City Food Lecture Reports
Food Security In A Changing Climate
Introduction
Your Royal Highness, Lords, Ladies and Gentlemen. It’s an honour
and a privilege to deliver this year’s City Food Lecture. The topic
which I have chosen - food security - is, I believe, the central
issue confronting the food industry.
More than that, it is one of the biggest challenges facing the
world as a whole. Writing in the Financial Times, only a few days
ago, Robert Zoellick – President of the World Bank – described it
as a “threat to global growth and social stability”. I could not
agree with him more.
The world economy is now more than five times the size it was in
1948. But despite six decades of unparalleled economic growth, we
are still confronted with a situation where over a billion people
are malnourished and the number continues to rise.
The demographers tell us that the situation will get worse.
Based on UN projections the global population will be 9.6 billion
in 2050. The Food and Agriculture Organisation of the UN estimates
that to feed these 3 billion extra mouths will require 70% more
food than is produced today.
It is a big challenge. To meet it, a major increase in
agricultural productivity will be required and this increase will
have to be made in a context where our climate is changing,
temperatures rising, soil quality degrading and water becoming
scarcer.
I would not like to pretend that I have all the answers to this
most complex of questions. All that I can hope to do this evening
is highlight specific aspects of the problem and propose some
practical solutions.
I am going to start by saying something about Unilever and why
it is important that companies like ours work to address the issue
and be part of its solution. I will then examine some of the links
between climate change and agriculture. I will conclude by
proposing a series of practical actions which could, if
implemented, have a positive impact on the problem.
However, if I have one single message this evening, it is that
food security has to be seen as part of the wider question of how
we can live sustainably within the natural limits of the planet. In
the coming two decades the nations of the world will have to find
ways of securing adequate supplies of food, fibre, fodder and fuel
from the finite pool of land, water and soil that is available to
us.
The Unilever Sustainable Living Plan
As a global business Unilever has sales in over 170 countries –
including many of the world’s poorest nations. Our brands are
present in 7 out of 10 households on the planet and on any given
day are used by over two billion consumers.
Our products – tea, soup, soap, shampoo, detergents - make small
but important differences to the quality of people’s lives. Brands
such as Lipton, Knorr, Dove, Lifebuoy, Sunsilk, Persil and Surf
address the needs of people everywhere for good nutrition, basic
hygiene and the confidence which comes from having clean clothes,
clean hair and good skin.
Because of our geographic spread we deal directly with the
problems of food supply, poverty, and sustainability on a daily
basis.
More than half of our raw materials come from agriculture and
forestry. We buy millions of tonnes of agricultural crops from
hundreds of thousands of farmers in virtually every country in the
world. Our footprint is large. We purchase 12% of the world’s black
tea, 6% of its tomatoes and 3% of its palm oil. We buy over 350
varieties – everything from green tea to purple carrots.
Ever since its creation at the end of the 19th century, here in
Victorian Britain, Unilever has subscribed to the principle of what
Professor Michael Porter has called “shared value creation”. This
is where growth is for the benefit of consumers, employees,
suppliers and society at large and where long-term shareholder
value is built sustainably.
Now, more than ever, companies must reconnect business success
with social progress. To do so requires partnership right across
the value chain.
Unilever has always been ready to partner with governments and
other actors in society to respond to emerging issues.
- In the 1960s we reacted to growing medical concerns about the
impact of saturated fat on cardiovascular disease by developing
Flora – a healthier alternative to butter.
- In the 1990s we started laying the foundations of our
Sustainable Agriculture programme.
- Also in the 1990s, concerned by declining fish stocks, we
worked in partnership with the WWF to create the Marine Stewardship
Council to promote sustainable fisheries.
- And in the last decade, at the request of the Food Standards
Agency here in the UK, we built an industrial coalition to reduce
the level of salt in processed foods.
‘Sustainability’, in the broadest sense of the word, has always
been central to Unilever’s way of doing business. The question we
now face is how companies like ours can continue to grow
sustainably in an increasingly challenging and more complex
environment.
Business growth is crucial to economic development and social
progress. It is this growth which has, over the past decade, helped
to lift nearly a billion people in China and India out of hunger
and poverty.
Even developed countries such as the UK need business growth to
provide employment and support their social welfare systems. Just
look at how much weight the Chancellor is putting on the private
sector to stimulate job creation and lead this country out of
recession.
