An International Perspective of the Future of Food Business
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An International Perspective of the Future of Food Business Special Seminar: Driving Innovation in the Irish Agri-Food System UCD – School of Agriculture and Food Science – Dublin June 11 th , 2014 Prof. Dr. Marcos Fava Neves University of São Paulo, Brazil International Professor at Purdue University PN 477 – PI 200 – AT - 677
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With Prof. Dr. Marcos Fava Neves-University of Sao Paulo, Brazil
Transcript of An International Perspective of the Future of Food Business
An International Perspective of the Future of Food
Business Special Seminar:
Driving Innovation in the Irish Agri-Food System UCD – School of Agriculture and Food Science
– Dublin June 11th, 2014
Prof. Dr. Marcos Fava Neves
University of São Paulo, Brazil
International Professor at Purdue University
PN 477 – PI 200 – AT - 677
What do we do?
Science
Projects
Training
Services (outsourcing)
ALLIANCES
MARKET
Coopercitrus
Moema Sugar Mill
SP / MS / BA
Mineral Supplements
US$ 1,307.3
Genetics
US$ 1,313.9
Pesticides
US$ 1,084.2
Feed Supplements
US$ 553.3
Animals sent to slaughter
US$ 30,770.4 millions
Exports of Live Cattle
US$ 658.7 millions
Animal Health
US$ 496.1
Vitamins & Additives
US$ 23.1
Fertilizers
US$ 332.4
Forage Seed
US$ 203.0
Agricultural Lime
US$ 108.0
Diesel Oil
US$ 3,757.2
SLAUGHTERHOUSES
US$ 42.0 billions
Tanning industry
FINAL CONSUMER
Facilitating Agents – US$ millions
Food Industry and Food
Service
Fencing & Posts
US$ 1,684.2
Facilitating Agents US$ 23.4 billions
Domestic Sales: 37.2
Exports: 4.8
US$ billions
Meat
US$ 35.8 billions
Domestic Sales: 31.9
Exports: 3.9
Other Products
US$ 6.2 billions
Domestic Sales: 5.2
Exports: 0.9
Figure 3. Brazilian Beef Chain (gross revenue). Source: Neves et al. prepared with data generated by Markestrat and Scot Consultoria.
Tractors & Implements
US$ 527.9
SISBOV Ear tags
US$ 3.4
Water Filters
US$ 37.1
Refrigerant Gas
US$ 41.4
Packaging
US$ 804.3
Eletricity
US$ 496.0
Maintenance Parts & Equipment
US$ 151.1
Fuel Oil for Boilers
US$ 83.2
Chemicals for Cleaning
US$ 41.9
PPE
US$ 27.4
Lubricants
US$ 8.9
Leather
US$ 1,147.6
Offal & Glands US$ 1,110.2
Industrial Meat US$ 887.9
Feet, Instestine, Stomach, etc US$ 741.5
Tallow US$ 722.3
Prepared & Canned Foods US$ 498.2
Tripe US$ 437.6
Byproducts for Industry US$ 322.8
Meat Meal & Bone Meal US$ 194.6
Bladder US$ 75.5
Blood Meal US$ 31.3
Trading
US$ 246.8 millions
Meat: 163.2
Byproducts: 83.6
Retailers
US$ 42,883.3 millions
Meat: 25,060.7 Byproducts: 1,601.5
Distributors/Wholesalers
US$ 14.493,8 millions
Meat: 13,976.1 Byproducts: 517.8
Cosmetic
Food
Animal Feed
Pharmacy
Other Industries
Meat: 15,119.0 Byproducts: 928.8
Meat: 163.8 Byproducts: 9.5
Small and midsize retailers
Slaughterhouses own retail stores
Major Retail Chain
BEFORE FARMS
US$ 11.4 billions
FARMS
US$ 31.4 bilhons
INDUSTRIAL INPUTS
US$ 1.7 billions
DISTRIBUTION
US$ 57.6 billions
US$ millions
Finished Steer
US$ 19,646.0
Cows
US$ 7,162.3
Young bulls
US$ 3,953.5
Veal
US$ 8.6
Distributors/Wholesalers/Trading Retailers
US$ 14.740,6 US$ 42.883,3 US$ millions
US$ millions
US$ billions
US$ billions
US$ millions
US$ millions
