August 10, 2010
According to the UN Food and Agriculture Organization, more than a billion people—roughly one in every seven people on the planet—suffered from undernourishment in 2009. Using a different methodology, the U.S. Department of Agriculture (USDA) estimates that the number of people experiencing “food insecurity” reached 833 million in 2009, and the USDA expects this issue to worsen over the next 10 years in 70 developing counties. The issue primarily affects those people living in rural areas in Sub-Saharan Africa and South Asia, who (in the ultimate irony) rely on agriculture for their livelihood.
Because of this problem, the first Millennium Development Goal (MDG) is to reduce world hunger by one half by 2015. Since the MDGs were created in 2000, the issue of “food security”—the guarantee that people worldwide have access to safe, nutritious food—has taken on greater prominence for governments, multilateral organizations, and the food industry due to the recent rise of agricultural and food prices, the growing use of agricultural crops to make fuel, and the outbreak of food-related social conflicts. Although still largely viewed as the responsibility of governments, the creation and maintenance of food security nonetheless has implications for the policies and operations of companies involved in the food, beverage, and agricultural industry.
Food Security Then and Now
Since the early 1970s, when the concept of food security entered the mainstream, its definition has changed substantially. Initially focused on the supply of food necessary to support growing consumption and balance short-term fluctuations in production and prices, by the mid-1980s, “food security” had evolved to account for the fact that while the planet produced enough food for all people, economic or physical limitations were causing some people to go hungry due to lack of access to food. Then, at the World Food Summit in 1996, the concept of food security was further expanded to include nutrition, safety, and cultural issues, and the definition coming out of this meeting is one of the most readily accepted today:
“Food security, at the individual, household, national, regional, and global levels is achieved when all people, at all times, have physical and economic access to sufficient, safe, and nutritious food to meet their dietary needs and food preferences for an active and healthy life.”
As with the definition of food security, there has been an evolution of thought on the causes of food insecurity and the remedies most likely to produce positive results. Originally conceived as a supply problem, food insecurity is now viewed as resulting from “structural” issues such as low incomes, extreme poverty, underinvestment in agricultural infrastructure, and market imperfections, and “transitory” issues caused by events like natural disasters, wars, and severe political upheaval.
Given the primary influence of governments over the factors that cause food insecurity, it is not surprising that solutions have most often been sought at the government level. But given the complex nature of the problem—which is caused by a combination of factors, not just a single event, action, or issue—efforts to bolster food security are most effective when they are multifaceted. And given that we’re unlikely to meet the first MDG without a radical change in our current approaches, this means there’s a critical opportunity for the private sector in addressing this challenge.
The Role of the Private Sector
From wheat farmers and grain millers to meat and dairy processors and retailers, companies all along the food and beverage value chains have opportunities to positively impact the level and nature of food security. Many other industries—including finance, infrastructure, extractives, and information and communications technology—also have an impact on food security. Although it is not (yet) a legal responsibility for companies to directly address food security, many are directly or indirectly supporting enhanced food security through efforts to increase production and improve access and nutrition.
There are two primary ways companies can address food security:
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Invest in agriculture. Over the past 30 years, underinvestment in the agricultural sector has been the norm in the developing world and in some industrialized nations. In particular, the lack of advances in agricultural science and technology, as well as inadequate or destructive policies and institutional structures, have combined to retard the development of the industry’s “productive capacity”—including sound farming practices, appropriate physical and government infrastructures, and technological advances in areas such as seeds and irrigation. Companies have played a supporting role in reversing this trend but can do much more to:
- Increase the allocation of funds to new crop varieties and sustainable production processes that minimize the environmental impacts and maximize the social benefits of agriculture.
- Use financial resources and political engagement to support the creation of rural cooperatives and agricultural extension services across the developing and developed world. Some companies have provided direct support to farmers to supplement (or take the place of defunct) state programs. Nestlé, for instance, supports a large network of agronomists that work with smallholder farmers around the world.
- Contribute technical and financial resources to the efforts to anticipate the impact of climate change on agricultural production and to devise solutions for those communities that will be most severely affected.
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Support efforts to overcome economic and distributional barriers to food security. As noted earlier, food security is not just a matter of inadequate levels of production; it is also driven by economic, political, and social issues that restrict individual or group access to food. Companies alone can’t solve these problems, but they can contribute to solutions by taking the following actions:
- Support public policy frameworks that provide economic incentives for production and the resources to build the necessary rural infrastructure.
- Increase access to markets and global supply chains for small- and medium-sized farmers through support for independent research and experimentation with new supply chain processes and business models. Examples of this include the efforts of Unilever to guarantee access to finance and technical assistance for thousands of small farmers of soybeans in Indonesia; the innovative program of J Sainsbury to provide access to its supply chain for small coffee producers in the Democratic Republic of the Congo; and the joint program of Danone and the Grameen Bank to locally produce affordable yogurt in Bangladesh.
The Way Forward
With food insecurity affecting up to a billion people today, it’s unlikely that those numbers will decline substantially unless all important stakeholders are engaged in solving what is a complex and multifaceted problem.
The business sector has an opportunity to use its technical, operational, and financial expertise to increase the aggregate supply of food, as well as to work toward eliminating some of the economic, distributional, and structural impediments to access to food that exist in many countries. In addition to contributing to solving one of humankind’s most serious and intractable problems, business can also look forward to larger consumer markets, more sustainable supply chains, and enhanced political stability around the world.
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