The Food Value Chain
A challenge for the next century
Executive summary / key findings
The global food industry is currently facing unprecedented challenges. Rapid population growth in emerging markets is putting a strain on the global food supply, while the scarcity of water and energy poses challenges to production and distribution in particular. This is further exacerbated by rising urbanisation and a growing middle class, which is resulting in changing dietary habits with the consumption of more meat and dairy. These foods are more resource-intensive than the traditional grain diet, which puts additional pressure on crop yields and local supply chains and raises a number of environmental concerns.
Furthermore, social changes in the way we live and work have required retailers to adapt their sales and distribution channels around the consumer. The result is the rise of convenience stores and online shopping, which pose challenges in the areas of inventory management and logistics. Finally, with supply chains becoming more globalised, the issues of traceability and quality assurance have become significantly more complex.
Many of these issues were highlighted in an Irish context during the 2013 horse meat scandal. The discovery of horse and pig meat in beef burgers in supermarkets across Ireland and the UK raised serious questions as to the traceability of meat and the quality control procedures in place in Europe. An increasingly globalised food industry has resulted in companies adopting longer and more geographically dispersed supply chains, thus leaving more room for error and making traceability more difficult. If supply chain procedures are not adapted to face this new reality, then incidents such as this will continue to occur. The horse meat scandal is a prime example of why every stakeholder must take due consideration to quality control and traceability, and it is imperative that there is adequate collaboration and communication up and down the supply chain in this regard.
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While the horse meat scandal caught the headlines, there are many examples of Irish food companies adapting successfully to the new world described in this report and meeting the challenge of serving a more sophisticated and demanding consumer. For example, one of the trends discussed is the need for food processers to work with food producers to increase quality and yields. A number of Irish co-ops are now working successfully with their farmer members to improve quality by continually monitoring and providing feedback on milk quality (with some even developing apps which allow the farmers to view their milk supply volumes, composition and quality results).
The report also discusses the urgent need for more sustainable supply chains. This has been a key focus for the government and food industry in recent years, most notably through the Origin Green programme which was established in 2012. This is touted as the only sustainability programme in the world that operates on a national scale, uniting government, the private sector and food producers. The Origin Green Standard is independently verified and enables Ireland’s farmers and producers to set and achieve measurable sustainability targets across raw material sourcing, manufacturing processes and social sustainability. This is precisely the type of coordinated action across the supply chain that this report calls for.
These examples illustrate the ways in which Irish food companies and producers are successfully adapting to a changing food environment. As this report illustrates, further changes and innovation will be required if Irish firms are to maintain a leading role in creating a sustainable global food supply in the years to come.
As one of the largest professional service providers in the world, the Deloitte network has collaborated with many stakeholders across the food value chain, bringing an impressive depth and breadth of skills in the areas of supply chain and operations. Deloitte Ireland understand the importance of supply chain planning to achieve optimal performance levels. We know that technology alone is not enough and that the focus should be on planning how technology supports the process. We help you consider the organisational components of the solution, such as organisational structure, capabilities and metrics to help your company achieve long-term benefits.