US$ millions
US$ millions
Exports US$ 1,729.2 millions
US$ millions
Freight and Diesel: 2,252.2 Farm Credit: 17,100.6 Payroll: 3,913.3 Traceability: 23.0
Transport to exports: 59.5 Agregated Tax: 16,531.6 Research: 23.1 Animal Register: 10.0
Livestock (millions of heads): 209.5 Slaughtering Capacity (heads/day): 198.731 Cattle Slaughtered (millions of heads): 42.8
BRAZILIAN BEEF PRODUCTIVE CHAIN Sum of Sales of the Various Links: US$ 167.5 billion in 2010
10 Years of World Consumption - Major Commodities (2003-2013)
Commodities 2003 2013 Growth
Suposed Price*
Annual Market Growth
Million ton 2003-2013 Million
ton (year) USD/ton USD Million
Corn 627.5 869.5 38.6% 24.2 308 7,454
Wheat 602.4 685.4 13.8% 8.3 316 2,623
Rice 405.9 465.5 14.7% 6.0 639 3,834
Soybeen 191.1 258.7 35.4% 6.8 495 3,366
Sugar 134.3 158.2 17.7% 2.4 579 1,390
Swine Meat 88.5 106.3 20.1% 1.8 3,181 5,726
Broiler Meat 57.8 81.6 41.2% 2.4 1,770 4,248
Beef Meat 53.9 56.1 4.1% 0.2 5,368 1,074
Orange Juice 2.5 2.0 -20.0% -0.1 1,964 -196 World Population 6,035 7,141 18.3%
*Top export . Unit Value in 2011- FAO Fonte: Elaborated by Markestrat from USDA e FAO
What do we take home in a global
agriculture perspective?
CONSUMPTION
RISKS (UNCERTAINTIES)
RESOURCES (PRODUCTION)
The Future of Food
Business… 2023
Just one triangle!
1 - Growth (9 Billion People 2050) 2 - Urbanization (90 million/year) 3 - Economic Development 4 - Income Availability and Distribution 5 - Government Programs (Food aid…) 6 – Bio: fuels, plastics, electricity… 7 – Other industries: medicine/cosmetics… 8 – Consumption behavior (ONG’s, waste, acceptances, diet and health, preferences…)
Source - Marcos Fava Neves: The Future of Food Business. Published by World Scientific, 2011, 213 p.
Mumbai
15
Biggest food importers?
Diversified Buyers 2000 (US$ 20.6 bi) 2013 (US$ 99.9 bi)
Fonte: Centro de Inteligência do Markestrat
Out of the box... Other industries using farmland...
From Farms to...
Food and Beverages
Feed
Fuel
Pharma
Medicine
Pharma
Cosmetics
Electricity
Plastics Environment
Entertainment/ tourism
Textiles and Clothing Industry
Shoe and Leather Industry
Construction and
Furniture
Paper
The Bio Era…Everything is coming from the farm!
Source - Marcos Fava Neves:
The Future of Food Business . World Scientific, 2011
Plastics from Farm
And for next year?
29
Which areas or countries will supply for the consumption growth (markets)?
CONSUMPTION
RISKS (UNCERTAINTIES)
RESOURCES (PRODUCTION)
The Future of Food Business… 2023
Just one triangle!
1 - Land and soil (horizontal expansion) 2 - Water (availability and cost) 3 - Weather and climate change 4 - Labor, people and education 5 - Nutrients (fertilizers, lime…) 6 - Energy (costs and sources) 7 - R & D + technology (vertical expansion) 8 - Information - big data 9 - Connectivity – digital world 10 - Capital: credit, insurance and interest rates 11 - Institutions (rules and efficiency) 12 - Organizations (collective) 13 - Government (regulations) 14 - Storage capacity 15 - Transport and logistics 16 - Farm management 17 – Business sophistication (competitiveness) 18 - Chain coordination (transaction costs)
Source - Marcos Fava Neves: The Future of Food Business. Published by World Scientific, 2011, 213 p.
Land and farm management?
