chain's productivity. It does not mean that we close the borders while the process is going on, but accelerate it because we are working a plan for improvement which may and will required imported components. The governments have to be players in this. No direct help just clear the way.
Also, PBEC cannot do it alone, so it is collaborating with other important trade groups who have additional resources to be put against this initiative. These organizations include PECC, ABAC, USCIB, and the Asean Business Council. Jointly we make a huge difference.
The next sector after poultry to be undertaken is the Oil Seed Sector. Again, this is another agricultural commodity with wide-ranging interest in most economies. We will follow the same process that we used for the poultry study.
The PBEC Food Products Committee just met this past Saturday to lay the groundwork for its implementation.
So as we make the targeted agricultural sectors more efficient in each of the economies, competition grows, it get more intense. We will all be better off for it. And the big result of all is the eventual establishment of an open and efficient food system where feeding the world in the new millennium will result in making nutritious food available to more people and at a price they can afford to pay. We will ultimately close the gap between developed and emerging economies and make a more level playing field.
Thank you.