From agriculture to the food and beverage sector

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In last week’s column I highlighted the importance of agri-food supply and value chains. Today I would like to emphasize the importance of those supply chains if we are serious about lifting the agricultural sector out of poverty. In this context, it is important to realize that the food and beverage industry is Europe’s largest manufacturing sector, while agriculture accounts for more than a quarter of GDP in several member-states of the Association of Southeast Asian Nations. In the Philippines agri-food or food and beverage can have a great future provided more assistance is provided by the government to get this super-important sector called agriculture going and assisting/convincing the farming community that there is money in this sector.

Overview of agri-food in the Asean and the European Union:

Asean

Almost all countries in the Asean are experiencing high economic growth accompanied by rapid changes in the consumption pattern. A growing middle class is developing preferences for food and beverages that are more convenient and packaged well, especially juices and premium beverages.

Through Asean’s Economic Community blueprint, the seven priority areas for food, agriculture and forestry include:

• Strengthening food security;

• Facilitating trade in agriculture and forestry products;

Generating and transferring technology to increase productivity and develop agri-business;

Developing rural communities and human resources (including cooperatives);

Involving and investing in the private sector;

• Managing and conserving natural resources for sustainable development; and

Strengthening Asean cooperation in addressing regional and international issues.

European Union

Together, the European food and drink industries are the largest manufacturing sector in the Euoperan Union (EU) in terms of turnover, value added and employment. Overall, food and drink accounts for about 6 percent of all EU exports, and about 5 percent of all EU imports.

While the Asean and the EU markets offer great potential for enhanced trade and investment in agri-food, there continue to be key issues in the regulatory space that are constraining development and growth:

1. Market Access

a. Tariffs, taxes and nontariff barriers (for the Philippines, GSP+ solves some of the issues);

b. World Trade Organization (WTO) compliance;

c. Technical standards and product-classification rules;

d. Labeling;

e. Sanitary and Phytosanitary Standards; and

f. Religion and Halal standards;

2. Other issues

a. Foreign investment restrictions;

b. Intellectual-property protection; and

c. Traceability protection.

As we are moving closer to the Asean 2025 vision, here are key recommendations:

Import tariffs and nontariff barriers should be phased out over time;

All member-states should ensure their internal taxes and regulations are simple, transparent and fully compliant with WTO rules;

Labeling rules for packaged goods should be harmonized and simplified;

Technical standards/definitions and product classification rules should be based on internationally recognized standards;

The protection and enforcement of intellectual-property rights should be improved; and

Governments should consult industry on proposed amendments or any new regulations affecting the agri-food sector.

Another factor increasing the pressure to grow more food is population growth. The number of people living in the Asean region is projected to reach 800 million by 2050, a third higher than at present. Population expansion and changing food-consumption patterns, together with growing demand for dairy and meat products, is making food security a primary challenge for Southeast Asia. The situation is compounded by concerns over water resources and the effects of catastrophic weather events, such as the typhoons.

The World Economic Forum (WEF), in collaboration with  the Asean, has launched an initiative known as Grow Asia, focusing on smallholder farmer development and environmental agricultural sustainability. The program is part of the WEF’s New Vision for Agriculture initiative, which is seeking to bring together both private and public sectors, to work on market-based solutions to the development of inclusive and sustainable farming in the region.

One of the aims is to increase agricultural productivity and profitability, while also reducing detrimental environmental effects in cultivation. Other areas of focus are inefficiencies in supply chains, postharvest losses, access to finance and crop insurance, access to land titles, access to mechanization, access to extension services, access to best practices in the cooperative movement and access to market without abusive middlemen.

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