But we need to grow differently. We are already consuming
natural resources at a rate faster than the planet’s capacity to
replenish them. The WWF calculate that if we all consumed at the
level of the UK then we would need the resources of three planets
not just the one that we have.
We are living off the earth’s capital, not the interest. We
can’t go on in this way - it is like a farmer eating his seeds. We
will have to do things differently in the future.
As a father of three children I don’t want to be party to an
economic system that steals resources that rightfully belong to
future generations.
As a businessman I know that our company requires a stable
environment and a continuous supply of raw materials to survive and
grow. If that is in jeopardy, which it is, we have a responsibility
to all our stakeholders to do something about it.
So we have set a challenging vision for Unilever. We will
develop a radical new way of doing business with the aim of
doubling the size of our company while reducing our overall
environmental footprint.
Our ambition is to decouple fully our growth from our
environmental impacts. We will do this right across the lifecycle
of our products from the sourcing of raw materials through to the
energy and water employed by the consumer when using our
brands.
At the same time we intend to increase the positive social
benefits delivered by our activities.
Our Sustainable Living Plan – which we launched in November and
a copy of which has been made available to you – sets out how we
intend to do this over the next decade.
The plan has three big goals:
- to halve the environmental impact of our products;
- to help one billion people take action to improve their health
and well-being;
- to source 100% of our agricultural materials from sustainable
sources.
All three objectives are to be delivered by 2020. All three are
backed by over 50 quantified, timebound targets against which we
expect to be judged.
As a business we do not have the luxury of choice. We cannot
choose between growth and sustainability. We have to deliver both.
We need to grow if we are to generate the money and technology to
invest in alternative energies, in sustainable agriculture, in
renewable packaging.
There are still, of course, many who argue that “soft” issues
like sustainability should be addressed only after we have sorted
out the “hard” questions of the global economy.
Unfortunately the choice is not ‘either’...‘or ’.
Vital as it is to get growth back on track, short-term pressures
must not stop us from also addressing the longer-term challenges
around poverty, energy, water, climate change and food security. At
a time when governments are increasingly focused on shorter term
issues it is even more important that business takes a lead.
Ultimately there is only one agenda: growth and sustainability
have to be parts of the same whole.
And for big companies such as Unilever that means developing new
business models which allow us to continue to grow but within the
finite resources of a fragile planet.
This change is not some minor evolution of corporate social
responsibility. It has nothing to do with the philanthropic
programmes or cause-related marketing campaigns which are common in
many large organisations. What I am talking about is a completely
new way of managing the company: one where sustainability is
embedded in every business function and process; where it is an
integral part of the business strategy; and where it is the
responsibility of everyone from the CEO to the most junior brand
manager.
The Sustainable Living Plan is Unilever’s blueprint for this new
future.
To deliver this will require us to manage the business for the
long term. That is why we have stopped giving guidance to the
markets; stopped giving quarterly profit updates; and stopped
reacting to the short termism of so much of the financial
community.
We have made it clear to investors that if they are looking to
make a quick return then maybe Unilever is not the best place to
put their money. If, however, they are investing for the future and
are prepared to stay with us over the long term then we will
deliver for them good, predictable and sustainable returns.
We have done the same thing with employees by weighting their
compensation schemes towards medium and long term results.
A World Under Stress
In essence there are three dimensions to the question of food
security.
- Can we produce enough food?
- Can we produce food of the right nutritional quality?
- Can we do this in a way that does not jeopardize the rights of
future generations to enjoy the same benefits?
I am not going to discuss nutrition tonight. I would say in
passing, however, that over the past decade Unilever has
dramatically improved the nutritional balance of the products in
its portfolio. We have made big strides in reducing salt, sugar and
saturated fat. We have also made progress in fortifying, with
micronutrients, some of the food we sell in the developing world.
In support of the World Health Organisation’s efforts we have added
to our recipes, ingredients such as iodine and vitamins A and D -
small improvements which can have an enormous impact on public
health in low income countries.
Critical though nutrition is, my focus tonight is on the
absolute quantum of food available rather than on its dietary
profile.
In 2008 the world experienced worrying shortages of certain
staple crops which resulted in price spikes and led to food riots
in over 40 countries.
Just two years later we are starting to see similar stresses and
strains in the global food system.
