By Akkinapally Ramakrishna
Rural agribusiness support should be designed with the prerequisite of reducing poverty in mind. Agribusiness entities are responsible for supplying food at affordable prices, under acceptable hygienic conditions, with consumer-oriented equality, and in quantities suitable for a growing urban population. The global population increase combined with the acceleration or urbanisation in developing countries offer much potential for future business development in the agriculture and food sectors.
Urban markets in PNG are growing at a rate of 4-6% per annum. Large number of small-scale traders, food vendors and home-based food processors has found employment in an expanding food trade system. The future of agribusiness lies in PNG predominantly in its domestic market, in contrast too much theorising, which tends to concentrate on export markets.
The provision of food safety is of growing concern and presents a major problem with rapidly growing towns. Increasing demands on women’s time due to changing lifestyles and shifts in relative prices associated with rural-to-urban migration are altering food preferences. Dietary habits are thus becoming more diversified, as basic staples are replaced by processed food, which requires less preparation time at home (below).
The challenge of producing and supplying hygienic food is an increasing problem for a number of producers and processors in most developing and developed countries and PNG is not an exception. This pressure is created by international food chains relying on inputs from developing countries, combined with the rising environmental deterioration of production and processing conditions.
One task of agribusiness support is to support food production quality in PNG. The question of food quality is also increasingly important in a growing world economy with rising consumer awareness. With the opening of markets, the pressure to rationalise agriculture is reaching to remote rural areas and agriculture sectors are faced with growing demands: they need to raise quality standards for their products, have more transparent production and handling processes, while some times having to produce these food products in a deteriorating natural environment.
In order to comply with a wide range of continuously changing public and consumer demands, and to develop sustainable economic growth, product quality, food safety, product liability and environmental legislation are important issues to manage. Increased (foreign) investments and their potential multiplier effects, risk sharing of entrepreneurs in (foreign) partnerships, are major issues to gain a powerful position in the supply chain. Retailers, governments and international trade regulations require a steady supply of safe and wholesome food meeting consumer expectations on taste, freshness and ease-of-use.
Dependent upon internal needs, capabilities, opportunities and ambition of the partners in a supply chain various levels of control are required to meet these expectations. Most countries in the vicious trap of underdevelopment do not in fact lack the primary resources and have considerable potential. What is missing is the financial, human and social capital for this resource potential to turn theses threats into viable opportunities. NARI and other agriculture oriented organisations should provide active support in the development of the human capital to address these issues.
At a time when food quality standards are acquiring an international dimension, and with food laws being rewritten to conform to the needs of the food companies and agribusiness giants, the United Nations constituted a sub-committee on codex alimentarius to establish guidelines on food trade issues. (The FAO and WHO created the codex alimentarius commission over 40 years ago in 1963 to develop food standards, guidelines and codes of practice under the joint FAO/WHO food standards programme.)
Despite not being legally binding for any nation, these guidelines have become part of the ongoing negotiations under the World Trade Organisation (WTO). The food safety standards therefore have to be harmonised internationally and there is a threat of economic sanctions for those countries which do not move in tandem.
Agribusiness today is becoming a vertically integrated process. End-to-end strategic partnerships between producers, processors and retailers are being forged to satisfy customers – in real time. New risks continue to emerge in the agribusiness sector as a result of regulatory changes and an increasingly global business environment. Issues such as food safety, supply chain risk management, bio-terrorism, security, genetically modified organisms, global warming, and contamination can have financially devastating effects if not properly identified and addressed.