Wich world food system for a sustainable development?

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Jean-Louis Rastoin. Wich world food system for a sustainable development?. Economia e Diritto Agroalimentare, Firenze University Press, 2007, 12 (3), pp.19-31. �hal-02656159�

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AGRICOLTURA E POLITIChE

ENERGETIChE

Which world food system for a

sustainable development?

Jean-Louis Rastoin(**)

JEL: E2, F1, L1, L66, N5, O1, Q1

ABSTRACT

Introduction 1. Characteristics of the dominant model: the industrial and agro-tertiary food system

2. Is another model possible?

Conclusions: toward a transition model?

(*) _{Paper presented at AIEA2 International Conference}

“Knowl-edge, sustainability and bio-resources in the further develop-ment of agri-food system”, Londrina-Paranà Brazil, 23-25 july 2007.

(**) _{Montpellier SupAgro – UMR Moisa. E-mail: rastoin@supagro.}

inra.fr.

INTROducTION

Sustainable development, as we agree to define it today, must satisfy 3 objectives: the intergenerational preservation of the environment, economic efficiency and social equity (Goddard, 2001). We might also talk about social responsibility by analogy to the demands we tend to make of firms (Pérez, 2002), this responsibility covering the 3 elements of su-stainable development.

The food system is “the manner in which Mankind organises itself in time and space to obtain and consume their food” (Malassis, 1994). This food system passes through different stages in the history of human societies and countries.

It has always (for 10,000 years or a few centuries, depending on the country) been founded on agriculture with the development of farms, based on blood ties and an attach-ment to Mother Earth, which act as the site of both food production and consumption. There is unity of location, an autarchy, an ultra-short commodity chain. This stage is still widely present in the poorest countries. It concerns several hundred million people throu-ghout the world today.

This is followed (until the 18th or 19th century) by the division of labour (the far-mer, the craftsman, the trader) and urbanisation, which break the food chain down (from the field to the plate or glass). The food system then forms an interactive umbrella for the production of inputs, the production of agricultural raw materials, the transformation of these raw materials into consumable products and their marketing, as well as for all the services necessary to the different channels (transport, finance, research, training, admi-nistration).

This multiplicity of activities and actors and the importance of the function of food mean that, in most countries, the food system has become the leading economic sector by number of jobs and turnover.

About half a century ago, the food system entered the agro-industrial age with a ge-neralisation of the industrial method of production (i.e. primarily standardisation and lar-gescale production) and mass consumption. This agro-industrial stage is characterised by an extraordinary extension of the agri-business channel and a major reduction in the time devoted to preparing and eating meals.

Since the end of the last decade, we have begun to see the emergence of a 4th food age which we refer to as agro-tertiary, as the foodstuffs tend – from the point of view of their economic content –to become services rather than material goods. Thus, in the Uni-ted States, almost half of the final price of the average food product comprises services or payments: transport, marketing (publicity represents more than 10%), banking interest and insurances, distribution margins, taxes and profits. The part corresponding to the agricultural raw materials has fallen to 10%. The rest, totalling 35%, is paid primarily to

the agri-business industry and the packaging companies. As for consumption, half of the average household budget devoted to food is spent in restaurants, largely dominated by fast-food restaurants.

The agro-industrial model is experiencing rapid growth in the emerging countries (with intermediate income), stimulated by the expansion of large volume distribution: in Latin America and South-East Asia, supermarkets now control 50% of retail trade compared to 20% ten years ago (source: Euromonitor). Indeed, in the food-processing channels, the downstream concentration causes the standardisation of products in accordance with the distributors norms and a rapid restructuring of the agri-business industry and the agricul-tural sectors upstream.

Whatever the configuration of the food system, food remains the basis not only for life but for the social act which is (or was) the sharing of a meal (Fischler, 1990) and, to a large extent, for society in general as all the great civilisations, be they Mesopotamian, Egyptian, Chinese, Mayan, etc., have a strong bond with agriculture. In terms of human development and social structure, the objective is therefore fundamental.