Size, profile and business model can be useful to segment farmers
Traditional Farmer Agricultural Business Network and Chain Managers Land Transformers
• Farmers which agricultural is the main business.
• Agricultural entrepreneur, generally passed through generations
• Family ownership and management
• Average small and medium farming areas
• Focused on grain production and commercialization.
• Operation with own machines. • Owned or leasing land • Has his own processing/ service
units • Offers logistics services
• Large scale production: optimized teams that support many farmers
• Economy of scale (inputs bundle – seeds, crop protection, fertilizers, credit, logistics and others)
• Service providers and contract manager in exchange of an incoming production - Barter
• Most part of production is located in rented areas, low investment in assets
• International companies
• Transform pasture and Cerrado lands in high production fields.
• Focused on the production of soybeans, corn and cotton.
• Focused on high production and real state.
Company Owned Area (ha)
Leased area (ha)
Pinesso 110.000 80.000
Scheffer 40.000 45.000
Bom futuro
120.000 100.000
Horita 50.000 40.000
V-Agro 40.000 200.000
Total 360.000 465.000
Company Owned
Area (ha) Leased
area (ha)
Tiba 200.000 N/A
Brookfield 170.000 N/A
Kobra 20.000 N/A
Total 390.000 N/A
Complexity of doing business +
Source (citation): Elaborated by Markestrat researchers based on Romangnoli (2012) three categories. Acreage information based on secondary data.
Company Owned Area (ha)
Leased area (ha)
Amaggi 210.000 90.000
El Tejar 150.000 70.000
SLC Agrícola
200.000 80.000
Los Grobo N/A 60.000
Total 560.000 300.000
Total Owned Area: 1.310.000 (ha)
Total Leased Area: 765.000 (ha)
-
CONSUMPTION
RISKS (UNCERTAINTIES)
RESOURCES (PRODUCTION)
The Future of Food Business… 2023
Just one triangle!
1 - Land and soil (horizontal expansion) 2 - Water (availability and cost) 3 - Weather and climate change 4 - Labor, people and education 5 - Nutrients (fertilizers, lime…) 6 - Energy (costs and sources) 7 - R & D + technology (vertical expansion) 8 - Information - big data 9 - Connectivity – digital world 10 - Capital: credit, insurance and interest rates 11 - Institutions (rules and efficiency) 12 - Organizations (collective) 13 - Government (regulations) 14 - Storage capacity 15 - Transport and logistics 16 - Farm management 17 – Business sophistication (competitiveness) 18 - Chain coordination (transaction costs)
Source - Marcos Fava Neves: The Future of Food Business. Published by World Scientific, 2011, 213 p.
Defensivos
Fertilizantes
Tratores
Corretivos
Colhedoras
Auto-Peças e Serviços
de Manutenção
Implementos
Caminhões
Carrocerias,
reboques e semi-
reboques
Combustível e Óleos
Lubrificantes e
Hidráulicos
EPI
Controle Biológicos
Própria
Produção de Cana de
açúcar
Própria
Própria
Produtor Integrado
Produtor Integrado
Produtor Integrado
Insumos Usinas / Destilarias
47 usinas sócias
Copersucar
Açúcar e Etanol
Outras usinas
Cooperativa
(associação de
produtores)
COPERSUCAR
Empresas de energia
Outras companhias de
subprodutos
Industria de alimentos
e bebidas
Refinadores /
Empacotadores
Coopersucar Trading
Varejo
Coopersucar ASIA
Outros fornecedores de
Açúcar
Eco-Energy
Outro Etanol (milho)
Distribuidores Etanol
Consumo Industrial
Etanol
Postos
CET
Produto
C
o
n
s
u
m
i
d
o
r
The issue of collective actions
CONSUMPTION
RISKS (UNCERTAINTIES)
RESOURCES (PRODUCTION)
The Future of Food Business… 2023
Just one triangle!
