Chain of events: a blog of Food Chain Intelligence

The Group of Twenty (G-20) Finance Ministers and Central Bank Governors was established in 1999 in Germany to discuss key issues in the global economy. The G20 countries are:
Argentina
Australia
Brazil
Canada
China
European Union
France
Germany
India
Indonesia
Italy
Japan
Mexico
Russia
Saudi Arabia
South Africa
Republic of Korea
Turkey
United Kingdom
United States of America

The 2011 meeting in France will be important for our readers because a prior meeting in June 22-23 will see G20 agriculture ministers seeking a deal on improving global food security amid increasing global commodity prices.

Some of the aspects to be discussed include:
-More transparency on food supply chains. President Nicolas Sarkozy has blamed speculators for food price inflation that fed unrest in North Africa and the Middle East.

-Better sharing of information on food commodity markets across G20 nations – which could help reduce speculation.

-More regulation of financial markets linked to raw materials.

-Ease export restrictions for humanitarian aid. The possibility of creating emergency humanitarian food reserves – e.g. development of regional storage facilities – will also be discussed.

-The launch of the Agricultural Price Risk Management facility. This is a new World Bank-backed instrument, which would provide up to $4 billion to help farmers in developing countries hedge the sales of their products in cases where prices rise or fall sharply. This instrument also addresses the issue of high up-front costs and limited or no access to financing by farmers in poor countries, which keeps them out of international markets.

Groups such as Oxfam are calling for restrictions in the production of biofuels, including the removal of subsidies for biofuels production and the development of contingency plans to adjust their biofuels targets when food supplies are endangered.

The World Food Programme (WFP), the food-aid arm of the United Nations, is proposing that G20 countries share market information through a database, the Agricultural Markets Information System (AMIS), which would be housed at the UN Food and Agriculture Organization (FAO), with a secretariat that includes WFP, the World Bank and others.

Australia’s role in food security is important in several fronts: a) as an effective food producer and marketer; b) as a provider of training and education in agri-food; and c) and a delivered of aid through its many organisations, including AusAid, ACIAR and World Vision Australia. Australia also delivers aid through its participation in the WFP. The Australian aid programme will deliver about $4.8 billion on development assistance during 2011-12. This is an estimated 0.34% of Gross National Income for the year. and will continue to grow to reach 0.5 % of the national income by 2015.

Given this commitment from the public purse, the Australian Government is also obliged to push for better trade conditions for Australian producers. Trade Minister Craig Emerson recently stated that “The single most-powerful means of dealing with the food security problem is through agricultural trade liberalisation” and that free trade “[..] enables food production to concentrate in those areas that are most productive at producing food” “[..]That means a greater amount of food at lower cost. That’s the equation that countries worried about food security are looking for: quality and price. Specialisation through free trade in agricultural products enables both of those to be achieved - that is, greater quality at lower price.”

Minister Emerson believes that Australia’s efficiency in agricultural production meant it could become “the food bowl of the world”, notwithstanding the problems of Murray-Darling Basin - and clearly, notwithstanding the relatively low public investment in agricultural R&D, which has been shown to be a factor slowing down agricultural efficiency itself.

As I write this, I am reading a note on the Brisbane Times that says that there are 16 Coles stores and 11 Woolworths stores closed to business in QLD.
While some sources say that the is a shortage in supply of basic items (including bottled water, bread, meats and fresh produce), Kate Carnell (CEO of the Australian Food and Grocery Council) has said that this is more a problem of panic buying and food can still be supplied from southern Brisbane. She added that “the major problem is transport logistics resulting from highway and road closures around the city (of Brisbane)”.

I wrote a note yesterday, showing maps of stores that should not be affected directly by the floods in Brisbane and QLD in general.The question I posed yesterday was “what about the distribution centres?”.

The following is an image that depicts the locations of the DCs that normally supply the five major supermarkets in Brisbane (ie. Woolworths, Coles, ALDI, IGA and Foodworks). I obtained the addresses of these again from publicly available information (cited in my previous note). have added the addresses of the DCs (which encompass more than one single warehouse) that are located in zones that may inhibit access or distribution of supplies.

Click here to see the map of supermarket distribution centres for QLD.

This shows that at least one Woolworths DC and three Coles DCs are affected. Metcash (which supplies both IGA and Foodworks stores) is in safe ground and so is ALDI. There are also 2 functioning Woolworths DCs and two Coles DCs. So, overall, stores at the south of Brisbane can be supplied. The challenge faced is how to supply stores at the North of Brisbane. And also Queensland’s nothern territories. Remember: these are all the DCs available for QLD and the is a large body of water in the middle.