To answer the question asked in the title of this paper, we will first describe the cha-racteristics of the food system, which would tend to become generalised worldwide in a “go with the flow” scenario. Then we will consider the possibility of an alternative scenario, insofar as the dominant model leads to a dead end from the point of view of sustainable development. In conclusion, we will examine a number of ideas which might facilitate the transition towards a “desirable model”.

1. chARAcTERIsTIcs Of ThE dOMINANT MOdEL: ThE AGRO-INdusTRIAL ANd AGRO-TERTIARy fOOd sysTEM

We will considerer the food system from the point of view of consumption and of the production-marketing mechanism.

From the point of view of consumption, the agro-industrial model, despite its unde-niable contributions to which I will return later, has not succeeded in achieving the objec-tive of any food system on a global scale, as defined by the world food summit organised under the auspices of the FAO in Quebec in 1995: “to ensure universal access to food available close at hand, which is economically accessible, culturally acceptable and satisfactory in health and nutritional terms”.

With regard to the final point, more than 50% of the world’s population, representing 3 billion people, was suffering one or other form of malnutrition at the start of the 21st century, according to WHO studies, with women and children the most affected (Delpeuch et al., 2005).

In particular, we should note that, today, 850 million human beings suffer from un-dernourishment, a phenomenon which is concentrated at a level of 95% in developing countries1_{. The resulting costs are colossal: several hundred billion dollars due to premature}

deaths, the loss of productivity, absenteeism at school and at work, etc. (FAO, 2005). At the same time, almost 30% of the population of the United States and 20% in Eu-rope suffer from obesity (BMI, body mass index > 30 kg/m2_{). In total, there are more than}

300 million overweight people in the world, i.e. over-nourished. This phenomenon also in-creasingly concerns developing countries. This dietary deviation causes terrible pathologies referred to as non-transmissible or chronic diseases linked to diet, which are the first cause of death (cardio-vascular illness, diabetes, cancers of the digestive tract, osteoporosis) and generate considerable economic costs (6 billion euros in France, at least 90 billion dollars in the United States in 2000).

The causes of this “dietary disorder” have been identified: poverty, the status of women, deficiencies in the health systems, an absence of education and the lack of public policies dedicated to the issue of food (Sen, 1981). With regard to this final, very important, point let us recall that the European Union white book on diet dates from 2000 (and it is far from being a food policy) and that the national nutrition-health programme (PNNS) only started – feebly – in France in 2001.

The production model of the agro-industrial age can be qualified as intensive, speciali-sed, concentrated, financialised and on the road to globalisation.

Intensive, as the technical outputs are very high per ha for agriculture, per m2 _{of factory}

or supermarket for the food industry and per worker in all 3 cases. For example, one ha of irrigated land can produce nearly 20 t of corn; a cheese factory can produce 150,000 pasteurised camembert cheeses per day. An employee in the oils and fats industry generates an average turnover of more than 800,000 €.

Specialised, due to the selection of a small number of plants and species of animal in contemporary agricultural systems. Scientists estimate that from a potential of 30 thousand edible plants, barely 120 are commonly grown and only 9 cover 75% of the dietary needs of the world population, of which 3 (wheat, rice and corn) represent 60% (Raoult-Wack, 2001).

We are far from making full use of biodiversity! It is also specialised with regard to the food industry, which today results in an industry which assembles ingredients from the 4 corners of the world according to relative costs. By adding the distances covered by all of the elements necessary for its production and delivery (“food miles”), we have calculated

 _{85 million under-nourished people in developing countries, 28 million in transitional countries and 9 in}

that a pot of yoghurt “contains” 8,000 km of transport. The costs of externalities which can be imputed to the transport of food products to the United Kingdom have been estimated at 7.4 billion GBP for a total of 30 billion km covered in 2002 (Smith et al., 2005). With the prospect of a major increase in transport costs in the coming years, the limits of such a productive model are clear for all to see.

