No Match Found
More food is being traded across borders as business activity becomes more mobile for international food companies entering new markets and looking to source the best prices for their food products. This is transforming the food industry as regulators, food producers, sellers and consumers demand a more consistent approach to food safety and quality standards across geographies. Risks are increasing and maintaining oversight over food supply chains is becoming more challenging.
As global food trade becomes subject to more regulations, food companies are spending millions on the integration of their supply chains to improve safety, traceability and processing facilities. At the same time, governments are issuing policy and strategic announcements to encourage the integration of supply chains to assist in making improvements.
High-profile food safety and quality scandals are damaging public trust in the food industry and increasing consumers’ concerns about their food. With the ubiquity of social media and increasing media and public interest, more food scares are turning into damaging scandals – pushing governments and food companies to improve standards.
More stringent food safety regulations with stricter policies in terms of quality standards, supervision and sanctions are being adopted by governments committed to protecting their communities. Challenges are created in meeting multi-country regulations while remaining economically competitive. For example, the FSMA has changed the game by shifting the FDA’s regulatory focus to the prevention of food safety problems that cause illness. The FDA now has a mandate to hold everyone at each step of the supply chain accountable for adopting preventative controls to decrease the likelihood of food safety problems – raising the compliance bar for all global food companies operating in and exporting into the US.
In maturing economies governments are committed to legislating to improve food safety and confidence in locally manufactured products – reducing their people’s need for expensive imported products. In China, several government departments previously responsible for food safety, with fragmented powers and responsibilities, have been brought under the powers of the China Food and Drug Administration. After naming food safety a top priority, the Chinese leadership now has a far greater ability to improve standards.
The growth of emerging economies is creating huge consumer markets where none existed before. Consumption power is shifting to wealthier, more demanding and newly urbanised middle classes. This is resulting in greater expectations of safety, quality, integrity and traceability of food by consumers across emerging economies. Demand for safe and high-quality food is increasing across the world.
Scientific advances are creating a greater understanding of food health and safety and the early detection of hazards, while technological breakthroughs are helping improve standards and manage risk. These advances are opening up opportunities for companies to gather more information about the safety and quality of their food across the supply chain. We’re using technology-enabled solutions to improve traceability and provide regulators and consumers with critical information about safety and quality. These advances are opening up opportunities for food companies to gather more information about the safety and quality of their food across the supply chain, from farm to fork. Bespoke solutions are required to deal with the complexity of operations and give stakeholders greater confidence.
Improving living standards across emerging economies are changing diets and driving growth within the food industry and the amount spent on meat and processed foods. In emerging economies the consumption of protein is increasing as populations grow wealthier and people have a greater concern not just with the safety of their food, but with quality, choice and aesthetics. Traceability and the demand for more choice, such as organic and halal products, are creating new standards for compliance, testing and certification across the world.
Consumer issues are becoming more complex and open as social media gives every customer that wants it an opportunity to share their views on the safety and quality of food products. Consumer expectations are also increasing with the growing knowledge of food safety and quality issues.
Not just consumers food companies need to be concerned about; employees, activists, media and other stakeholders could all expose food companies not following best practice. As such, food companies are investing more resources in risk management and prevention.
Leading food companies are going well beyond the standards required to be compliant and setting their own independent standards and using them as a measure to control risk, production efficiency, protect brand value and create import trade barriers. Food companies can see the benefit of progressing to higher levels of compliance.
As the world becomes more populous and prosperous, demand for food and other natural resources will rise.
Food consumption is expected to increase 35% over the next 15 years as we add another billion people to the world’s population by 2025. Agricultural production will need to increase by 70% to feed the world’s people by 2050, yet climate change and pressures on water and energy availability will impact supply.
So, how will we feed all these extra people and meet rising consumption demands in the face of increased food scarcity? Governments and food companies are urgently assessing the risks they face in food supply chains and finding alternative suppliers, producers and products. Contingency planning may involve finding alternative growing areas, making acquisitions or divestments and sourcing from new markets.
As food scarcity increases, the industry will need to remain vigilant to criminal activity that will compromise the integrity of the food supply chain through the adulteration or mislabelling of products. Food defence is growing in importance.
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"It's mainly about changing the mindset in the food industry."
Senior Director, PwC Netherlands
Tel: +31 (0)62 256 64 19
Partner, PwC Netherlands
Tel: +31 (0)61 211 88 41