There is also the added challenge of the nature of the operating DCs. For example, Woolworths DC in Larapinta is for dry goods. But they are struggling to deliver fresh goods. The immediate emergency response would be conditioning a dry good warehouse as a cold store by using reefer containers or trucks to hold product in dry goods space. Supply from NSW can be accomplished (although there are flooded areas in NSW too).

Expensive? Yes. But it can be done.

The latest news from major retailers indicate that 300 trucks are stranded across the state, Coles has closed 10 supermarkets and Woolworths has closed 8. Woolworths is supplying QLD supermarkets cut off from the main distribution hub of Brisbane by transporting groceries from Adelaide to Tennant Creek, from which goods are delivered by truck from the west.
There are over 1,200 supermarket stores in Queensland. IGA/Metcash has 286 stores, Woolworths has 193, Foodworks has 157, Coles has 134, and ALDI has 60 stores. The remaining 400 stores are independent small retailers.

I have prepared a series of maps showing the situation of retailers in central Brisbane and Queensland. To do so, I mapped the locations of all stores mentioned above from publicly available websites (see below), to see which stores have been (or are) in flooding areas.

The first map presents the simulated 4.5 m flood level scenario in Central Brisbane (I explained in my previous blog note how I arrived to this scenario). To place some context, I have added some addresses and four verified reports of floods that have occurred or are expected to occur between today and tomorrow. I should be able to add more as they come available (and I have time to add them). The map shows 35 supermarket stores that have either been affected or are in a location where they may require to close.

Click here to access the map for Central Brisbane, showing a simulated flood level of 4.5 m.

Locations of supermarket stores: (a) The yellow squares represent IGA/ Metcash stores; (b) the green squares represent Woolworths stores (including the former Safeway stores); (c) the red squares represent Coles supermarkets, BiLo and Coles Express stores; (d) the blue squares represent Aldi stores; (e) the purple squares represent Foodworks stores. Data obtained from: (a) the Metcash supplier information webpage; (b) the Woolworths vendors website ; (c) the Coles Supplier website ; (d) the GPS Data Team provider (http://www.gps-data-team.info/poi/australia/shopping/); (e) the Foodworks store locator. All accessed in 12 Jan 2011.

The second map shows a map that covers a greater area of QLD. All the shops of the five major retailers are shown.

Click here to see the entire map of QLD with the affected areas and the stores of the five major supermarkets.

It should not be a surprise that the most densely populated areas (e.g. Brisbane and surrounding suburbs) also show the greatest concentration of supermarkets. Therefore, there should be no shortage of stores for consumers. The following map shows this.
I am not able to simulate the entire flooded areas in this depiction, this area goes beyond the capabilities of the software I am using. I have not found a satellite image showing all the flooded areas in QLD. If anyone has come across such an image, please let me know.

What I used to show the impact of all the flooded areas on available supermarkets in QLD was the flooding simulation from BOM. While I think this depiction underestimated the actual flooding we are now observing, it is still a good basis to assess what stores are being affected at the moment.

Click here to see the flooding predicted by BOM in Brisbane and surrounding areas, and a general view of the number of stores affected.
However, the problem faced by retailers is how to replenish these supermarkets when the main distribution centres supplying QLD are in Brisbane. This is an aspect that I will cover tomorrow. Today, I can just reassure consumers in Brisbane that there will be stores open around you. I am hoping that this map shows the areas where consumers can purchase supplies in these confusing times.

Croakey has an interesting post on the debate about how inclusive the National Food Policy Working Group is. While the CEO of Choice is part of the group, it has been justly pointed out that the group does not have representatives concerned with public health (e.g. obesity, healthy diets). The disconnection of the newly formed group with the Preventative Health Task Force and the Prime Minister’s Science, Engineering and Innovation Council (PMSEIC) were also pointed out.

The PMSEIC in particular released a report entitled “Australia and Food Security in a Changing World“. If you type the title and search for a link, the first link where you can download the report is not the Chief Scientist office, by the way. I found the link through “the funneled web“, a website that contains notes of interest to Australia’s Higher Education sector. Clearly, they have a better website ranking than the Chief Scientist office (note to Penny Sackett: must invest in social media and search engine tools ).

In any case, I want to make sure than in this debate we do listen to what the PMSEIC has to say about food security in Australia.

I found the report to be a well thought, well structured position paper. Just what you would expect from a Chief Scientist advising the Prime Minister.

