The recent Foresight report. The Future of Food and Farming, describes a perfect storm of factors converging to put serious pressure on a global food system "living beyond its means".
The relevance to management accountants is evident. The food system (comprising agriculture, processing, distribution, retail and waste disposal) is a huge global industry and a source of economic growth for both developed and developing countries. The pressure on the food system from both population growth and changing patterns of consumption-from traditional to more protein-rich, resource-intensive, Western-style diets-means that food productivity must be increased. This requires investment and innovation, better supply chains and distribution networks, and the minimisation of waste.
Fortunately, there is potential to increase productivity in developing countries by using more advanced farming methods and higher yielding or pest- or disease-resistant crops. Waste can be minimised by changing consumer behaviour, but can also be addressed on an industrial scale by investing in better storage and transport infrastructure to enable small producers to access new markets and store produce to sell it for a higher price, or to supply larger customers.
The early stages of innovation and investment, when decisions are taken which lock in costs further down the line, are natural territory for the management accountant, with our forward-looking mindset and expertise in dealing with uncertain or qualitative (rather than purely historical) information. We are also equipped to bring in non-financial costs (such as environmental costs or other externalities) into the economics of the food system.
There are also problems created by imperfect markets, when a lack of information or a dearth of either buyers or sellers creates an imbalance of power between elements of the supply chain. These issues were discussed in the recent CIMA-funded research From Gate to Plate, which brought together farmers, wholesalers and supermarkets to discuss their "terms of engagement" and the potential to work more collaboratively. …