Concentrated, as in France, for example, 2/3 of agricultural production is manufactured by less than one quarter of the farmers, 2/3 of the food industry turnover is generated by less than 10% of firms and 90% of the self-service retail food trade is provided by 6 companies. The very high concentration of “super purchasing outlets” gives huge market power to the multinational groups active in large volume distribution: IRTS (Auchan and Casino), Age-nor (Intermarché, Eroski and Edeka), CMI (Carrefour)2_.

Financialised, because the leading agro-industry and large-volume distribution firms are all listed on the stock exchange and are therefore subject to the will of their shareholders who, more and more, provide funds which the managers treat as investors rather than as industrialists. These managers dictate the rates: short-term growth and profitability. Gover-nance is based on shareholdings, not on partnerships (Pérez, 2004).

On the road to globalisation, as we witness a triple phenomenon: the growth of inter-national trade, the development of DFI (direct foreign investments) and the diffusion of the western model of consumption by the mass media. International trade of food goods has increased twice as fast over the past half century as production (about 4% per year for world exports of food products compared to 2% for production, according to Faostat). In 2004, the export/production ratio stood at about 15%, with peaks rising to 75 % for stimulant needs (coffee, cocoa, tea). Trade is concentrated among certain operators: multi-national firms generate 2/3 of intermulti-national transactions, either because it is inter-firm trade (between subsidiaries belonging to the same group), or because one of the operators is a multinational.

Direct foreign investments increased considerably during the 90s, in particular in the large volume distribution sector (Carrefour has over 10,000 stores in 50 countries throughout the world) and the agribusiness industry sector. Finally, the promotion of pro-ducts from the agro-industrial trans national company, TNC on television, thanks to huge advertising budgets3_{, broadens the markets for a limited number of brands and products}

which tend to become “global”, thereby contributing to the standardisation of the

con-2 _{These structures are, for the most part, based in Geneva in order to avoid European Union regulations}

concerning competition.

3 _{More than 7 billion dollars for the world top 20 firms in the agri-business industry, representing almost}

sumption model in accordance with the standards of the TNC, which rarely correspond to those of nutritionists.

The characteristics of the agro-industrial production model mean that this model generates negative externalities, i.e. problems or malfunctions, the costs of which it does not at present cover and which therefore hold little sway in the strategic decisions of the dominant actors.

This might include the exhaustion of natural resources and the degradation of the countryside, the hyper-specialisation of production units and the artificial hyper-segmen-tation of products which exacerbate the economic disparities between firms and between consumers.

Furthermore, international trade liberalisation and the low cost of goods transport lead to the delocalisation of activities towards sites which benefit from advantageous compara-tive costs and from which the products are exported throughout the world. For example, the standard frozen chicken produced in the United States or Brazil for less than one dollar competes with native Moroccan or sub-Saharan African chickens, thereby destroying small local producers, who will then swell the numbers of unemployed in the cities, and distorting the organoleptic typicality of traditional preparations, thereby causing the regional culinary heritage to disappear in the long term.

2. Is ANOThER MOdEL pOssIbLE?

Having examined the agro-industrial and agro-tertiary model and before considering the feasibility of an alternative model, it is essential that we consider what this model has demonstrated.

First, this model banished the spectre of famines and allowed a global level of self-suffi-ciency to be achieved: if all the inhabitants of the planet shared world food production equi-tably, the nutritional standards would toady be satisfied. The last famine caused directly by food was suffered in Ireland in the middle of the 19th century, causing more than a million deaths. It is true that the 20th century was the most deadly in world history and that the victims of hunger could be counted in tens of thousands (China, USSR, Africa). However, these famines were primarily political or military in origin and only secondarily the result of natural catastrophes (cataclysms, floods, droughts) (Devereux, 2002).