1 - Land and soil (horizontal expansion) 2 - Water (availability and cost) 3 - Weather and climate change 4 - Labor, people and education 5 - Nutrients (fertilizers, lime…) 6 - Energy (costs and sources) 7 - R & D + technology (vertical expansion) 8 - Information - big data 9 - Connectivity – digital world 10 - Capital: credit, insurance and interest rates 11 - Institutions (rules and efficiency) 12 - Organizations (collective) 13 - Government (regulations) 14 - Storage capacity 15 - Transport and logistics 16 - Farm management 17 – Business sophistication (competitiveness) 18 - Chain coordination (transaction costs)
Source - Marcos Fava Neves: The Future of Food Business. Published by World Scientific, 2011, 213 p.
CONSUMPTION
RISKS (UNCERTAINTIES)
RESOURCES (PRODUCTION)
The Future of Food
Business… 2023
Just one triangle!
1 – Political/Legal 2 – Economic 3 – Natural 4 – Socio-Cultural 5 – Technology
Source - Marcos Fava Neves: The Future of Food Business. Published by World Scientific, 2011, 213 p.
A framework for uncertainties and
risk analysis…
Political-Legal Economic and Natural Socio-Cultural Technological
-Risks to democracy in some countries; -Populist measures of some Governments and its impact in social expenditures; -Terrorists and political attacks using food or other sources; -Global arming (even atomic) procedures and weapons availability taking to unexpected local or regional wars; -Riots and other challenging political systems; -Increase in corruption within political systems; -Labor laws decreasing work productivity and increasing costs and strikes; -Growth of illegal crime systems and parallel states (drug cartels, non licit trade groups and others); -Declining support to world’s organizations and institutions (World Bank, ONU, FAO…); -Immigration and also migration to urban areas threatening infrastructure -Others
-Fiscal debt crisis in some countries; -Inflation threats in some economies; -Not sufficient economic growth mostly in poor and emerging economies pressuring Governments; -Supply chain inefficiencies (bad land use and other resources); -Infrastructure collapse; -Financial systems inefficiencies, failures and lack of financing capital; -Controlling diseases spreading in human, animal or plants; - Over usage of non-renewable resources (oil, some fertilizers); - Water shortages and excess causing droughts and flooding (disasters); -Temperature changes in some regions, with extreme situations; -Increasing carbon emissions and its effects over pollution; -Potable water availability; -Asteroids collision and other planet threats; - Food safety risks due to poor management of food supply chains; - Natural risks of earthquakes, tsunamis, hurricanes and other extreme events.
- Fast changes in consumption behavior; - Consumerist movements; - Environmental movements; - Nationalistic movements; -Food security concerns increasing inefficiencies in non-adequate producing areas; - Food waste concerns; - Non-tolerance in some aggressive religious movements; - Increase in xenophobic movements; - Others based on socio-cultural variables.
-Digital systems operation (web based companies operational systems and Government systems); -Data stealing, data frauds and advances over personal intimacy; -Viral communication exposure of individuals, companies and Governments; -Not controlling new high tech innovations, such as genetically modified, nanotech and others that may get out of control; -Others based on technology.
CONSUMPTION
RISKS (UNCERTAINTIES)
RESOURCES (PRODUCTION)
The Future of Food Business…
2023
1 - Growth (9 Billion People 2050) 2 - Urbanization (90 million/year) 3 - Economic Development 4 - Income Availability and Distribution 5 - Government Programs (Food aid…) 6 – Bio: fuels, plastics, electricity… 7 – Other industries: medicine/cosmetics… 8 – Consumption behavior (ONG’s, waste, acceptances, diet and health, preferences…)
1 - Land and soil (horizontal expansion) 2 - Water (availability and cost) 3 - Weather and climate change 4 - Labor, people and education 5 - Nutrients (fertilizers, lime…) 6 - Energy (costs and sources) 7 - R & D + technology (vertical expansion) 8 - Information - big data 9 - Connectivity – digital world 10 - Capital: credit, insurance and interest rates 11 - Institutions (rules and efficiency) 12 - Organizations (collective) 13 - Government (regulations) 14 - Storage capacity 15 - Transport and logistics 16 - Farm management 17 – Business sophistication (competitiveness) 18 - Chain coordination (transaction costs)
1 – Political/Legal 2 – Economic 3 – Natural 4 – Socio-Cultural 5 – Technology
Source - Marcos Fava Neves: The Future of Food Business. Published by World Scientific, 2011, 213 p.
