Post on 28-Apr-2019
Adding Value – Development of Food Processing and Supply Chain
A “Plate to Farm” perspective
Asitava SenSenior Director & Head – Food and Agribusiness Research & Advisory, Rabobank
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Rabobank Group
From a rural Dutch credit cooperative to a leading full-service financial
group Rabobank Nederland Rabobank International
Coöperative CentraleRaiffeisen-Boerenleenbank, B.A.
Two separate cooperative banks - the Coöperatieve
Centrale Raiffeisen-Bank in Utrecht and the
Coöperatieve Centrale Boerenleenbank in Eindhoven -
were founded by enterprising rural folk, who, with
little access to the capital market, decided to help one
another.
Leading full service financial group in the
Netherlands, holding many subsidiaries
with business in:
Insurance, Pensions, Leasing / trade
& Vendor Finance, Asset
Management/Advice, Real Estate
Project Development/Finance,
Private Banking, Home Broker
Rabobank International (Corporate
Investment Banking)
Largest financial group in the world
specialized in Food and Agribusiness
(F&A) on a Global Basis:
Presence in >42 countries
Over 1,300 F&A clients
Global Approach
Local Relationship
All Industries
Full Service (Corporate and Retail)
Food and Agribusiness Focused
Corporate Investment Banking
Safest privately-owned Bank , more than EUR 700 billion in Assets
1898
2013
Cooperative Principle: long-term relationship
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Our approach to client relationships
Driven by sector knowledge & supported by product capabilities
Sectors covered:
Dairy
Ingredients & Sugar
Grains & Oilseeds
Value-added Processing
Beverages
Animal Protein
Farm Inputs
Broader sub sector coverage
Sub sector specialists involved in both origination and execution for financing and advisory products
Sub sector coverage bankers cover an entire region (Europe, Americas or Asia)
M&A bankers specialised into 11 sub sectors of the food, drinks and agri spectrum
Access to deeper research
Rabobank has its own unique group of dedicated and highly specialised Food and Agri Research analysts (FAR)
FAR comprises over 70 analysts in 13 countries around the globe
Fundamental research covering the entire food and drinks chain
Output in the form of tailored presentations for internal and external clients, World Maps, Industry Notes, F&A Reviews, Commodity Notes and Regional Banking Reports
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Leading global financial institution in most sub-sectors
9 of the Top 10 Global
Sugar companies are
Rabobank clients
9/10
70 sugar clients around the globe
$2 .8 billionin commitments to the global sugar industry
19/2019 of the Top 20 Global
Beverage companies
are Rabobank clients
100+ beverage clients around theglobe
$5.9 billionin commitments to the global beverage industry
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•Emerging trends in global food supply chain
•Emerging integrated and dedicated supply chains in India
•Conclusions and questions for panel discussion
Agenda
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• Four drivers are responsible.
• The first three are well known.
• The fourth – the great crossover – is new.
• As a result, F&A companies are trying to maintain and grow their margins in an increasingly complex operating environment.
F&A supply chains are under unprecedented pressure
Source: Rabobank, 2013
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• This concept is new, even though the individual elements are well known
• Outside agendas now influence traditional supply and demand dynamics
• Their influence has become material
• The complexity they create is set to remain
The great crossover creates new complexity, adding pressure to the chain
Source: Rabobank, 2013
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Traditional conflicts in the supply chain - Dilemma
Suppliers are gradually strengthening their
negotiating position – will returns be better in
open market? How much to commit to one
buyer?
Buyers are seeking to protect margin – how much upside to be shared to secure supply and reduce volatility?
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Fundamental changes in supply chain management are needed in the F&A sector
Chain partner engagement
From negotiation
From transactional
To collaboration
To transformational
How much flexibility and potential upside need to be traded-off to achieve the increased certainty that will drive growth.
Significance of relationships
Potential for adding value through the supply chain
Source: Rabobank 2013
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Dedicated supply chains – a new direction for F&A
Source: Rabobank, 2013
• Dedicated supply chains are characterized by
• closer cooperation from one end of the chain to the other,
• longer-term supply agreements, and
• a focus on adding value
• Dedicated supply chains allow all F&A companies to increase control of supply to manage pressure and complexity
Companies outside supply chain cooperation models
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Dedicated supply chains create value in five well-known areas
Source: Rabobank, 2013
• Reduce exposure to market price volatility through multi-year, stable, pricing agreements.
• Optimise production through increased certainty.• Improve process innovation through better insights into chain
requirements.
