Bruce Campbell, Dr Bruce Campbell Consultants Limited
5 May 2020
COVID-19 will fundamentally change the world and its food systems forever. What actions should we take in Aotearoa New Zealand to address this challenge and redesign the food and beverage sector for the future?
How long will this last?
SARS-Cov-2 is massively disrupting global health systems and economies right now. The immediate effects of responding to the virus with physical distancing are likely to last until at least 2022. A protracted game will be played around the world stamping out outbreaks here and there until a vaccine can hopefully be produced and the disease is suppressed. Immunity may not be long-lived even with a vaccine so further rounds of immunisation and upgraded vaccines may be needed over the long-term. The impacts of physical distancing, depressed economies, high unemployment and large government debt will last for many years to come.
Adjusting to living with the impending threat of a global pandemic will become the new normal and will result in major global system redesigns that will shape the future forever. Global economies, societies and food systems must adjust.
Some sectors will be severely diminished (airlines, cruises, international tourism, commercial office real estate), some will continue and reposition themselves (agriculture, manufacturing) and some will substantially expand (telecommunications, digital platforms, e-commerce).
What is happening to global food supply?
As the pandemic has accelerated, there has been an immediate scramble to keep food supply chains open. In the immediate term, there is still enough food grown but household stockpiling, drastically reduced air freight and physical distancing measures have placed severe restrictions on food harvesting and distribution. This has created significant distribution problems and increases in food waste. The seasonal labour supply of migrant workers for food production is substantially reduced and food containers for shipping are not in the right places.
A number of food producers may stop producing food in the medium term as a result, creating food shortages, and compounding the health and wellbeing of vulnerable communities. During repeated waves of resurgence and then suppression of the virus over time we can expect to see this situation continue.
Markets will see these long-term consequences of the COVID-19 pandemic for many years to come. Food supply systems and health systems around the world will be redesigned as a result.
Governments of the world must redesign their economies, health and welfare systems and food supply chains.
How might the world respond?
“Everyone for Themselves” Scenario
At one extreme, we could enter a new era of food protectionism and nationalism. We are already beginning to see countries hoarding wheat, rice and oils. Nations may become highly nationalistic, withdrawing from international cooperation and focusing on internal self-sufficiency.
In this scenario, will New Zealand focus internally, aim to rebuild its domestic capacity in supplying goods and services and reduce its global dependence and trade with global partners?
“Global Unity and Action” Scenario
At the other extreme, there could be a redoubled commitment to international cooperation, with unprecedented intervention by governments into economies and global cooperation to accelerate a post-COVID-19 recovery.
This will require strong government intervention and greater control than we have seen in the recent free-market economies era, along with close intergovernmental cooperation to address issues on a global level.
There is likely to be a much greater role for government in designing the future food and beverage supply and distribution ecosystem. Food supply will increasingly be seen by governments as a matter of national security.
Decades of consolidation into relatively few, large food supply companies have left food systems vulnerable. Large and specialized food supply chains have demonstrated that they are not so efficient in the face of the disruption caused by COVID-19. Public food infrastructure could in future have a critical new role supporting mid-sized producers, responding to disruptions, and supplying communities left out of consolidated supply chains. Diversification of food supply chains is also expected to grow as a result of COVID-19, accelerating a trend that was already beginning. There is likely to be increasing partnerships of public, not-for-profit and private entities in food supply chains.
The United Nations is urging countries to work together on a global level to protect food supply. International cooperation and open global trade is key, so governments might be expected to eliminate export restrictions and import tariffs on food for a period.
Here there is an opportunity:
- take a wide interconnected view of the challenges facing the world,
- redesign a new economic model which addresses the various challenges of economic development which protects the environment,
- address climate change and ensure more equitable health, wellbeing and social development.
We are borrowing from future generations to cope with COVID-19 so let’s make sure we create a better world for them.
How Might We Pivot to a Future Food and Beverage System?
Consumers can be expected to be taking much greater heed of where food comes from and to be making healthier food choices in future.
Redesign should start with building a collaborative understanding of what consumers want for the future of their food by widespread sharing of data in the food industry across competitive lines.
Innovative sharing hubs could enable a stronger food ecosystem to be built faster. These innovation clusters should address questions like, what happens if a sizeable proportion of global food manufacturers, suppliers and restaurants close down for good?
Aotearoa New Zealand can take leadership to shape the longer-term future of food and beverages.
A Leadership Role for Aotearoa New Zealand
Premium Healthy Food and Beverages for Discerning Consumers
Consumers will want a greater proportion of safe, healthy and plant-based foods in their diets.
These consumers are already adjusting eating habits in response to the lock-down. There is more fresh focused consumption in Asia than ever, with health emerging as a big indicator for future market trends in China. This may be a key indicator for fresh fruit and vegetable retailers. It is expected that things may not return to as they were. Home quarantine has meant that 89% of consumers in China now say they would be more willing to buy daily necessities and fresh products online when the pandemic is over.
Plant-based foods are likely to be seen as healthier and safer by many consumers. A significant rise in demand for functional foods with health benefit claims is also to be anticipated.
This expanded high-value, high-margin food production system can be used to back-fill the economy for losses in revenue from greatly reduced international tourism.
