In the previous Blog, we stressed that surplus countries and regions are crucial for global agri-food security. We also pointed out that these surplus countries face problems, which are (1) gaps between actual and potential benefits, (2) loss of productivity due to soil degradation and climate change, (3) disruption of logistic system.
Here, we elaborate our general strategies and solutions to bridge the gap between actual and potential economic and social benefits for surplus countries and regions.
I. Vertical integration
Let’s take Brazil as an example, which is famous for its soy and maize supply. The value created by exporting these commodities is rather limited compared to processed products. Moreover, they are often associated with images of deforestation and soil degradation. In fact this damage to the environment should even be deducted from the export profits, how can Brazil increase the added value they can capture, at the same time reducing environmental harm in a way consumers are demanding? Vertical integration is one of the answers to this question. The basic idea for this Brazil case is to integrate soy and maize production with dairy production and processing. Dairy production and processing create more added value than feed production, by including this activity Brazil can capture this extra value for itself, instead of leaving this to other regions such as Europe or the US. Moreover, manure from animals, in this case from dairy cows, is a valuable product. As a source of minerals and organic matter manure is superior to chemical fertiliser for efficient plant growing and healthy soil, also drastically reducing the cost of fertiliser purchase on the world market. It also avoids/remedies the present manure disposal problems of animal production far from feed production, such as the current Dutch Nitrogen crisis.
Soy and other crops are fed to animals, and the produced milk is processed on site. In the end, only final products are delivered to the global market. This approach increases the number and quality of jobs, since human resources are needed not only for soy production, but also for feed processing, as well as dairy production and processing. The full added value from (soy and dairy) production and processing stay with the producers. Moreover, shorter transport lines reduce both costs and climate impacts. More efficient use of land and other resources reduces the overall demand for land (both for dairy and soy in this case), which can free extra land for other purposes like nature and biodiversity conservation. This is crucial, since many food surplus countries and regions are also important to nature and biodiversity conservation.
II. Horizontal integration
The basic idea of horizontal integration is to integrate different supply chains, and use one supply chain’s by-products as production material for another supply chain. The WMFC team aims to apply this approach to improving the current beef production in Latin American countries and regions, such as Paraguay and Uruguay. Currently, beef production is strongly associates with mass deforestation, the loss of carbon storage, decreasing water availability, and soil and water saturation with nutrients, which in the end not only destroy the environment, but also threaten the beef production itself. Local producers are searching for approaches to balance their environment management and economy performance.
Our general approach is to introduce dairy production in this case as well, and horizontally integrate dairy with beef production. This gradual shift from beef to beef-with-dairy also fits better in the future trend of a healthier diet. Due to this trend, it is expected that the global dairy market has better general future perspectives (see figure below) than the beef market.
Instead of being the prime driver, beef becomes a “collateral product” from the dairy chain. The joint use of slaughterhouse facilities can serve the processing of animals from both the dairy chain (steer calves and adult milk cows that are no longer productive) and from the meat cattle chain. Efficient joint-manure management and feed production can be applied in a similar way as for the Brazil case to improve the efficiency of land use and feed production, as well as soil health, and nature conservation.
Projected demand for food of animal origin till 2050 (millions of metric tons)
III. Higher added value products and modernizing agri-food production
In the example of Brazil, the integration of feed and dairy production and processing more than doubles the value of exported products. In the example of combining beef and dairy production and processing, also integrating slaughterhouses, the increase in added value is even higher.
For both examples, to further improve resource use efficiency, advanced technologies are needed. For instant, to use state-of-the art stable systems for accommodating animals. These solve the problem that generally in these regions the climate is too warm for highly productive dairy cows and meat cattle. The WMFC team has designed a patented technology to provide climatized stables to provide the most favourable conditions for animal health and productivity, at the same time reducing CO2 production and even eliminating methane and ammonia emissions. These technologies are crucial for climate change adaptation and mitigation, as will be demonstrated in the next blog.
