The statistics read like the summary of an apocalyptic Hollywood film, but sadly the threat of resource security for many materials used in manufacturing is all too real. We are used to flashy headlines about the increasing scarcity of fossil fuel reserves – but less widely reported are parallel declines in the abundance of minerals, metals and even gasses which are essential to manufacturing processes and to the composition of everyday products we have come to rely on as a society.
Beyond food security
As already mentioned, it’s not just food manufacturers that need to be concerned about resource security. Metals, minerals and gasses commonly used in manufacturing processes and often essential to making products are also falling into short supply.
In December of last year PwC released a report titled Minerals and metals scarcity in manufacturing: the ticking time bomb. This publication throws the threat of resource security into sharp relief and suggests approaches manufacturers might take to achieve sustainable resource management.
PwC’s report showed that while CEOs across subsectors were concerned by resource security issues, most felt that there was a lack of awareness among employees and stakeholders about the threats posed.
European business leaders interviewed for the report were generally more confident that policies and actions were being taken to mitigate the risks of resource scarcity than leaders in Asia Pacific. However they also expressed high levels of concern at the risks posed by growing demand and geopolitical factors in access to resources, over and above the threat of straight forward resource depletion.
The PwC report listed 14 commonly used metals and minerals as having reached a level of ‘critical’ scarcity.These include:
- Beryllium: used as a lightweight component in military equipment and in the aerospace industry. it is used in highspeed aircraft, missiles, space vehicles and communication satellites
- Cobalt: a material used in industrial manufacturing. It is an essential chemical element for the production of jet turbine engines and automotive rechargeable batteries
- Tantalum: a metal used in mobile phones, computers and automotive electronics
- Flurospar: used in construction, cement, glass, iron and steel castings
- Lithium: an extremely light metallic element used in wind turbines and lithium-ion batteries in hybrid cars
Furthermore, the dynamics of resource security are not only associated with declining reserves of raw materials. A linked issue of escalating demand for products, thanks to increasing global populations and rising GDPs, puts on added pressure. A final kick from geo-political concerns, including resource protectionism from some governments, and the outlook for access to certain materials and resources starts to look bleak.
“We are keeping an eye on projects like those at the Norwich Research Park which are investigating the development of heritage strains of barley for drought resistance.” - Andy Wood, Managing Director, Adnams
This is the case with food security according to a growing community of academics and political bodies and there can be few resource issues more emotive or universally relevant.
The UN Food and Agriculture Organisation predicts that global demand for food will see over 40% growth by 2030 and 70% by 2050. In addition, the kind of food in demand is increasingly of a processed or ‘convenience’ variety following a global trend for urbanisation and the aspirational image attached to the consumption of certain Western food types in developing nations.
On the face of it this sounds like good news for the UK food and drink industry – the UK’s largest manufacturing sector – which exported over £12 bn worth of food and non-alcoholic drinks in 2011, accounting for 7% of GDP. But things are never so straight forward.
The fact is that UK food and drink manufacturers face immense operational and ethical challenges if they wish to play a part in servicing this demand. They must do so in an environmentally, socially and economically sustainable manner.
Professor Tim Benton, champion for the Global Food Security programme, comments “The global population is growing and so are middle classes. We tend to think of the middle class as a Western phenomenon but it is now a global thing and these middle classes have disposal income and busy lives, increasing the demand for processed and often imported foods. This will put a huge demand on the global supply chain – right back to the primary producer.”
Professor Benton is concerned and admits that it is not going to be easy to meet this growing demand. “Climate change, sovereignty issues and other resource constraints are going to make it more difficult to produce food in the future,” he says. “Nitrogen, fertilisers and water for instance, are going to become harder to get hold of. There is also increasing competition over land.”
It’s not just about food shortage
Food security issues are not only concerned the ability to supply enough nutrition for the world’s growing population. Access to quality nutrition is also an escalating issue.
A number of government funded research projects investigating the links between diet and health are highlighting a growing divide in levels of health between social segments able to afford a varied and fresh diet and those more likely to subsist on a limited selection of highly processed – and cheap – foods.
These research projects are increasingly seeking involvement from industry to support the reconfiguration of processed food products to make them more nutritious without raising their price point.
An example is a project involving the University of Birmingham, the Institute of Food Research and agricultural research organisation Rothamsted Research. Individuals from these institutions are mining diversity in wheat fibre to uncover a means of reducing the glycacemic index of white bread. The end game is to create a cost effective process for the production of white bread which includes all the health benefits of wholemeal bread.
The above research is part of the work of the Diet and Health Research Industry Club (DRINC). DRINC is a publicprivate research initiative led collaboratively by three UK research councils: the Biotechnology and Biological Sciences Research Council, the Engineering and Physical Science Research Council and the Medical Research Council.
Manufacturing partners of the DRINC initiative include: Britvik, Kraft Foods, Coca Cola, GlaxoSmithKline, Pepsico, Nestlé, United Biscuits and Unilever. DRINC is a five year partnership with £10 m of public funding. More information can be found at: www.bbsrc.ac.uk/drinc
So how do we use the current global foot print of agricultural land to produce more food without having a negative impact on the environment?
One approach is to either genetically modify or breed new crop varieties that can cope with drought and disease without the need for increasingly rigorously regulated fertilisers and pesticides, while also producing higher yields. While the appetite for GM food is low in Europe it has a strong following in the US and keen interest from nations like India, which keeps a weather eye on solving food shortage problems in Africa.
Taking a more traditional road, companies such as Nestlé are investing huge sums into R&D to make key crops for their products more resilient. A coffee plant developed by Nestlé for use in Ivory Coast delivers a 30% higher yield on average than any strain previously farmed there. “The world class research centre we built there now distributes 1.1 million plantlets a year for free,” says Nestlé UK and Ireland CEO, Paul Grimwood (see p20 for our lead interview).
But before manufacturers run away with the idea for food engineering, Benton says there are some simple steps to be taken in tackling waste and efficiency in the food production process. “Along the manufacturing line itself there is relatively little waste because those in industry know that wasted product is wasted money and your margins won’t allow it,” he says. “But this is not true up to the farm gate and certainly not when food reaches consumers. Around one third of the food purchased in the UK is thrown away.” To counter this wastage Benton says that more manufacturers could take an influential role in educating their supply chain in both directions.
“Climate change, sovereignty issues and other resource constraints are going to make it more difficult to produce food in the future” - Professor Tim Benton, Global Food Security
Of course, some companies are already taking greater responsibility up and down the supply chain – and not just in terms of public awareness campaigns which might be sceptically perceived as PR stunts. Archie Gibson, director of seed potato producer Agrico UK says that manufacturers are generally better than retailers at working with suppliers to plan demand.
“We plan carefully with manufacturers what their demand profile looks like for up to two or three years,” he says. “With EPoS [Electronic Point of Sale] and data being what it is these days they can see relatively clearly how each of their individual stock keeping units (SKUs) are performing and translate that back into the total tonnage they will need while allowing for wastage. With retailers we don’t tend to have this long term dialogue. It is just a beauty parade from one year to the next.”
Beyond simply letting farmers know how much produce they will need, manufacturers are also helping to improve productivity. International manufacturing group Cargill, which produces food, agricultural, pharmaceutical and industrial products, is in hot pursuit of this goal. Among many other initiatives, 2.1 million Chinese farmers have taken part in Cargill’s programme for increased farming efficiency and the company is also leading research into better irrigation methods with the Chinese government.
The benefits of international programmes like this are greater than the increases in productivity they bring. Their diplomatic value is immeasurable to Cargill, which has deep set concerns over the future of free trade and investment policies as food security challenges come to the fore.
According to Paul Conway, vice chairman at Cargill, protectionist policies and punitive taxes on imported foods are not the right approach. Speaking at a food security summit held in Manchester in September last year, Mr Conway said: “We strongly believe in a free and open rules-based trading system. We believe that transparent, efficient and regulated markets are the best way to set prices. We do not want to see governments deciding on ‘the right price’ [for food].”
Going on to affirm his belief that food manufacturers have a responsibility to lobby international governments for a supportive approach, Conway continued: “If we don’t speak out on some of these critical issues, then you get the sort of reactions that we saw in [the 2008 food price spike]. Prices went up and governments slapped on export bans.”
Leave it to the big boys?
Companies like Nestlé and Cargill – organisational leviathans – have an obvious corporate responsibility to address global challenges around the impact of making and selling their products on international communities.
But what about UK SMEs and their supply chains? What relevance does global food security have to them? Andy Wood, managing director of sustainable brewing company, Adnams, insists that it is strong – and that smaller firms have an important local part to play in mitigating the global threat.
“This is part of a wider sustainability issue which concerns us greatly,” he comments. “Although we are not directly involved in the research, we are keeping an eye on projects like those at the Norwich Research Park which are investigating the development of heritage strains of barley for drought resistance.”
Explaining this interest further Wood says that “although East Anglia, where we are based, is considered the bread basket of the UK and has traditionally plentiful barley crops, it is also one of the driest areas in the UK. We are therefore concerned about the drought predicted for much of the UK this summer, not only in relation to this year’s yields, but with respect to the longer term.”
Belinda Jennings, quality manager at Adnams backs up the MD’s statements. “We are in close communication with our maltsters and the farmers that supply us and we have supported trials of new, more drought and pest resistant barley strains in the past.”
Speaking the language of business, Ms Jennings explains that the primary motivator for Adnams in supporting such research is far from altruistic PR. “We are always trying to improve our yields and help our farmers overcome any challenges which are limiting their ability to produce good crops for us,” she says. For Adnams, which holds much of its brand value in its local sourcing principals, this is important. “If we can’t get the yields we need locally we will have to source barely from up north,” comments Jennings, a move that would add food miles and CO2 emissions to the company’s carefully monitored carbon footprint.
But as quality manager, Jennings also points out that the implications of food security for manufacturers do not simply come down to available quantity. Over the past few years there has been a general trend for a lowering in the overall quality of barley and other crops in the UK.
Adnams has invested to cope with this trend, protecting against limitations to its productivity. “We invested in a new brewhouse four years ago and we looked to increase our capability to process lower quality barely at the same time,” she recalls. “There were a lot of reasons why we made that investment, but the ability to become more flexible in our ability to process lower quality barley was certainly part of that thinking. As long as you have the right technology the quality of the end product is not affected,” she states.