Contrary to the opinions expressed by the Public Commission and to some extent Ross Gittins, in that we should decrease agriculture R&D funding and that we don’t really have to worry about food security in Australia, the PMSEIC report indicates the contrary. Emerging food security challenges mentioned in the report include:

a) Vulnerability to climate change and climate variability.
b) Slowing productivity growth in primary industries observed over the last decade.
c) Increasing land degradation and soil fertility decline coupled with loss of productive land in peri-urban regions due to urban encroachment.
d) Increasing reliance on imports of food and food production inputs (such as fertilisers) and the susceptibility of these supplies to pressures outside our control.
e) A finely tuned and ‘just in time’ food transport and distribution system that presents risks of rapid spread of contaminated food and is vulnerable to events such as pandemics.
f) Poor nutritional intake leading to an increasing burden of diet-related diseases in the population.
g) Conflict in our region and elsewhere.

What do you know? I have the same in my list, made in 2009.

In the report, it is said that Australia’s strengths are:

-Australian agriculture has maintained its leading position in despite of itself. That is, we produce food on the driest populated continent, on low quality soils and in the face of continual climate variability (and I would add, in despite of the lack of leadership in food policies and R&D funding).

-Australia has strong links and capabilities in delivering technological development to developing countries in our region.
-Australia has a strong R&D base and our agricultural R&D capability ranks among the best in the world. Note: we should not confuse “strong R&D base” with “strong R&D funding”. The same report indicates that global investment in agricultural R&D has decreased over the past 20 years and that similar trends are observed in Australia, where agri-food R&D investment has progressively fallen from
a peak of 5% of gross value of agricultural production in the 1970s to just above 3% in 2007. John McMullen, adjunct professor of Charles Sturt University, links decreases in agricultural R&D with losses in Australian agricultural productivity beautifully. Listen to his views here
-Australia has a strong capability in climate change research including impacts, adaptation and mitigation.
-We have expertise in human health and nutrition research.

The report also states that a national and coordinated approach to food is needed. This includes not only the supply chain partners (i.e. farmers, manufacturers, retailers and service providers). It also includes policy makers, regulatory agencies and research organisations. This is a position I argued in my submission to the Cutler innovation review. And inclusion is now the issue discussed by Franca Marine the PHAA and Prof. Lawrence.

Key recommendations out of the report:

a) The establishment of an Australian Food
Security Agency, which coordinates the development and implementation of
policies and programs targeted to improving Australia’s food security.

b) Australia should increase its investment in agricultural R&D, to harness national expertise and take a leading role in national and international programs targeted to improving low input farming systems (hear that, Productivity Commission??)

c) Development of incentives to recruit and nurture future generations of innovative and adaptive farmers, researchers and associated professionals for the Australian food production and processing sectors.

d) Improve engagement with the community and partner organisations to elevate the status of food in Australia and build cooperative commitment to an improved food value chain.

The report establishes a time frame of three years to achieve these recommendations.

This report provides an excellent review of the issues confronting Australia’s food system in the next years. This includes water availability, fertiliser and energy availability, climate change, competition for arable land, and the effect of international conflict on food security.

I also liked the assessment of food distribution as an issue: the report says: “In Australia, we have had an abundance of food. We can produce more food than we need and we
have the resources to import food if necessary. However, we have faced crises for specific foods, such as the banana shortage after Tropical Cyclone Larry in 2006. Further, our food transport, distribution and storage systems are vulnerable to disruption. For example, a major epidemic could restrict movement of people and materials resulting in food shortages in some urban centres”. These are examples that we use in two publications: 1) ” Food distribution systems in a climate-challenged future: fruit and vegetables as a case study.” 2) “Food Security in Pandemic Scenarios”.

You will be glad to know that there has been some research done in regards to the vulnerability of food transport, the carbon footprint of food transportation and distribution initiatives to decrease emissions from food transportation. Two reports just finished (to be available through VEIL) discuss a) the impact of food distribution systems; and b) the carbon footprint of food distribution of fruit and vegetables in Victoria. Stay tunned to this blog for further information about these two studies.

Overall, I highly commend the PMSEIC report and I look forward to the implementation of the recommendations.

The Wild and Scenic film festival is America’s largest environmental film festival, shown each year at over a hundred venues across North America.

This year the festival will be shown in Melbourne, sponsored by the Sustainable Living Foundation.

There are very interesting films on sustainable food, farming and energy. An example is “Fresh” (http://www.freshthemovie.com/), which is a provocative and inspiring movie about the environmental impact of mass food production and alternative farming practices to decrease this impact.

“What’s organic about organic?” (http://www.whatsorganicmovie.org/) focuses on the debates that arise when a grassroots agricultural movement evolves into a booming international market.The debate extends beyond personal choice and into the realm of social responsibility.

For those lucky Melbournians (or those travelling to Melbourne), the festival will take place in October 19 & 20, 2010 in Kaleide Theatre, RMIT, 360 Swanston Street, Melbourne.

For more information, check the website:
http://www.wildandscenicfilmfestival.org.au/films