Next to modern agri-food technologies (we call them hardware), relevant Education and Training (we call them software) is at least as important, to provide qualified teams and staff for operation and management. To meet the requirements of its projects, the WMFC team offers tailor-made Education and Training programs together with our technology producers and knowledge institutes. In our projects, integrated design of hardware, software, and orgware (such as communication, legislation and certification, and policies) is one of our basic design principles.
IV. Improvement of world market access
Mexico supplies a large share of (fresh) agri-food products to metropolitan markets in the United States and Asia. Mexico has a large variety of fresh products and has the challenge to sort and distribute them in an efficient way. To improve world market access, the WMFC team have conducted a series of projects for Mexican federal and state governments and local producers, with two angles – to improve the physical access by efficient infrastructures, and to improve the quality and quantity of products through following international standards.
The first step was to look from the federal level at Mexico’s agri-food logistic network and Metropolitan Food Clusters (MFC) structure, to select focus regions for further development, identify crucial agrologists infrastructure, and propose investments in market potential.
The State of Chiapas was one of the regions selected for MFC development. A regional plan was drafted for the spatial MFC-structure, including Agroparks (AP) with high-tech land independent production, Consolidation Centers (CC) and Rural Transformation Centers (RTC, cir in figure below); other infrastructure such as roads and harbors; as well as bio-diversity conservation.
The Consolidation Centers play the role of collecting large loads of products and split up and recombine these into smaller, but more varied loads based on specific demands of each retailor. This requires storage and distribution space that can provide different climate conditions for each type of products. In a consolidation center, supporting functions such as financing, packing, or auction are also relevant.
In the Chiapas project, detailed plans for several components in MFC have been elaborated, such as a Conceptual Master Plan for an Agropark and Consolidation Centre in Tapachula, representing the spatial layout of different functions. Production and processing, agri-food logistics, facilities for a circular economy, education & training programs, as well as a business plan were covered by this master plan. The design also includes a harbour on the coast of Pacific Ocean, which can directly export products to the Asian market without intermediate transportation.
IV: Balance between agriculture plantations and small producers
Agriculture plantations are often located in countries with a relatively poor economy but with suitable climate, land, water, labour and other resources. In many cases, plantations have better access to finance, technologies and other resources such as water than local small producers. Products from plantations are usually exported to countries from which investments in the plantations originate. As a consequence, benefits for countries and regions where plantations are located are mostly very limited, especially from the perspective of food security. These food security challenges overlap with the Type 3 counties and regions, which we elaborated earlier.
Large-scale global market-oriented agriculture should be more beneficial for the countries and regions where the production happens. To realise this, the same recipes are applicable as given for Brazil as well as for Paraguay and Uruguay: vertical and horizontal integration. So more added value can be retained and generated, and more employment can be created for local (small) producers or residents. Education and training for qualified staff and efficient operations and public communication are also important to attract the participation of local producers.
V: Knowledge and experience sharing
Traditionally, due to the combination of historical factors and climate and soil conditions, some parts of the world can feed themselves and go even beyond that. Northwest Europe, especially the Netherlands is an example. This is also where the concept of MFC originated.
Not only are the current agri-food knowledge and technologies from these parts of the world more advanced also their past mistakes during the modernizing process of the agri-food sector, offer valuable experiences for other countries and regions. Therefore, exporting these technologies, knowledge, and experiences is equally important to exporting food. The benefits of doing so are not only generating economic benefits for the exporting countries, but also help the rest of the world to keep innovating in order to make food provision both more secure and more sustainable.
The WMFC team has started its in-depth research of agri-food practices and cooperation in Northwest Europe over twenty years ago. We have applied the research outcomes in different types of countries and regions together with technology providers and knowledge institutes. The ambition is to help provide good food for everyone in an urbanising world and create benefits to the countries and regions where the food is produced, from a social, economic and environmental perspective.
In the coming weeks, we will elaborate more detailed contents on the other two perspectives. Stay tuned!
To read about other types of countries or regions and their food security challenges: