Ireland is the most “food-secure” nation in the world, according to the Global Food Security Index. As we export 90% of what we produce, food security shouldn’t worry us. Yet, ironically, we could barely feed ourselves last week as supermarket shelves resembled something from a warzone rather than a three-day weather event. Anxious shoppers experienced the prospect of not having enough to eat when their provider of food had empty shelves.
Maslow’s hierarchy of needs saw that there wasn’t a run on quinoa, soya milk or avocados. More it was the basics of bread, eggs, meat and vegetables, the items we produce in abundance in this country, that were in high demand.
While Storm Emma is a once in 30- or 40-year event, these events happen and it is a stark reminder how close we can be to hunger. So, given that we feed almost 50m people around the world, how could we run out of food for our own?
Cost stripping
In recent years, the food industry has put immense emphasis on cost control and a relentless focus on maximising returns for shareholders along the supply chain. Shareholder value is everything and efficiency is the means to it. Lean management, six-sigma and just-in-time centralised distribution have taken huge amounts of slack and redundancy out of the system. The result is the companies that feed us can sometimes struggle, as we saw last week.
Promotions might seem like a good thing for consumers. In the long run it just means more producers leaving the industry and more imports replacing Irish produce on shelves
Across the EU, the food industry has become increasingly consolidated where it enjoys stronger bargaining power, although it is retailers more than food processors that are now setting the rules. Too often this power has been used to push down farm-gate prices with the savings pocketed without making food cheaper for consumers.
These practices have paved the way for selling some foods such as milk and vegetables at low and discounted prices. This helps create the expectation of cheap food among consumers. Furthermore, the food processor is often forced to supply the retailer with own-label equivalents which are sold at heavy discounts competing directly with a branded product from the same factory. Milk is a prime example and demonstrates how bizarre the food industry has become.
In fresh produce, supermarkets use heavy promotions to ensure shoppers are enticed into a store. Promotions might seem like a good thing for consumers. In the long run it just means more producers leaving the industry and more imports replacing Irish produce on shelves all year around. That leaves consumers with less choice and reduced access to local food. Last week supplies couldn’t get from the giant centralised distribution centres out to local supermarkets despite the vegetables sometimes originating in the locality of a supermarket.
Changed shopping habits
The traditional supermarket model, which encouraged shoppers to make a weekly pilgrimage to a supermarket and wheel heaving trollies around the aisles, is over. Instead, time-poor shoppers increasingly search for more convenient options, making smaller, more frequent trips to their local shops, or shopping online and having their groceries delivered to their homes. The impact makes the fridge and cupboards become just-in-time stock locations with only enough food for a couple of days. Last week people went out and stocked up in fear of the worst, putting pressure on the complete chain.
Irish people spend less than 10% of household income on food. It is a similar story across the EU. Globally over the last 10 years, actual food prices have declined in real terms according to the FAO. Is there a point at which prices have become so low that there is a threat to the food supply chain? The danger that a relentless focus on maximising returns becomes self-defeating is real where so much fat has been stripped from the system that we now have no contingency built in.
The complex food chain
Consumers are increasingly alarmed that failures and abuses of this convoluted supply chain mean they have little idea what they are eating, where it came from and whether it is safe. Horsemeat was a case in point.
In the US, for example, there are around 2m farms and more than 400,000 food facilities that process or distribute food. Millions of containers of food are moved on trucks, trains and ships. Food ends up in more than a million points of sale, including restaurants, supermarkets and other food service outlets. The ingredients that make the food can come from many parts of the world. For example, a simple loaf of bread can contain ingredients that come from 14 countries. The distance some foods travel is the equivalent of going to the moon and back before entering the kitchen.
Last month, KFC was left exposed following a supply-chain hitch. It had one job – ensure a steady supply of chicken to its customers. It should be a pretty low bar to clear for a specialist chicken chain. But two-thirds of its 900 shops went without their primary ingredient for several days.
Hunger
The events of the past week show there is a risk of the market failing to feed a country’s people. An interesting comparison is when the UK government introduced rationing to deal with extreme shortages of food during the second world war. At the time, the UK, with 50m people, was importing 70% of its cheese and sugar, 70% of its cereals and more than half of its meat, while relying on imported feed to support its domestic meat production. In a strategic move, its enemies decided to target the food import routes –effectively starving them to defeat.
With the UK voting to leave the EU, and Trump determined to make America great again, countries which once embraced global trade are turning inward and becoming more nationalistic. While the threat of war in the Western world is quite low today, could the next war take place in the battle fields of trade barriers, import duties and tariffs? Is it time for non-market correction mechanisms to ensure a country’s food security?
CAP and food security
CAP gives Europe food security. Without it, the EU would be dangerously dependent on fluctuating imports – a risk no EU country wants to expose. The CAP has its roots in 1950s western Europe, whose societies had been damaged by years of war, and where agriculture had been crippled and food supplies could not be guaranteed. The emphasis of the early CAP was to encourage better agricultural productivity so that consumers had a stable supply of affordable food coupled with ensuring the EU had a viable agricultural sector.
The CAP was obviously too successful in meeting its objective of moving the EU towards self-sufficiency, creating controversial butter mountains and wine lakes for a time. But it evolved and farmers today are no longer paid just to produce food. Today’s CAP is demand-driven – it takes consumers’ concerns such as the environmental impact of farming into account, while giving EU farmers the freedom to produce what the market needs.
Food items can be significantly cheaper when they are imported due to cheaper labour and less regulatory requirements. But it comes at a price. What happens when a supply point breaks down due to a logistics problem, a food scare or a disease outbreak.
Governments have become complacent when it comes to food security. People won’t worry about where their next meal is coming from until the day arrives and there is no food on the supermarket shelves. It might seem hard to believe, but if such an event like Storm Emma happened across Europe, would it survive?
Europe’s job of feeding itself isn’t over. Chicken and pork have grown to become the most popular meats in the EU. They may be produced internally, which gives the EU a false sense of food security. However, they both rely on imported feed commodities such as soya.
Given that China has replaced Europe as the main importer of South American soya bean as it strives to meet its growing demand for protein, there is no guarantee that imported ingredients for animal feed continue in the amounts required. If the EU cannot access the feed required to grow this meat, it may not be as secure as it thinks.
It should be no surprise that China, with a quarter of the world’s population, is concerned about feeding its people and is buying meat processors and food companies all around the world.
The Government continues to award planning permissions to supermarkets to expand their footprints, applauding the announcement of a new supermarket arriving into town as “creating” jobs. This is nothing more than job displacement and increases the risk to the supply chain.
It is the role of Government to ensure its people have enough to eat. Is success three supermarkets controlling almost 75% of our grocery spend? Is success where supermarket shelves were empty? But we don’t just need food security – we need food defence that gives governments control over the integrity of the food supply chain to feed its people.
Storm Emma may also serve to remind us about the potential impact of border checks and customs delays after Brexit. Ignoring food safety, the UK will expose 65m mouths to the vagaries of distant global markets where a food supply shock could see food rationed again.
The pursuit of cheap food has in many ways decreased food security. The supply chain is so finely tuned today that there is no contingency for a wobble. Is it time for a risk assessment of the Irish food supply chain?
After all, most consumers simply don’t understand how the supply chain works until it goes wrong and then it may be too late.