• Improve investment opportunities through more stable cash-flow and multi-year supply agreements.
• Improve product innovation through better insights into downstream needs and opportunities.
• Work with chain partners on other product attributes, such as quality and sustainability.
Reduce Risk
Improve productivity
Increase access to capital
Access new markets
Enhance brand reputation
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Leading F&A companies are responding to this concept
McDonald’s has long established close
working relationships with its suppliers,
seeing them more as partners than
transactional counter-parties.
McDonald’s promotes innovation by
specifying what is needed rather than
how partners should deliver its needs.
Bayer Crop Science is strengthening
relationships with growers and retailers
in vegetable supply chains.
Retailers select varieties, Bayer Crop
Science produces seed, and growers
deliver to market specifications,
reducing risk for all involved.
Starbucks is investing in its supply chain
in Yunnan Province, China, to improve
its focus on quality.
Starbucks has established a local coffee
grower training centre to improve local
production. In return Starbucks wants
to market high-quality Yunnan coffee.
Nestlé has formal structures and checks
on suppliers to help manage its chain.
Nestlé directly works with some 45,000
farmers, providing advice on agronomic
practices and support to meet Nestlé's
product quality and sustainability
requirements, and to contribute to local
sustainability.
Coca-Cola is looking double its revenues
by 2020.
Can the supply of agri commodities keep
pace with this sort of target?
This question is already being addressed
in the juice industry, with suppliers and
off-takers adopting novel approaches to
under-write new investments.
India Examples
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•Emerging trends in global food supply chain
•Emerging integrated and dedicated supply chains
in India
•Conclusions and questions for panel discussion
Agenda
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A few examples of collaboration in the supply-chain in IndiaQ
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Mismatch between QSRs’ footprint and processing facilities for key ingredients
Source: Company websites, media articles, Rabobank analysis 2012
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•Emerging trends in global food supply chain
•Emerging integrated and dedicated supply chains in India
•Conclusions and questions for panel discussion
Agenda
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Conclusions
• A clear view of the chain and getting the business model / focus right is more
important than ever
• Positive outlook in F&A underpinned by demand growth. In a consumption led
economy, demand will always precede supply.
• The question is how would the supply side cope with changing food demand and
consumption?
• There is a case in favour of thinking “Plate to Farm” vis a vis the traditional concept
of “Farm to Fork”
• Role of the “captain” at the downstream end is critical in this transformation.
Growth in demand will lead to investments in upstream and midstream and
compact value chains, which will be beneficial to all stakeholders
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Key questions companies should ask about their supply chains
Quality and price
Questions increasingly being asked of suppliers
and supply chains
Protect and grow margins
Security of supply
Support growth
Safety and sustainability
Strengthen the weakest link
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Supply chains now need to deliver more
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• For the panel, we would like to understand your viewpoint on the weakest linkages
which need to be addressed first?
• Some more question relevant to our discussion today:
More Questions for the Panel Discussion
Government
• What should be the focus of our policy initiatives to promote the right investments in the supply chain?
• What impact does the Food Safety regulation have on the food supply chain?
Chain Captains Chain Partners
• What are downstream companies in India doing to improve supply chain linkages?
• What are some of the best practices in supply chains from the developed world that can be adopted in the Indian market?
• How do producers capture greater value in the supply chain?
• What other process hurdles need to be managed to make the supply chain dedicated and efficient, in the local context?
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Contacts
Rabobank International
1/F, Forbes Building
Charanjit Rai Marg
Fort, Mumbai 400 001
India
+91 22 22034567
Rabo India Finance
Asitava SenSenior Director & Head Food & Agribusiness Research, India
Telephone +91 22 2219 7126E-mail Asitava.Sen@rabobank.com
Neither this presentation nor any of its contents may be used for any other purpose without the prior written consent of the Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A. (“Rabobank” or “Rabobank International”).
The information in this presentation reflects prevailing market conditions and our judgment as of this date, all of which may be subject to change. This presentation is based on public information. The information and opinions contained in this document have been compiled or arrived at from sources believed to be reliable, but no representation or warranty, express or implied is made as to theiraccuracy, completeness or correctness. The information and opinions contained in this document are wholly indicative and for discussion purposes only. No rights may be derived from any potential offers, transactions, commercial ideas et cetera contained in this presentation. This presentation does not constitute an offer or invitation. This document shall not form the basis of or be relied upon inconnection with any contract or commitment whatsoever.