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The food processing industry is a mature sector which is experiencing a turbulent period due to the growing global demands for food safety, increasing food insecurity and consumer demand for higher quality and sustainability.
There is a significant economic impact of getting food safety wrong if modern food supply chains are incorrectly assessed and risk mitigation is absent. Even a small impact on a supply chain can have a large economic impact. The processed food industries are valued at over $2 trillion dollars globally and consist of over 400,000 businesses.
In 2011, it’s estimated that 48m Americans fell ill and 128k were hospitalised as a result of food hygiene issues. The cost to the US economy was $77.7bn.
source: CDC, Centre for Disease Control and Prevention, 2011
Food processing is also significantly impacted by multiple external factors, including economic trends, climate change, demographic shifts, emerging power markets, new trade partnerships and world population growth predictions.
Today’s food supply chain is more globalised, longer and far more complex than ever before. With growing imports and exports, processed foods are dependent on longer supply chains which poses a great challenge to assuring food safety.
The below content dives into the detail of the major trends affecting the food processing sector and their implications for the evolution of the industry.
In many countries, the food processing industry is a major contributor to the health of the national economy. In the same way too, the sector is impacted by both the local economy where it manufactures as well as by the global economy in terms of food logistics and imports and exports.
Shifts and changes in regional economies, population size, food consumption, and the food and drinks industry in general all have significant implications for food processing.
According to the European Food and Drink Industry there are three leading production regions worldwide:
The turnover of the EU food & drink processing industry alone is double that of the USA and China. However, this will change significantly in the next few decades.
In order to feed the growing world population, predicted to reach 9.3 billion by 2050, agricultural production needs to grow by 70% and by nearly 100% in fast growing economies.
By 2030, India will have the largest population in the world, representing 1/3 of the Asian population and 17% of world population.
In fact, by 2050, India, China, Indonesia, Philippines and Pakistan will represent more than 50% of the world’s population.
By 2050, two thirds of the world population will be living in cities, increasing demand for processed foods and meat protein — in Asia protein consumption will have grown by 128%.
By 2030, E7 countries (China, India, Brazil, Mexico, Russia, Indonesia, Turkey) will overtake the G7 (Canada, France, Germany, Italy, Japan, UK, US) in size and purchasing power.
The growth in demand and high growth of both exports and imports in key emerging markets is making food safety and hygiene in this sector a priority.
The emerging markets (India, Indonesia, China, Malaysia) will increasingly drive global growth. The share of both exports and imports for food and drink products in these markets is growing rapidly. Manufacturing & processing will increasingly shift to these markets, to be close to a growing customer base.
65% of the world’s middle class will be living in the Asia Pacific region by 2030. The increasing disposable income in emerging economies will drive demand for manufactured food products.
The complexity of modern supply chains is just one recognised factor affecting food processing today. It is no longer enough to mitigate risk in the primary processing and manufacturing unit. To truly assure food safety in today’s world, businesses need to assess levels of risk along the entire supply chain, from end to end.
The increased cost of raw material will impact cost of damages in case of pest infestation. This places a heightened need on businesses to action recommendations to prevent, reduce and control pest infestations at pace.
Continuing consolidation of the market - Increasing M&A activity (Kraft & Heinz, AG Barr & Britvic). Economies of scale & cost savings activities to increase revenue, protect raw material supply.
Supply chain optimisation/vulnerability - Improved distribution processes & supplier assurance to reduce fraud threat and the threat of terrorism across the supply chain (eg assure ingredient authenticity).
Raw material costs - Increase price of water and ingredients due to droughts & climate change.
Emerging food safety risks - Many regions behind Europe in QMS/HACCP. Food borne virus pathogens (Norovirus, Hepatitis, A&E) key focus Campylobacter (chickens predominantly).
Environmental responsibility - Greenhouse gas emissions, deforestation, soil degradation, farming practices.
Cost of energy - Waste reduction, including use of less packaging, recycling.
Social responsibility - Support for local communities (schools, hospitals, etc). Global “fair-trade” initiatives.
Climate change - Extreme weather conditions leading to both floods and drought (scarcity of water and resources). Longer growing seasons.
Increased regulation - Constantly increasing number of regulations. Regulations becoming stricter & tighter — forcing suppliers to improve safety from the start (farming) of supply chain. New FSMA bill — requires FDA to inspect all facilities exporting to US to ensure compliance. Consolidating audits to harmonised plans — harmony in regulations by markets to follow GFSI and Codex Alimentarius recommendations.
In addition to all these trends which are predicted to affect demand, productivity and the cost of raw commodities, consumers, customers and legislation will require even greater transparency than ever before of food safety and quality.
The demand for clarity of where food originates, and a growing trend for health and sustainability and ethical food production will also affect the evolution of the food processing sector in 2016 and beyond.
Pest control features notably in prerequisite programmes (PRPs) for food manufacture and forms part of the GMPs helping to make a HACCP programme effective.
With high concerns over the main pest challenges facing food processors from rodents, flying insects, SPIs and cockroaches) it will become increasingly important for manufacturers to partner with a trusted and accredited pest control supplier to mitigate risk from pests, ensuring audit compliance.
Hygiene features prominently in prerequisite programmes relating to personal hygiene and basic sanitation amongst others.
The consequences of poor hygiene can be dire for a business and will include non-compliance, breach of safety regulations, product recalls and, of course, food poisoning.
To mitigate risk, the assurance of hygiene through the partnership with recognisably accredited suppliers (eg EN 16636, BRC AIB) will be critical.
Source: fooddrinkeurope.eu, Data & Trends of the European Food and Drink Industry 2013-2014
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