- Russia introduced a ban on exporting grain, following the
country’s worst drought for a century.
- The devastating floods in Pakistan disrupted another key grain
grower.
- Canada saw its crop substantially reduced by heavy rains.
- In Australia they have had to battle the effects of both floods
and droughts.
In November the FAO’s Food Price Index – a basket tracking the
wholesale cost of commodities such as wheat, rice, oil seeds, sugar
etc – reached a historic high. This month the US Department of
Agriculture said that the ratio of global stocks to demand would
fall to “levels unseen since the mid 1970s”.
We are back in dangerous territory. There are already ominous
signs with recent unrest in Algeria, Tunisia and Mozambique. The
resilience of the global food system is, once again, looking
increasingly fragile.
Leading academics in the related field of energy, such as
Professor Andy Stirling at the University of Sussex, have done much
to further our understanding of the nature of “security”.
Professor Stirling has shown how systems like energy and food
are subject separately to both shocks and stresses.
In the food system a shock can be anything from a small scale
disruption in supply to an extreme weather event such as a drought
that wipes out harvests in a particular region.
Stresses are different in that they build up slowly over time.
Two obvious stresses impacting food supply are population growth
and rising GDP. The first is driving the absolute demand for food
and the second is impacting dietary patterns. As people get
wealthier they consume more calories and there is an increase in
the consumption of meat and dairy products – two categories of food
which are responsible for vast quantities of greenhouse gases.
There are other stresses too – declining soil quality, steadily
reducing water tables and – most alarming of all – accelerating
climate change.
Stresses are easier to predict – but, at the same time, the
small incremental changes of a stress mean that they rarely attract
the same political or media attention that the shocks inevitably
do.
Markets and investors typically respond quickly to short-term
shocks – but find it harder to cope with long-term stresses.
We have to manage both equally well. We have to be nimble enough
to deal with short-term shocks, and also clear-sighted enough to
manage long-term stresses.
Climate Change And Agriculture
Of all the stresses none poses a bigger challenge than climate
change.
It affects the food system in two different ways. On one side,
climate change impacts agricultural growing patterns – what can be
grown where, and when.
Unilever is already having to face up to the reality of this.
Changing rainfall patterns in Kenya and India are having an impact
on both the yields and the quality of the tea we source. We are
also becoming concerned about whether Greece and Spain will have
adequate water in the coming decade to guarantee us the tomato
harvest that our business needs.
Water, or the lack of it, will almost certainly be the biggest
climate change related stress. Ten days ago I was in Jordan and was
able to experience at first hand what it means to live and work in
a country where water is scarce and where available supplies are
expected to run out before the end of the century. The River Jordan
is no longer the life-giving force we read about in the Bible. It
is now little more than a trickle in parts.
The second impact of climate change is to create the kind of
instability in weather patterns which lead to an increase in shocks
- droughts, floods, storms and extremes of temperature. These are
shocks which are becoming all too familiar to Australian wheat
farmers.
In short, climate change creates a ‘double whammy’ of both
shocks and stresses – one that our food system is not well designed
to withstand.
To complicate matters, there is plenty of evidence that modern
agriculture is itself helping to drive climate change. It is
estimated that some 18% of greenhouse gases come from the meat and
dairy sector and, as we will see later, the intensive cultivation
of certain commodity crops is one of the big drivers of
deforestation.
These challenges would matter less if we were continuing to
improve productivity at a fast rate – but productivity growth
appears to have reached a plateau. After two decades when it
averaged around 2% a year, growth has fallen to 1.3% per annum over
the last decade.
In some ways it sounds like a disaster scenario – and you may be
thinking we’ve been here before.
Forty years ago policy makers were concerned by what was then
called the ‘population time bomb’. The Malthusian demographer Paul
Ehrlich famously predicted at the end of the 1960s that we were
heading for a future where hundreds of millions would die of
starvation. Lester Brown of the World
Resources Institute predicted that China would go hungry by
2000. Thankfully we never reached that point, as a scientific
revolution in agriculture quietly took hold and ensured we were
able to feed the rapidly rising population.
But a positive move forward needs a positive mindset – and
unfortunately the prophets of doom have returned.
The Economist magazine recently coined the term ‘agro-pessimism’
to describe the growing worry that food security and sustainability
are now in direct opposition to each other – and that we will only
be able to feed the world by destroying the planet.
