Rabobank Group

11-10-2010 | Food and Agribusiness news

The food crisis of 2007-2008 placed long-term food security back on the global political agenda and raised the question ‘Will it be possible to feed the world in 2050?.’ Many studies conclude that this will be possible, but ask whether it can be done sustainably. A new Rabobank report entitled ‘Sustainability and security of the global food supply chain’ calls on the food industry to take the lead in ensuring a sustainable global food chain.

Food security challenge
Presenting the report at the Duisenberg Lecture during the 2010 IMF Annual Meeting in Washington, Rabobank Executive Board Chairman Piet Moerland said: “This Rabobank study can be seen as a wake-up call to all stakeholders of the global food supply chain. We must achieve a sustainable food supply system if we are to meet the global food security challenge now and in the future.”

New business opportunities
The report concludes that radical and coordinated action is needed by multiple partners to make the global growth of food supply more sustainable. “This requires major changes in regulations, markets, consumer preferences, pricing and how companies measure profit and loss,” argues Piet Moerland in the report’s preface.

The Rabobank Chairman also calls for large investments to improve current agriculture to secure a sustainable global food supply. The rewards? New markets and business opportunities. “The objective of growing our business and profitability is to ensure the sustainable development of wealth for all. After all, a cooperative bank such as Rabobank is by nature focused on people, while planet and profit are essential to a sustainable future.”

Leverage of multinationals
There are numerous uncertainties and constraints to overcome, and many challenges to face, says the lead author of the report, Rabobank economist August Sjauw Koen-Fa. “All the developments in achieving sustainability and security of the global food supply chain will affect the current economic and business models, and even the long-term strategies and competitive positions of food companies.”

The report stresses the strong strategic position of the processors, traders, retailers and investors in the food industry. “Many stakeholders in the global food supply chain are multinationals or international companies that provide farm inputs, food processing and retail and food services,” explains Sjauw Koen-Fa. “These players have enormous leverage in transforming the supply chain into a sustainable value chain.”

Price of sustainability
It’s not just the growth of emerging economies or populations that is threatening food security. Natural resources such as fertile soil, clean water and air, rainforest, plant extracts and genes are key drivers in changing the global food supply system. Sooner or later a price will have to be paid for the use of these vital resources for agriculture which have been known as ‘free goods’ since ancient times. The existence and emergence of various emission trading systems beyond the developed world are the first examples of this.

Rabobank Chairman Piet Moerland:”The valuation of scarce natural resources will be factored gradually into companies’ balance sheets. Private sector companies in the global food supply chain should take the lead in exploring new opportunities and implementing them into their business models as a means of transforming supply chains into value chains.”

Background of the Duisenberg Lecture
Now in its seventh year, the Duisenberg Lecture addresses topics close to the bank’s heart as a leading food and agribusiness bank, and topics that are relevant to the international development agenda. The event is named after the late Dr. Wim Duisenberg, former President of the European Central Bank and Vice-Chairman of the Executive Board of Rabobank Nederland (1979-1981).