Regenerative Agriculture
People are increasingly demanding a rebalancing of economic, environmental, cultural and social goals in food systems to provide greater benefit for the environment, vulnerable communities and future generations.
There is an opportunity for us in New Zealand to lead the way in developing regenerative agriculture, leveraged off a renewable energy platform and focused on healthy food growing systems with a lighter footprint on the environment. These would have greater efficiency of food production, and address and mitigate global challenges such as climate change, environmental degradation and biodiversity loss. These must be developed in a way to encourage and support farmers and growers to produce food, and will require special intervention and support by government.
World-leading, sustainable water storage could be developed for food production systems so that we can be a supplier of quality, healthy food to ourselves and the world using our natural sunlight, rainfall and soil resources.
There is an opportunity to completely redesign current food production systems to rebalance economic, environmental and community health and equity goals. Here challenging questions must be asked to confront previously intractable trade-offs and conflicts, in order to innovate and develop radically new approaches to future food and beverage supply chains.
Pest and disease threats could be managed by a new generation of biological controls and digital surveillance technologies, developed through cooperative international innovation networks.
Aotearoa New Zealand has a distinct advantage in this area as there are important sustainability principles embedded in Māori values for kaitiakitanga or care of the land for food production. Important innovations and investments are likely to be made by Māori in the food and beverage sector during the post-COVID-19 recovery.
New Food Distribution Systems
Reliable delivery services are going to be increasingly important to supply food and other perishable goods. It may be necessary and more efficient to have a centralised or consolidated distribution of food and other goods in major population centres.
In addition to local delivery services, we may also see the emergence of local, drive-in-pick-up centres for groceries and cooked food from giant “ghost kitchen” food preparation centres. Drop-off and pick-up areas will become increasingly important in new retail space design. Ideally this would employ minimal customer contact using automated systems to bring products and food to customers’ vehicles using app-based ordering. Fast food outlets may also alter menus to offer more nutritionally balanced and appealing meals. A large amount of public retail space, such as shopping malls, cinemas and restaurants can be expected to permanently close.
Many people in future will likely work as a home-based population with flexible working days, so this may necessitate 24/7 operations for some businesses that did not traditionally work that way such as supermarkets, take away food shops, and centralised food distribution and preparation centres. These require enabling technologies for a population that is always awake and in need of goods and services at all times.
Expanded Innovation, Learning and Social Equity
The food and beverage sector will be a significant source of new jobs to achieve this post-COVID-19 future and the additional workers will require substantial training and skills development.
New Zealanders will make up a much higher proportion of the local food production workforce than has been the case in recent years, as immigration is curtailed. There will be significant redeployment into this sector from the retail, hospitality and tourism industries. A wide range of new innovation approaches and new skills will be required. Many of these will be developed by on-line and in-workplace learning. This will be an opportunity to create more jobs in regional economies with lower traditional levels of employment such as Tai Tokerau Northland and Te Tauihu at the top of the South Island. This should be an opportunity to benefit to lower income families and help in growing social equity for Māori and other groups that have previously experienced intergenerational unemployment.
High Value Food Manufacturing
A key to the recovery will be to add more value to our raw materials.
This will be particularly the case in the food and beverage sector and high-margin value streams should be investigated for all the biological raw materials produced, including those that had previously been regarded as waste. These new generation food and beverage products, and the new technologies used to produce them, could be traded to the world to grow our economy, retire debt and secure imports that we require for our health, wellbeing and future development.
The Circular Economy and Reduced Waste
Economic recovery must include a much greater focus on reduced waste in all parts of the food supply chain, to reduce inefficiencies and minimise the environmental footprint of food production on the planet.
Principles of a circular economy could be strongly embedded in the way we produce and consume food. Nutrient inputs for food production could come from recycled biomaterials and new smart-biological processes. It is a great opportunity for a new generation of entrepreneurs to step in and reshape the food landscape.
Digital Platforms
Digital platforms will rapidly become the new way that consumers will connect with and purchase their food.
Consumers will require digital proof. Information such as the safety, quality standards and environmental standards should be transparent to consumers on-line and when they search for suppliers or scan a product code at the supermarket.
Digital forms of communication will be critical but with a shortage of investment funds in the next few years, large scale deployment of public 5G access points may be delayed. Bandwidth will be a precious resource to be conserved with a long-term shift to more home-based work for a large section of the population. Cloud capacity from hyperscale vendors will be critical. There could be a conscious decision taken by government to accelerate investment into digital enabling technologies to support food production, distribution, marketing, promotion and export as a key driver of the new New Zealand economy.
Renewable Energy and Automation Platforms
A drive to greater efficiency and higher environmental credentials will prompt an accelerated focus on renewable energy and automation as the basis for food production.
There is a significant opportunity to develop a new fleet of electric vehicles and robotic platforms for farms and orchards, connected digitally to manage efficiency and quality in the supply chain. Automation could accelerate in response to the drive for high quality standards and efficiency in food production. As a consequence, the jobs and skills in food production will be increasingly those of digital savvy technologists, designing and operating production and harvesting devices.
A Challenge Question
This world-changing event has cost many lives, is reshaping economies and is altering livelihoods. We will not be the same again. What role might you take in redesigning the future of Aotearoa New Zealand’s food and beverage system?
Dr Bruce Campbell Consultants Limited 