The agricultural and food value chain - entering a new era of cooperation

A new era of cooperation in the agricultural food chain

Supply chain transparency is now high on the political agenda.

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Partner and Global Chair, Life Sciences

KPMG in the UK

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Agriculture and food sector

- a bright spot in the economy

The agriculture and food sector remains one of the few bright spots in an otherwise troubled global economy. With strong underlying growth drivers such as population, urbanization, and the rise of the middle classes, it is expected to remain so. Not only are the economic fundamentals strong, but so is the level of political support as food security tops government agendas.

At the same time, the sector is facing challenges driven by climate change, rapid technological innovation and new demands for biofuels and access to information. These forces are manifesting themselves through increased volatility, complexity and scrutiny throughout the value chain.

Food controversies

- causing disruption and mistrust

Furthermore, recent food controversies in the UK, such as the ongoing horsemeat scandal and the supplier of halal food found to contain traces of pork, further drive transparency and food security up the political agenda. These issues are not new, but as history shows, can have dire consequences, including the deaths of six babies linked to the 2008 Chinese milk scandal where milk and baby formula were adulterated with melamine. Thousands died or were seriously injured or disabled after the 1981 Spanish ‘cooking oil’ disaster, where years later it was determined that the contamination was most likely caused by farmers’ overuse of chemicals and pesticides rather than the cooking oil itself.

Overcoming challenges

- greater collaboration is required for more successful outcomes

To overcome these challenges and help prevent future tragedies, greater collaboration and cooperation both up- and down-stream will be required between various players in the value chain. The extent and structure of that collaboration will be a very important strategic decision. Options may include vertical integration at one end of the spectrum right through to relatively loose relationships at the other end. In addition to seeing greater cooperation between private players from different industries, we are witnessing more collaboration between the private and public sectors.

Opportunities abound for players at all stages of the value chain, but improvements to business intelligence, agility, and risk management strategies must first be realized.

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