Food Supply Chains: Recent Growth in Global Activity

By Lillford, Peter J. | Innovation : Management, Policy & Practice, July 2008 | Go to article overview
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Food Supply Chains: Recent Growth in Global Activity

Lillford, Peter J., Innovation : Management, Policy & Practice


Where does our food come from? The answer is from farms and fisheries, but as consumers in our developed urbanised society we know the reality is from a retail outlet. In other words; we shop.

In my youth, shopping meant a trip on foot to a variety of small retailers, stocking post-war English commodities, some of which were rationed. I first saw a banana at age about five, and developed a passion for exotic pomegranates in my teens. My mother spent at least 25% of her waking hours preparing meals for the family.

On the other hand, my children drive to a supermarket where everything is to hand, they complain if the mangoes aren't fresh and buy international cuisine, microwaveable within minutes. How did this change occur within one generation? The answer is 'progress and success' in the development of the food supply chain. To map its history, we must first understand the 'players' and the factors driving change. The dominant driver is easy to identify.

Since the whole chain is in the hands of the private sector, the motivation for all the players is profit and survival against competition. The stories of growth, survival and decline of the various players relates to their ability to provide benefit to their customers, and eventually to us, the consumers. That some are financially successful is beyond doubt. Table 1 gives the data on the performance of the major global players, several of whom have turnover and profits comparable to the GDP of nation states.

Hunting, gathering, fishing and farming

We begin with primary production. Developments in this sector go hand-in-hand with the rise of human civilisation. Certain forms of biological materials are ideal for human consumption. Nuts, fruits and berries can provide nutrition without any processing. Milk is similar and most meats, fish and vegetables, can either be consumed raw or with minimal processing, providing they are eaten fresh. Horticulture and animal farming can be seen most simply as a labour-saving method of keeping the food source immediately available to the producer, avoiding the need for tedious and possibly dangerous activities in their harvesting. For land-based production, hunting has largely died out, probably because of man's incredible efficiency and advanced hunting 'tools'. (The seemingly inexhaustible supply of bison meat in North America was decimated in less than a generation with the arrival of the rifle.) Fishing remains as a hunting activity but the factory ship, with sonar detection and enormous nets, is such an efficient device that global fish stocks are now threatened. Aquaculture is becoming economically competitive even with its higher input costs of feed and species management.

The types of food mentioned above require distribution and consumption to be rapid, or dangerous microbial contamination or chemical degradation will occur. Originally this meant short distance in the supply chain; the hunter could eat at the site of the kill, or simply walk back to camp. Now airfreight, fast land transport, temperature control and sophisticated packaging allow operation internationally. The producer can also be the distributor and retailer (a vertically integrated business). Modern specialisation usually means that produce will go through several business partners. Nonetheless, we can identify the 'fresh chain' (Figure 1).

The unstable nature of this produce requires speed of distribution unless preservation techniques are employed. Traditionally, drying and fermentation were used, adding value by providing safety, reducing losses, utilising by-products and creating variety in sensory impact. Dried meat, fish and fruit, fermented milk, meats and fish products are to be found in most cultures and throughout history. These food technologies, which have now become international businesses, developed from the obvious advantages of storing food safely and successfully controlling microorganisms, even though the latter were not discovered until centuries later.

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