According to Euromonitor, the world food supply grew 250 million metric tons (MMT) in just 17 years (1971-1987), whereas the same amount of growth after 1987 took 22 years.
When we hear about the future of global agriculture, we are reminded of projections from the United Nations for the world population to exceed 9 billion by the year 2050 and from the Food and Agriculture Organization of the United Nations that global agricultural production in 2050 will need to be 60 percent higher than in 2006 in order to meet the demand.
There are concerns about global food and nutrition security and countless opinions on how diet preferences will change. While the global food supply is still growing, it is growing at a slower rate. According to Euromonitor, the world food supply grew 250 million metric tons (MMT) in just 17 years (1971-1987), whereas the same amount of growth after 1987 took 22 years. This deceleration, coupled with the growing population, will leave a substantial gap between the supply and demand for food globally.
Africa is now home to six of the top 10 fastest growing economies and 42 percent of its population is expected to reach “middle class” by 2060. In the Asia-Pacific alone, an increase of $1,330 per capita in disposable income is expected by 2020 and an estimated 20 percent to 30 percent of the additional income will be spent on food.
Jim Yong Kim, president of the World Bank, stated earlier this year, “Battles over water and food will erupt within the next five to 10 years as a result of climate change.” Dr. Frederick Davies from Texas A&M University, who also serves as a senior technology advisor at the Bureau of Food Security in the Office of Agricultural Research and Policy at USAID, has indicated that food issues could become as politically destabilizing by 2050 as energy issues are today.
Many options for solutions have been given by various universities, companies, nonprofits and even governments to address this growing disparity between supply and demand. There is already evidence of structural changes globally in the livestock sector, such as moving from smallholder mixed farms toward large-scale specialized industrial production systems. There is an increased emphasis on global sourcing of inputs and technology and rapid increases in consumption of livestock products in developing countries are being seen.
According to FAO, by 2009 consumption of milk per capita in developing countries had almost doubled since the early 1960s, meat consumption had more than tripled and egg consumption increased by a factor of five. Diets will continue to improve, both in the consumption of more calories and in a greater variety of foods. There is no one solution or avenue to address this challenge of feeding the world. However, supporting efforts to expand global trade is one vital step for global food and nutrition security in the years ahead. This means becoming less protectionist and straying from the mentality of self-sufficiency that has engrossed the attention of many countries and is sure to continue to threaten their food security.
What does all of this mean for U.S. feed manufacturers? What role can they play in the future of global food security? How can they sustain themselves and evolve in an ever-changing environment with challenges beyond our imagination? A mantra here at the American Feed Industry Association is: “The future growth of the U.S. feed industry is in exports.” It is in the growing demand for feed/feed ingredients globally. It is in the increased propensity of growing economies to look for new technologies and novel products; to desire inputs that provide greater, more efficient returns. As world population continues to grow and with it, global demand for meat, milk and eggs, the demand here at home, in the U.S., is expected to stabilize. In order to grow as a company, and sustain as an industry, we must look beyond our borders. Doing so is not as daunting as it seems. With proper planning, support, knowledge, preparation, resources, and most of all, patience, expanding into the global market can be attainable, and even fruitful
AFIA Immediate Past Chair, Jeff Cannon (Diamond V Mills), sheds some light on his company’s experience and perspective on expanding into the global market.
What made Diamond V decide to start exporting?
Diamond V first started to export in 1963, but it was more from an opportunistic standpoint until 1988. From 1988 to 1998 we focused more effort on developing our international exports because of the large strategic opportunity present to grow the business.
Has this been a successful effort?
Yes, our international focus has been very successful. Our strategy has been to focus our resources in those international regions that provide the best opportunities in an effort not to dilute our resources by trying to go to all regions of the world at one time. It has been a very systematic and sustainable business model. This has worked well for us, allowing us to focus our resources in specific regions to gain dominance in that region.
How long did it take and how did Diamond V gear up for exporting?
The first 25 years of exporting was primarily as individual opportunities surfaced. Once we decided to make it part of our strategic growth plan, it took about 10 to 15 years to implement a sustainable strategy with sales and technical service offices throughout the world.
How does Diamond V deal with challenges such as their products not being approved in other countries?
The registration process in some countries can be onerous. But we work with partners in most of the international countries we do business in to assist us with that process. Having our products safely used in the U.S. since 1943 helps with the process. It is important to deal with the regulatory agencies in an educational fashion to help them understand our products and how they add value to their animal agricultural industry. We spend time working with the local government agencies, industry associations and producers to help them understand the value our products can bring to their local industry.
How has AFIA been of assistance to Diamond V?
AFIA has been a resource over the years in helping with issues that come up during the registration process and has provided contacts and other assistance with U.S. and foreign officials.
How did the U.S. government assist Diamond V in terms of support, i.e. intelligence, data, in-country staff, assisting with problems, etc.?
Various U.S. government agencies have provided ongoing assistance primarily in the initial registration process and with subsequent matters related to maintaining registrations.
What more could AFIA push the U.S. government to do?
AFIA could help in the development of uniform standards and processes for registrations of products around the world.
To what degree does Diamond V use staff vs. consultants, trade experts or agents?
From a regulatory standpoint, Diamond V has its own staff to support new and ongoing maintenance of existing registrations. From a market development standpoint, we have numerous distribution relationships around the world and also have our own offices in various locations to support sales, marketing, technical support and logistics.
What are the pitfalls of exporting?
The main issues are dealing with different regulatory environments then we are used to in the U.S.
Is there anything Diamond V wished it had done differently?
We have been very successful overall with our export business. Our approach and what we have learned has had an impact on our success and the future success of our organization. We learned the power of focus and the more an organization can focus, and not dilute their resources, the faster it can grow a specific market.
What advice would you give to companies wanting to start exporting?
Have a strategic plan, focus on specific regions that you have enough resources to support and continue to invest in those strategic regions until you have captured an acceptable market share before expanding into new regions. Focus on building your international export side of your business in a sustainable fashion. It might take a bit longer, but it will provide more stable and sustainable growth. Balance the speed of growth with the risk of the investment.
What other resources do you recommend for companies wanting to export?
Initially you may need the counsel of legal and regulatory experts to help navigate the particular company requirements for registration. You may also want to utilize the services provided by the U.S. government to screen potential business partners in a particular country or region.
What advice do you have for companies who do not see value in exporting?
There are certainly opportunities outside the U.S. to leverage technologies in the production of feed and food. The timing of an organization’s investment is dependent on their resource focus and availability. Geographical expansion of your existing core business is a very viable option to grow and create sustainability.
For more information on global trade issues, please contact Gina Tumbarello, AFIA director of international policy and trade, at (703) 558-3561 or firstname.lastname@example.org.