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The document discusses the challenges faced by the global agro-system, focusing on population growth, food security, and the increasing demand for agricultural products. It highlights the need for significant increases in cereal, meat, and soybean production to meet future food demands, while also addressing the complexities of food safety and consumer perceptions. Additionally, it examines the impact of climate change and economic factors on agriculture, emphasizing the need for improved management and communication within the food supply chain.

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7 views

Slide_week1

The document discusses the challenges faced by the global agro-system, focusing on population growth, food security, and the increasing demand for agricultural products. It highlights the need for significant increases in cereal, meat, and soybean production to meet future food demands, while also addressing the complexities of food safety and consumer perceptions. Additionally, it examines the impact of climate change and economic factors on agriculture, emphasizing the need for improved management and communication within the food supply chain.

Uploaded by

sandy877381
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Challenges of the Global Agro-System

Week 1
Lecture: Population growth 2

• Population growth has been geometrical rather than


mathematical in the last decades. Almost flat for
300.000 years, the curve had started rearing with the
first and second industrial revolutions.
• The industrial development ignited the
development of modern medicine and mechanized
agriculture: thanks to these changes people have
started to live longer and have more food.
• Nowadays, the steady population growth increases
demand for arable land not only for food and feed
production, but also for biofuels, fibre and timber.
• Since we still have approximately 1 billion people
who do not have access to safe, nutritious and
sufficient food, food security is considered a priority Elaboration from data available on Statista.com
right now.
Lecture: The calories challenge 3

• According to FAO, to feed the world population, under


current conditions, we will need 110% more cereals,
135% more meat and 140% more soy beans, more than
doubling the arable land.
• At the same time, we need to consider that there’s a
wide gap in terms of calories intake between the OECD
countries and the non-OECD countries.
• About 2.5 billion people in emerging countries are
moving to a modern economy with a larger middle class
with more income available for nutrition, leading to an
increase in calorie intake worldwide.

• On the basis of previous assumptions, the gap between


food production and food demand could be around
1300 calories per day per capita if the entire world
population adopted a Western consumption model. In
other words, we would not be able to feed the world.

World Resource Institute


Lecture: Income growth 4

What happens when incomes grow?

• Calories consumption is directly related to income availability and the quality of the food consumed: when income
increases, food consumption changes, not only in volumes, but also and especially in quality.

• Taking China as an emblematic example, it is quite evident how the change in per capita disposable income impacted
on commodities import.
• In the last decades, China has imported soy, corn and wheat mainly from North and South America to feed a growing
number of livestock.
• Animal proteins are in fact a proxy indicator for the economic development of a country: the higher the disposable
income, the greater the consumption of animal proteins.
Lecture: Prosumerism and food scares 5

One hamburger from Burger King can contain ingredients from approximately 200 suppliers located throughout the
States and around the world. This implies that:
• when a problem arises at one point in the supply chain, it is not easy to identify the original epicenter and even the
precise cause;
• the probability that a threat to food safety (whether real or not) will evolve into food scare has increased, causing a
growing consumer anxiety concerning food.

Food scare has been defined as “the response to a food incident (real or perceived) that
causes a sudden disruption to the food supply chain and to food consumption patterns”.

It is the response of the final consumer that elevates an event happening at any point in
the supply chain to a food scare, and this response resolves in a significant change in
consumers’ consumption habits and patterns.
Lecture: Prosumerism and food scares 6

Types of food scares:

• Information
• Technology or Industrial processing
• Microbiological
• Contaminant
• Deception

Implications for the actors involved in the food system:


• An improper management of a trivial event (we call it a butterfly) may have an effect on a very large scale;
• food system increased complexity and globalization augment the probability of “butterfly effects”;
• all the economic and political bodies involved in the food system should conceive strategies to reduce both the
number of incidents related to food scare and their associated economic, social and environmental impacts.
Lecture: Perceptions and embeddedness 7

• The term “embeddedness” refers to the degree to which the activity of a firm is conditioned by non-economic
considerations, namely factors that are related to society and culture.
• The food industry is full of cases where consumers’ perceptions and behaviors are driven by causes that are more
rooted in cultural and fashion trends than in objective factors.
• People tend to declare they prefer detailed nutrition information, but studies on actual choices show that they utilize
more easy-to-use and simplified labels and employ mental shortcuts that substitute a complex problem with a simple
one.

A preliminary task for companies and political bodies is to educate consumers not only to eat properly, but also
to be aware of the meaning of food labels. Moreover, food labelling can serve as a powerful tool for more
effective communication and product positioning, which ultimately turns into a competitive advantage for
companies.
Lecture: Sources and causes of climate changing emissions 8

• Anthropogenic climate change started about 250 years ago fueled by the utilization of coal and oil during the industrial
revolution.
• At the same time, about half of cumulative anthropogenic CO2 emissions have occurred in the last 40-50 years, during
a period characterized by a great acceleration of population and economic growth and the development of industries
based on intensive technological solutions.
GHG emissions per year by use
1. Energy, both through direct utilization and through electricity and heat production, is the most important contributor;
2. industrial activities (contributes to more than 30%);
3. transport (contributes to more than 14%).
“Considering agriculture, forestry and other land uses – for example, land-based CO2 emissions released from fires – this
sector contributes to about a quarter of global GHG emissions per year.”

• Beef and cattle milk production account for 41 and 20 percent of the sector’s emissions respectively;
• in terms of activities, the production and processing of food and enteric fermentation (digestion) from ruminants
represent the two main sources of emissions.
Lecture: Commoditization and price transmission in the chain 9

Distinctive aspects of commoditization


1. Product homogeneity: products are perceived in the market as being interchangeable;
2. price sensitivity: buyers are looking for the best price for a standard product;
3. absence of switching cost: the direct and indirect costs of changing from a supplier to another are basically inexistent;
4. industry stability: predictable market demand, a consistent competitive structure, and few changes in the set of
customers.
“Price transmission in a supply chain refers to a situation where prices at one level of a supply chain react to changes at
another level.”
Why is there asymmetry in the transmission of prices?
1. Market power
2. Adjustment costs
3. Public interventions
4. Publicity and food scares
5. Perishability of the products
Lecture: Agriculture value added 10

How much value added is attributable to agriculture?


“Agriculture value added is the net output of the agriculture sector, including forestry, hunting, fishing crop and livestock
production, after adding up all outputs and subtracting intermediate inputs.”

When industrial economy advances:


• raw materials from agriculture are transferred to industrial food manufacturers who benefit from economies of scale of
large processing plants;
• input cost increases due to growing demand for standardized volumes: as a consequence, farmers pay more for
production inputs.

• The limited possibilities for farmers to add value to the basic product or to get remunerated for it and the increasing
input cost due to competition for scarce resources, is reducing the value added of agriculture in the supply chain.
• Agriculture’s contribution to the Italian national GDP is a decreasing percentage, today it is around 2%.

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