If the agricultural sector complacently carries on with
‘business as usual’ farming, the Economist may prove to be right.
We need to fundamentally re-think current practices and move to
more sustainable models.
It can be done. Take the interaction between agriculture and
deforestation.
The tropical rainforests of Brazil and Indonesia are
disappearing at a rapid rate as trees are cut down for
agriculture.
The biggest drivers of deforestation are palm oil, soya, paper,
timber and cattle ranching. These are all essential ingredients in
the supply chains of food and consumer goods companies.
Deforestation, by the way, accounts for an estimated 18% of all
greenhouse gas emissions.
Working inside an organisation called the Consumer Goods Forum,
Unilever (together with Tesco) has built a coalition of companies
which are now publicly committed to sourcing all of these
commodities sustainably and to eliminating eforestation from
their supply chains.
The coalition includes such unlikely bedfellows as Coca-Cola and
Pepsi, Nestle and Danone, Wal-Mart and Carrefour, Henkel and
Unilever. It will work with the WWF and other NGOs to help put an
end to tropical deforestation by 2020.
This is not a pipe dream. For some of these commodities action
plans are well advanced. Last year Unilever sourced more than
500,000 tonnes of palm oil from certified sustainable sources. In
2011 we will purchase 800,000 tonnes, taking us more than half way
to our goal of sourcing 100% of our requirements sustainably. This
would not have been possible without the remarkable achievements of
the Roundtable on Sustainable Palm Oil – a multi-stakeholder body
which was only established in
2004 but which is now well on the way to transforming one critical
commodity market.
The RSPO and the Consumer Goods Forum are examples of the
industry working together with governments and NGOs to create a
different future. What can be achieved with palm oil can certainly
be done with similar commodities such as soya, beef and paper.
This brings me to my four practical proposals for improving food
security.
Of these the first and the most important is the widespread
adoption of sustainable farming practices
1 Sustainable Farming Practices
At its simplest, sustainable agriculture seeks to increase
farmers’ yields, whilst at the same time reducing their inputs of
fertiliser, pesticides and water.
It should deliver a “win win” for the farmer – better harvests
with lower input costs.
Unilever has made public the results of its fifteen years of
work in sustainable agriculture by putting online the Unilever
Sustainable Agriculture Code.
Sharing our work with the farmers who supply us is already
producing some remarkable results.
In India for example, we have, with the government, jointly
funded drip-irrigation trials for gherkin suppliers. The best
performing trials have produced extraordinary outcomes:
- yields have risen by 84%;
- water usage has reduced by 70%;
- profit per kilo has more than doubled.
We have had similar success with some of our tomato growers in
California.
These experiences give us important learnings as to how we can
maintain outputs in a world where water will be very scarce.
Sustainable agricultural practices will help improve food supply
by driving up yields. It should also bring down prices by reducing
input costs. But adopting this new approach to farming takes time
and involves transition costs. Hence proposal number two – the need
for a step change in investment in agriculture.
2 Investment In Agriculture
The FAO estimates that investment in agriculture must reach
around $83 billion a year to meet future food needs – that’s an
increase of 50% versus today.
In the 1970s and 1980s Asian governments achieved their ‘green
revolution’ by spending up to 14% of national budgets on
agriculture. Today many sub-Saharan African governments are only
spending around 4%.
However there are some promising signs.
There have been rapid falls in hunger in countries such as
Vietnam and Ghana because of high investment. And countries as
diverse as Burkina Faso, Chad, Ethiopia and Malawi are now spending
over 10% of their budgets on agriculture.
Much of this increased investment needs to be targeted at the
billion or so small farmers. Supporting smallholders is critical –
not just because this will help food supply but because it is one
of the most efficient approaches to poverty alleviation.
The private sector can help. Unilever is making a major effort
to link small farmers into its global supply chain. We are doing
this in partnership with Oxfam. Together we are working in
Azerbaijan to see if we can bring thousands of local onion farmers
to a level where their costs and quality are competitive in a
global marketplace.
Both organisations bring complementary skills. Oxfam - their
knowledge of working with and organising dispossessed communities,
and Unilever, our skills in agronomy and ultimately providing a
market for the produce.
By 2015 we hope that the Azerbaijani onions will be as
competitive as those from China. Early signs are promising and we
are hoping to open up a second pilot programme with Oxfam in
sub-Saharan Africa – possibly with cassava.