Technical progress has been decisive in this quest for self-sufficiency. In 4 decades (1961-2002), average world outputs of rice have doubled (2 to 4t/ha), while those of wheat have tripled (1 to 3t/ha). This means that the agronomic sciences have enabled us to perfect an operational food production system which is very efficient in relation to the objective of self-sufficiency.

Second, we should attribute a very high fall in food prices to the agro-industrial system (if we take the consumers’ point of view): in France in 1700, 300 hours of work were required to buy 100 kg of wheat while barely 2 hours were sufficient in 2000. This evolution was made possible by the fantastic gains in agricultural productivity and in the agri-business industry.

We know that the fall in food prices frees purchasing power for other goods and servi-ces and contributes to economic growth.

A third conquest is food safety. Despite recent high-profile crises (mad cow, dioxin, listeria, etc.), we note that the number of deaths due to the toxicity of foodstuffs is now very low: the agro-industrial food system is very safe, even if it has become vulnerable to infectious pathologies due to its concentration.

A fourth positive element is the effect of the agro-industrial system on economic acti-vity. As a result of its sophistication, it has allowed new sectors, such as packaging, logistics, distribution and restauration, to be created or to experience a boom. Consequently, em-ployment has been maintained whereas it has slumped in other sectors.

The destruction of agricultural jobs has been accompanied by the creation of posts, primarily in the service industries. With a total of 4 million in France and 16 million in the United States, the number of personnel employed in the food system, has suffered only a slight fall in the long run.

Finally, the society of abundance, which characterises certain countries, provides hyper-choice and therefore hedonistic satisfaction through consumption.

At the end of this analysis of the dead ends and successes of the agro-industrial model, we can consider its durability. This type of question can only be considered globally, as the world is now a village, at least with respect to every form of communication and trade. Before we even tackle the, albeit, essential problem of nature, we must first consider the human element.

The world population is set to increase by a further 50% by 2050, after which date demographers forecast a “stationary state” at around 9 billion human beings. The answers to the question “can the Earth feed 9 billion human beings?” are qualified. In simple terms, we can answer “yes” on a technical level4 _{and “yes if” on a socio-economic and political level.}

Solutions exist in research laboratories with regard to the agro-industrial model. Ne-vertheless, the diffusion of these solutions in developing countries would require the im-plementation of major policy (in particular the allocation of wealth) and organisational reforms, as well as massive investment, unparalleled in relation to the financing currently awarded by rich countries in favour of poor countries.

Furthermore, a revision of the consumption model would prove essential. The major trends we have seen at work these past 50 years will become subject to a dietary regime based on a high level of consumption of animal proteins which are very costly to produce (7 plant calories are required to generate one animal calorie). This means that the model cannot be extended to the world population as it would require land and water in excess of the total resources available on the planet. As this model is also condemned by nutritionists because it includes the consumption of excessive lipids and sugars5 _{and generates large-scale}

pathologies, the only other scenario which we could envisage is a change in dietary beha-viour. According to doctors, it is necessary to move towards a more natural and diversified diet. This diet presents the advantage not only of preventing non-transmissible or chronic diseases linked to diet, but of being more agreeable to the senses and of restoring the social and intergenerational link which is cruelly missing in individualist societies.

Although it is possible to provide a precise definition of the consumption model towards which we should tend, the question of the food production model is not, for all that, solved. For many years, professionals and associations have warned us of the dangers of the agroin-dustrial model and recommended an alternative model, based on short commodity chains and firms on a human scale. Nevertheless, this approach does not include either economic calculation or the idea of time. Despite the empathy it might encourage in a context of huge agro-industrial and agro-tertiary firms, a productive model based on small agricultural and traditional production units would necessarily lead to a drastic fall in labour productivity (and even the productivity of land and equipment, for technical and economic reasons). We should know that today, a French farmer feeds almost 80 people, of which 70 live within the national borders, and an employee in the food industry supplies 125 consumers, of which 100 in France. In other words, less than 10% of the active population in rich countries works in the production of foodstuffs. Moreover, in many countries, the food system is highly in-tegrated in the international market, which means that large, and sometimes vital, financial incomes come from abroad. Consequently, a fall in export capacities due to lower internatio-nal competitiveness would be detrimental to economic growth and employment.

