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Global Food Security and the WTO: the role of Mercosur countriesMarcos Jank
Vice President, Corporate Affairs & Business Development,BRFAsia-Pacific
IFPRI Board Member
International Food Policy Research Institute IFPRI – 22 February 2017
2
BRF from farm to fork: an integrated supply chain for maximum safety
Largest Brazilian
buyer of corn and soy
meal
Genetics expertise
14,000 contract
farmers
Integration:
sanitary control and
larger productivity
34 units in Brazil
16 units overseas:
Europe, Argentina,
UAE, Singapore,
Thailand, Malaysia, HK,
Turkey
2.3 million tons of food
annually
27 Distribution
Centers
2,300 items (SKUs)
Technical
Assistance
Genetics
Feed
Processing Distribution
Domestic mkt
International
mkts
More than 240,000
points of sales
Present in 120
countries in 5
continents
Contract
Farmers
Comprehensive and integrated chain, from farm to fork
8th biggest food company in the world (US$ 12 billion market cap)
#1 chicken exporter in the world (14% of the world total)
#1 Halal poultry company in the world (by volume)
# 1 agri-food company in Brazil (US$ 12 bn net sales in 2014)
4th largest Brazilian exporter
5th largest brazilian employer company (115,000 employees)
Top of Mind brands in Brazil, Argentina and Middle East
Listed on NYSE and Bovespa BM&F
Listed on the 100 most innovative companies in the world by Forbes
Superior corporate governance and Investment Grade by Moody’s/S&P/Fitch
3
-300
-250
-200
-150
-100
-50
0
50
100
150
200
250
SouthAmerica
NorthAmerica
East Europeand Russia Oceania West Europe
LeastDevelopedCountries Africa Middle East Asia
1990 1995 2000 2005 2010 2015 2020 2025
Note: “Million tonnes equivalent” for cereals, oilseeds, animal
proteins, biofuels and cotton. Source: OCED and FAO Agricultural Outlook 2016-2025
World Food Security (1990-2025)Net intra-regional trade
Food supluses and deficits
4
Uneven distribution of consumption and resources
One dot represents 100,000 people
51% of world’s population19% of GDP18% of available land23% of renewable water
Consumption(% world)
28% poultry20% beef31% dairy37% sugar
SOUTH AND SOUTH-EAST ASIA: Bangladesh, Bhutan, Brunei, Cambodia, China, Honk Kong, India, Indonesia, Lao, Macao,
Malaysia, Myanmar, Nepal, Pakistan, Philippines, Singapore, Sri Lanka, Thailand, East Timor, Vietnam
5
-125
-100
-75
-50
-25
0
25
50
75
(US$ Billion)
Source: WTO. Note: China: Mainland China + Hong Kong + Macau
Top global trade surpluses and deficits in the agri-food sector
Brazil
ArgentinaAustralia
USA
Korea
Japan
China
6
0
5
10
15
20
25
US$ Billion
EU (21%)
China (24%)
Asia ex-China (20%)
LAC (9%)
Others (5%)
Mid East (8%)USA (7%)Africa (7%)
Brazilian Agri-Food Export Destinations
Source: MAPA (Agrostat).
7
Food chains: different drivers, different speeds
Elaboration: BRF (Marcos Jank). LDC: Least Developed Countries.
• Labor intensive agriculture
• High number of verysmall farms
• Self-sufficiency policy• Social concerns:
inflation,urbanization
Food Security Safety & Quality Value Added New Trends
• Quality• Healthy & safe food• Global players• Value chain
coordination• Consolidation• Economies of scale• Traceability
• Variety and branding• Differentiation• Taste• Labeling• Speed to market• Convenience• Food service• Infrastructure
• Individualized & emotional needs
• Environment issues• Animal welfare• “Buy local”• GM/antibiotics free • Organic, veggie, bio• Land use changes
Productivity Integrated food chainsSegmentationCustomization
EuropeUS
JapanSingapore
AfricaIndiaLaos
Myanmar
BrazilThailandMalaysiaMexico
ChinaRussiaLATAM
8
Market access for animal protein more complex than feed
Limited
Closed
OpenChicken: Access remains an issue in Asia
Note: Assessment of market access based on tariffs and NTMs for frozen
chicken and soybean meal
Soybean: free access
Open Limited Closed
Sources: 1. USDA reports on Livestock & Poultry, Grains and Oilseeds (2014 data) 2. OECD-FAO Agricultural Outlook 2014.
Note: For soybeans, crush volume is approximated for consumption volume.
97
23
21
15
15
3
46
30
14
13
11
6
0 10 20 30 40 50 60 70 80 90 100
Soybeans
Soybean meal
Beef
Corn
Chicken
Pork
World
Asia
% imports/consumption
Value per tonne (USD):• Grains 300 a 500 • Meats 2.000 a 5.000
9
Top priority issues is a challenging trade-off
How to achieve?
…with import restrictions and self-sufficiency policies?
Food Security Food Safety & Quality
Affordability
Low InflationSustainability
Trade is still very limited…
New protectionism: tariffs and subsidies complex non-tariff barriers
Trade: economic efficiency and sustainability
Feed (grains) vs. Animal Protein better carbon/water/energy footprints
10
10
Evolution of Agricultural Protectionism
11
Conclusions
OLD
AGENDA
NEW
PARADIGMS
Drivers Food security Food safety, quality, value added, new trends
Relationship Commodities
Spot markets
Contracts, traceability, certification, private standards
sustainability (water & carbon footprint, climate change),
integrated supply chains
Geographies Developed
countries
Emerging economies: Asia, East Europe, Africa, LAC
Trade WTO
Mega-regionals
Bilaterals (spaghetti bowl) and strategic partnerships
“New” mercantilism
Protectionism Tariffs and
TRQs
Domestic
Subsidies
Complex Non-Tariff Barriers (NTBs): sanitary (SPS),
technical (TBT), burocratic (plant approvals),
environmental, private standards.
From developed and emerging economies (ex. China).
The WTO is essential to solve systemic issues
13Sources: USDA annual GAIN reports, 2006-2015, TradeMap trade data derived from UN ComTrade
5,52%
6,78%
6,20%
5,87%
3,39%
3,97%3,85%
4,43%
3,65%
3,20%
0,00%
1,00%
2,00%
3,00%
4,00%
5,00%
6,00%
7,00%
8,00%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
% Import/ Consumption in China (by volume) Year Soybeans
2006 65.9%
2007 75.9%
2008 71.1%
2009 81.6%
2010 81.1%
2011 72.7%
2012 77.1%
2013 79.6%
2014 81.8%
2015 86.8%
Increasing import access into China for soybeans and beef, but
decreasing for poultry. Access for meats remain very low.
Corn