Initiatives of this kind are an essential part of the Unilever
Sustainable Living Plan’s commitment to enhance the livelihoods
some 500,000 small farmers.
3 Market Distorting Subsidies
My third practical proposal for action centres on eliminating
market distorting subsidies.
There are still a number of areas where food security is
jeopardised by well-meaning but ill conceived state
intervention.
The instance I want to highlight is biofuels and particularly
first generation biofuels which use food crops such as corn, sugar
and rapeseed oil as feedstocks.
There is nothing inherently wrong with biofuels. Hopefully they
will have an important role to play in reducing emissions in the
future.
Indeed, second generation biofuels – which use crop waste or
algae as feedstocks – already look very promising.
But the biofuel subsidies in some developed economies are
distorting the market. Since 2003 the area of land under
cultivation for biofuels has more than doubled to 25 million
hectares. Already 30% of the US maize crop and two-thirds of EU
rapeseed is used for fuel.
Disturbingly however a number of studies have shown that many of
these first generation biofuels have a negative greenhouse gas
balance which means that, contrary to the claims made for them,
they result in more rather than less climate change.
And, of course, the rush to biofuels risks reducing further the
land and water available for food - thereby exacerbating the
problem of food security.
The harsh reality is that biofuel policies in the EU and the US
are ill considered and are producing perverse outcomes. Governments
on both sides of the Atlantic must apply rigorous sustainability
screens to all those crops that are being used as feedstocks.
Otherwise we will find ourselves in the absurd situation of
powering Mercedes and Porsches with energy sources that are not
only more greenhouse gas intensive than their fossil fuel
alternatives but which contribute to high food prices for the
poorest members of society.
4 Freeing Trade
My fourth and last proposal for action centres on the need to
free up trade in food and agricultural products.
The fact is that even those governments in Europe and the US
that are most vocal in their support of free trade are often
lukewarm about liberalising their own agricultural sectors.
The OECD calculates that agricultural support in the EU amounted
to $120 billion in 2009, with the US figure being around $30
billion. These vast sums of money are anti-competitive and for the
most part discriminate against the poorest nations.
The World Bank estimates that global free trade could lift as
many as 500 million people out of poverty and expand developing
country economies by $200 billion each year. This would do far more
than any aid initiatives to help meet the Millennium Development
Goals.
Free trade in agriculture is especially vital to the poorest
countries because it’s often the only economic sector with export
potential. If we could eliminate agricultural subsidies and
tariffs, developing countries would receive almost two-thirds of
the gains.
At the same time the creation of a multilateral system that
allows agricultural trade without barriers would do much to improve
food security. It is imperative that we complete the stalled Doha
Trade Round.
Conclusion
Yes – food security is a large and complex subject!
There are many issues that I have not been able address – the
role of biotechnology, the rise and rise of the commodity
speculators and their impacts on market pricing, the impact of
mono-culture on biodiversity.
Others more expert than me should opine on these questions. But
I hope that I have been able to give you a flavour of how I and my
colleagues at Unilever are viewing the issue.
Although the challenge is great there is no need to despair. I
am an optimist. I am confident that we can rise to the challenge of
feeding the world.
It will require a step change in productivity and the adoption
of a new kind of agriculture – a much more sustainable form of
farming.
There are many practical things which government and industry
can do now to stimulate this change. We must start by viewing food
security as part of the larger question of sustainability and the
need to live within the natural resource constraints of the planet.
For big companies, like Unilever, this will mean developing new
business models which will allow them to decouple growth from their
environmental impacts.
As Oliver James points out in his book Affluenza – “business as
usual is not an option”. With this mindset we should advocate and,
where possible implement, the practical approaches I have set
out:
- a widespread adoption of sustainable farming practices;
- a step change in government investment in agriculture (with a
particular focus on smallholders);
- the elimination of market distorting subsidies like those on
biofuels;
- finally we should constantly remind our political masters of
the importance of completing the Doha Round. The removal of
agricultural tariffs and subsidies will do much to increase
agricultural capacity and reduce global poverty.
None of these issues is simple. But they will all have to be
tackled sooner or later.
That being the case, why not make a start now? In the battle for
food security we have everything we need to win – echnology, money,
political will.
As the old Chinese proverb says: “Unless we change direction, we
are likely to end up where we are going”.
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