The model inspired by the slogan “Small is beautiful” (Schumacher, 1973) which ap-peared after the first oil crisis, implies 5 socio-economic consequences in those countries which have reached the agro-industrial stage:

a significant increase in the active population working in the agricultural and agri-business sector (need to find volunteers);

5 _{“Empty calories”, low-cost due to technical and managerial progress and agricultural policies favouring}

oleoproteaginous products (soya in the United States) or sugar (European Union common agricultural policy).

a major increase in food prices (need to devote a larger part of household budget to food);

greater time invested in preparing meals (rather than using “ready-to-eat” pro-ducts);

a fall in currency resources;

the redefinition of the occupation of space by slowing the exodus towards coastal areas and by ensuring a more equitable distribution of material infrastructures and services.

These five consequences or conditions would signal a break from the trends observed for the past century in most countries throughout the world. Other changes would be necessary, which also pose certain problems: rebalancing territories with new methods of marketing products (short commodity chains). Some authors describe this new configura-tion as an “alternative model” but assess that it’s not possible to contemplate only an outli-ne. The forecasted model would be a combination of various alternative models (Winter, 2003; Watts et al., 2005).

We can try to quantify the potential size of the alternative model from the French case. In this country, the trend of the food market indicates a segmentation in 3 categories as shown the following figure.

French Food Market Segmentation and Trends – 2004

Segment Sales (€ billion) Market share (%) Annual average growth rate

Mass market 97 75 0 – 1%

Innovative market 6 5 15 – 20%

“Terroir” products market 26 20 5 – 10%

Total 129 100 1 – 2%

Source: our estimation

In the future, the food industry TNCs will capture the innovative market of nutra-ceutics and ingredients such as Omega 3 to maintain their domination on the market, according with a consumer’s preference. After the food safety crisis, TNCs tried to use the concept of “Terroir” as a marketing argument. But it exists a contradiction between those very large scale globalized firms and Terroir products, because this kind of product is contingent with SMEs, territory anchorage, historical and cultural aspects. For that, I think Terroir products will return – sooner or later – to SMEs. In France, this market is significant and it knows a high growth rate. It’s possible, with an adequate public policy to increase its market share.

— — — —

In developing countries, and in particular the least developed countries, the situation is radically different. Over time, in most countries throughout the world, we have seen the emergence of a dual, if not schizophrenic, food system. On the one hand, a sub-system orien-ted towards the middle class and the wealthy in the major urban centres and exports which reflect the agro-industrial model; on the other hand, a traditional sub-system in the agricul-tural or traditional stage which concerns the majority of the rural areas. In general in these countries, the agricultural population is numerous; relative food prices are high (they absorb a large part of the household income); a considerable amount of women’s time is devoted to preparing the meals due to the low level of development of food products; and integration in international trade remains weak with the exception of some rare commodities.

In these countries, the priority is naturally to fight poverty through the modernisation of agriculture and the diversification of activities. These countries should avoid copying a model whose limits we now see, instead including sustainable development objectives in their policies. This means, on the one hand, an institutional change in the organisation of the people involved in the national food systems and of international cooperation measures; and on the other hand, specific handling in international negotiations of both the protec-tion of the channels and market access.

At the end of this diagnostic, we can state that the world food system (be it agricultu-ral, traditional or agro-industrial and agro-tertiary) does not satisfy the recommendations required for sustainable development. If, at a global level, it succeeds in providing low-price commodities (economic efficiency), it is often to the detriment of the natural environment (negative externalities) and by generating social injustices between countries and, within each country, between the actors in the commodity chains, be they producers, traders or consumers.

cONcLusION: TOWARds A TRANsITION MOdEL?

