Food security is a critical issue for any food & beverage company. It is self-evident that food is the business for such a company, so any macro-level issue regarding food is inherently important, but there are specific considerations that drive the relevance of food security.
First, food security reflects on the long-run sustainability of the business. It may sound silly to say it, but food companies need food in order to survive. They need to grow it, process it, package it and sell it. So at the supply chain level, threats to food security need to be taken seriously. The world today is just now starting to legitimately look like a zero sum game with respect to many resources, food being one. If the world needs to produce much more food than what has been produced in the past, but as much as a quarter of agriculture land is already compromised (AP, 2011), and much more threatened by water constraints and climate change (Wheeler, 2013). For a food company, global food security issues will affect its ability to get the materials that it needs to produce the food that it wants to produce for profit. It is not hard to imagine a future where big food companies are targeted by governments, as food security needs will ultimately outweigh the perceived right of these companies to control the food supply.
But there is also tremendous opportunity. Where food companies can provide benefit, they can gain in terms of their status. If there is growing demand for food, any company that can meet that demand will be able to increase its profits. While one can reasonably argue that the UN's 70% figure is overstated -- it assumes that people have the inherent right to demand and receive a Western-level of calorie consumption -- there is little doubt that there is going to be a greater imbalance between what we produce and what we need to produce. The degree to which a food company can close that gap will go a long way to determining if such a company is going to succeed in a future where food security becomes a much bigger policy issue.
Corporate Response
Companies in the food business will need to take a number of different steps to address the issue. But it can be hard to predict what the future holds. The future could be like in science fiction where food companies monopolize production and markets for food; or governments terrified of starving populations dismantle big food companies and nationalize production and distribution of food seeking greater security and efficiency (yes, efficiency, as the capitalistic food system is incredibly wasteful). An executive running a food company will necessarily want to consider strategies, which could range from increased vertical integration to positioning the company as a food security solutions provider, to reducing waste dramatically to avoid being the first target. But before that can happen, the company has to monitor the situation. Threats and opportunities will not be evenly distributed around the world.
Many international food companies operate with a geographic organizational structure, or a matrix structure for companies that have several billion-dollar brands. These structures allow for local divisions to gather information about food security. This information is not always collected, even by local government officials, but food companies are fairly well-connected with the local food production conditions. These are usually combined with information about water, and demographic data, to determine a region's food security. In many cases where a region lacks food security, the food companies are already involved in making up the gap. Thus, food companies have the means, should they choose to dedicate some internal resources, to determining the level of food security in a region and understanding what the business and political implications of that are going to be.
One of the biggest issues for food companies is balancing short- and long-term interests in food security. In some areas, agriculture is relatively sustainable in the short-run, but reliance on groundwater, or the predicted effects of climate change are going to compromise food security in the long run. Food companies, usually public corporations, are oriented towards quarterly earnings releases, and have a tough time thinking more than a year or two out. This is a genuine concern where long-run sustainability is concerned, because managers are not incentivized to think long-term. A manager could make a decision today that negatively affects long-run sustainability, but will be dead by the time that full effects of that decision are known -- there is just no incentive...
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