The global agri-food sector has sometimes been seen as suffering from a lack of innovation in comparison with other consumer-driven industries. New industry developments have sometimes been held back by the role of distorting trade policies in the major markets of the EU, North America and Japan. This is now starting to change as international trade bodies see the need to deregulate markets and produce an environment of freer trade.
In the fresh produce industry, however, and in comparison to other agri-food sectors, there have been a huge number of innovations taking place right across the supply chain in recent years. These can be found in all parts of the fresh produce map - from Latin America and Europe to the US, Africa and Asia. As such, the innovation process is not restricted to any one part of the supply chain, nor any particular part of the world.
The emergence of the developing markets in Asia, Latin America, parts of the Middle East and Africa has produced a situation whereby international producers and exporters are not limited to trading in the more established markets of Europe, North America and Japan. Countries such as Chile, New Zealand, Australia and South Africa see these new emerging markets as being every bit as important in their future export portfolio. India and Brazil have large domestic markets to supply, as well as exploring selected export opportunities too.
The simple fact is that these days producers and exporters have more options as to where to sell their fruits and vegetables than even 10 years ago. With more markets to choose from, and these markets being less regulated, there is the opportunity, drive, environment and need to introduce more innovation right across the supply chain.
But what is the common thread behind all these examples of successful innovation in the horticultural sector? It is clear that some organisations are more innovative than others in the way that they approach the whole process of developing their businesses. They typically put the task of innovation at the very heart of their business model. They have developed an internal structure and culture that allows the innovation process to flourish. It is a fundamental priority to ensure that this is not submerged into the day-to-day running of the business. And the key driver has to date nearly always come from the commercial demands of the main customers in the supply chain for some aspect of the business to be carried out better, quicker and more economically than in the past.
This premise is now being fundamentally challenged. In the past, the sorts of innovations seen have been typically concerned with new varietal developments, new forms of packaging, use of IT in the field, packhouse and distribution chain, and other areas such as consumer analysis and new product development.
These characteristics are, however, often no longer seen as the sole determinants of what might be regarded as innovation per se. They are, of course, still must-have characteristics of a successful supply organisation, but in many cases are no longer unique - many of the leading international players have, for better or worse, mastered these areas of the supply chain.
In the last few years, the whole issue of environmental and socially driven innovation has come to the fore in a way not seen before. This is potentially a huge area and can cover many facets. It can range from how produce is grown, who it is grown by, how these growers are dealt with and the role that the fresh produce sector plays in a wider societal context of providing safe, healthy, nutritious food to a rapidly expanding global population of up to nine billion within the next generation.
The pressure for better environmental and social credentials is being driven by a combination of leading retail and foodservice companies - all keen to be seen driving the agenda in this area - but also from a group of well-organised, well-funded and single-focus pressure groups and NGOs. These organisations are determined to see the way that food is produced radically change in the future. The fresh produce sector only has to look at what has happened in other food and farming industries to see what the impact of this can be.
Take the dairy sector as an example. Large-scale dairy farms are now becoming more common, partly in response to the forecast of increasing population growth to 2050. In parts of the US, such as California, dairy farms and herds of up to 20,000 cows are not uncommon. It is worth noting though that the role of the small-scale family dairy farm in the US is still critical - over 75 per cent of US dairy units still have fewer than 100 animals. In the UK, the average herd size is 140.
There have also been plans for much larger units in the UK, most notably in Lincolnshire recently, where plans were submitted for a 4,000-cow unit. This project was eventually rejected after a review of its impact by the Environment Agency, as well as huge pressure from a well-planned and implemented consumer protest. In the US, one of the leading fast-food chains has declined to source milk from a large-scale dairy farm on similar grounds. The fresh produce sector should take note.
In the future, it might not automatically be just the companies and organisations who have the best new varieties, the newest packaging, the most NPD and/or have developed the most new, niche market positions that are the most successful. We believe that the real differentiator in the future will be those that can show the best track record of demonstrable achievements in the area of social improvements and this might be the real difference between winning the business or not.
There are multiple drivers at work here which probably apply to all fruit and vegetable sectors. They are, however, underpinned by the need for sustainable systems of farming and fruit packing, and reductions in areas such as the use of energy, pesticides, water, supply chain waste and higher levels of packaging recycling.
These are seen increasingly as being global issues. They present a considerable R&D challenge at a time when most governments around the world are looking to cut back on such funding. To understand all the nuances of such a wide range of issues is a huge task for many fresh produce companies. Many of even the most prominent of these are SMEs and, as a result, face inherent constraints in terms of physical, human and financial resources.
There is, however, a huge amount of R&D around the world available from post-harvest technology firms, life-science companies, seed providers, packaging and labelling firms, and private R&D businesses. Developing strategic alliances with them is all part of the way forward for companies in the produce sector who want to better themselves in these areas.
And while all major international markets have their own logistical and distribution requirements, the common denominator is the need for R&D and innovation-based solutions that bring into play a stronger environmental angle. -
John Giles is a divisional director of Promar International, a consulting and research group and a subsidiary of leading agri-business and technical services company Genus Plc. He can be reached at john.giles@genusplc.com.
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