Through a critical examination of the agro-industrial model, we arrive at the conclu-sion that a “go with the flow” scenario, i.e. the prolongation of past trends in both the field of consumption and that of food production, is not “sustainable”. We have demonstrated that the called “western” consumption model is not only damaging at a personal and so-cietal level, but also that it cannot be extended to cover the entire planet. As for the produc-tion model, which is highly asymmetric and predatory, its negative impact on the physical and social environment, and the fact that it is managed in accordance with purely financial reasoning, means that it too cannot be generalised.

Nevertheless, a return to the “traditional” age can hardly be envisaged due to considera-tions which can be sociological (we live in a society of individualistic mass consumption,

the bases of which must evolve), economic (need for low-cost production and international integration) and technical (all our R&D is oriented towards performance based on econo-mies of scale and therefore implies large production units).

It is therefore essential that we consider the means of organising the transition towards a new model of “sustainable food development”, i.e. in accordance with the 3 objectives of economic viability, social equity and ecological viability. Due to the extreme diversity of situations observed, this model can only be hybrid in nature, combining modern (based on globalisation) and post-modern (based on territorial attachment) configurations accord-ing to geographic areas, mentalities and behaviours6_{. This means that we cannot reckon}

with only regulation by the market. A genuine food policy must be implemented which at present is not visible in any country in the world (Rastoin, 2005b).

A food policy must be an efficient incentive to improve the nutritional regime. It is legitimised by considerations concerning public health (prevention of illness, well-being) as well as economic concerns (lowering of direct and indirect costs of pathologies).

Fundamentally, it must be based on a modification of the consumer’s behaviour through education from the earliest of ages. It requires reflection on the allocation of budg-etary resources (revaluation of food prices) and time (increase in time devoted by house-holds to preparing food and taking meals). It should also guide agricultural and industrial policy with regard to improving the nutritional quality of the products sold to consumers and remodelling the production-marketing model by means of diversification and shorter commodity chains.

Finally, it must include an effort towards R&D vis-à-vis these models, in particular the technical developments, the baskets of products and the formats of the companies.

Due to the intensity of trade between countries, such a food policy involves regional coordination and international dialogue (WTO). In light of the deviations caused by the globalisation of the agricultural and agri-business markets, we might envisage “regionalis-ing globalisation” in order to “relocalise” the food systems. This would involve clos“regionalis-ing the distances between the production and consumption sites. Restoring short commodity chains would have the advantage of maintaining (if we are not too late) the diversity of consumption models (by causing them to evolve towards an improved nutritional suit-ability)7 _{and maintaining or creating activities, and therefore jobs, in rural areas in most}

countries throughout the world.

 _{According to North, the process of economic development depends on 4 factors: the quantity and}

qual-ity of human beings, the stock of knowledge, the institutional framework and the system of beliefs (North, 2005).

The alternative model must not fall into the trap of the old-modern debate which has been running for more than 2000 years, at least with respect to agriculture. As early as the 1st _{century A.D., the “first” agronomist, Columella, a proponent of intensive and}

special-ised large-scale agricultural cultivation, disagreed with Pliny the Elder who encouraged the diversification of production in the context of the family farm (Padilla et al, 2005). It is indeed necessary to invent a new agri-business model, which reconciles the historical herit-age specific to each society with the scientific and technical knowledge of our own century. The food system could, then, be the field to be favoured in order to initiate the essential changes on which the quality of our future depends, as suggested by the project of the phi-losopher Ernst Bloch (1885-1977) “…to make the earth and the attachment to the land into contemporary elements, the foundations of freedom and the need for belonging as well as vectors of sensitivity and a universalist conscience” (Alphandéry et al., 1992). The earth is therefore one of the essential foundations of sustainable development.

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