Pandemic, geopolitical risks force agro-food companies to innovate

By Kyle Aristophere T. Atienza, Reporter

THE coronavirus pandemic exposed the world to unprecedented risks, affecting the agricultural sector and food security and prompting governments to impose protectionist policies.

But the global health crisis, which also showed the weakness of other industries in the face of supply chain disruptions, spurred companies in the agro-food sector to innovate.

“The supply chain disruptions caused by the COVID-19 (coronavirus disease 2019) pandemic created a number of responses by both companies and countries,” Christopher Ilagan, who heads the American Chamber of Commerce of the Philippines (AmCham) Agribusiness Committee, said in an e-mail.

“From a deep reliance on global trade flows, the shifts have come in various forms. There are those who have diversified supplier bases across borders and there are others who have sought to ‘near-shore’ or ‘friend-shore’ their supply chains.”

“The most extreme has been the reshoring or onshoring of supply chains, driven further by growing nationalism, protectionism and geopolitical tensions,” he added.

Cargill Philippines, Inc. was among the companies in the Philippines that adapted to the “changing marketplace conditions and operational and logistical challenges.”

“Our interconnectedness and experience from 75 years in the Philippines allowed us to deal with the challenges that arose as a result of the pandemic — we could tap local sourcing options to reduce dependency on international supply routes and satisfy demand in vulnerable communities,” it said in an e-mail.

During the pandemic, Cargill redirected poultry from restaurants in Asian countries like the Philippines to consumers, selling the equivalent of about 200,000 budget meals locally.

Cargill provides food and agricultural services and products such as grain, oilseed, commercial feeds and sweeteners.

“In response to the shifting demands, it was important to take an agile approach and adjust swiftly,” it said.

Cargill said it has been using digital solutions to efficiently analyze data, improve decision-making and optimize farm operations, “providing our partners a competitive advantage in the market.”

“With our expertise in precision nutrition, we can drive efficiencies and enable livestock farmers to do more with less,” it said. “We provide customized formulations that minimize waste while maximizing nutrient absorption and raw material utilization.”

The company has adopted new methods and technologies to become more competitive, including a cloud-based farm management platform called Agriness, which provides real-time data and insights to improve productivity, enhance animal well-being and increase profitability.

The company has also been using a poultry microbiome assessment tool called Galleon, which uses artificial intelligence (AI) and statistical analysis to help farmers assess the gut microbiome of their flock.

It has also adopted Panorama, a flexible scenario planning system that helps broiler producers make confident decisions about their operations for the best economic results; Neopigg, a young animal nutrition solution that gives piglets a good start to boost their performance throughout their life cycle; and Truvisor, a broiler breeder offering that helps improve laying performance, hatchability and chick quality.

“The global health crisis taught us the value of agility and we continue to maintain a contingency plan to address potential issues promptly,” Cargill said. “We continuously review and refine our business continuity strategies to better respond to future crises effectively.”

The same is true for Axelum Resources Corp., a Philippine manufacturer, exporter and retailer of globally in-demand consumer food essentials, including coconut products.

“The COVID-19 pandemic compelled us to innovate our ways without compromising productivity by embracing digitalization, streamlining our value chain and reinforcing contingency planning, in order to thrive in a renewed business landscape,” it said in an e-mail.

The company has capitalized on unprecedented opportunities to future-proof key areas of the business, “which will serve as our growth anchor in the long term.”

Axelum said it has continuously invested in cutting-edge technology to maximize scale and retain its competitive edge, citing its main production facility in Misamis Oriental in southern Philippines that features state-of-the–art equipment “attuned to world-class manufacturing and export standards.”

‘TECH ADOPTION’At the peak of community lockdowns, the company managed to fast-track its expansion programs, resulting in increased production capacity of up to 50%.

Mr. Ilagan of AmCham noted that in the food and agriculture space, there has been a growing focus on enhancing domestic food security with the help of emerging technologies, including precision agriculture, robotics and automation in the food manufacturing sector, artificial intelligence in digital applications and biotechnology to maximize yields/productivity for various crops and livestock species.

“This tech adoption trend is driven not only by the pressures of having to feed a growing and more prosperous nation, but also to react against those counter-productivity trends which have reduction impacts on productivity, such as climate change and human-induced air, water, soil and solid waste pollution,” he said.

Aside from the pandemic, geopolitical tensions and the ever-changing climate have also pushed food prices up, worsening food insecurity, according to McKinsey & Company.

It noted that Russia’s invasion of Ukraine, which is among the world’s six breadbasket regions, was “tilting global food security into a state of high risk.”

Recently, Russia withdrew from a deal that allowed Ukraine to export grain through the Black Sea, raising fears over global food supplies.

Cargill said it’s working to mitigate external risks by helping boost the local food system “to avoid disruptions.”

“We firmly believe that by addressing global challenges head on and adopting forward-thinking strategies, we can turn these challenges into opportunities for a sustainable, resilient and thriving future,” it said. “After all, our mission is fueled by our drive to keep innovating and fostering collaboration with our partners and stakeholders.”

The company said it has been rehabilitating 700 hectares of coconut farms damaged by Super Typhoon Odette, helping 1,000 coconut farmers. “This is being done through farmer-led propagation of seed nuts in community-based seedbeds and nurseries, farmer training in sustainable agriculture, provision of alternative livelihoods while waiting for the coconut trees to bear fruit, and establishment of farmer cooperatives for improved access to markets and corporate buyers.”

It has also been helping corn farmers and cooperatives to boost agricultural yields, improve farmer livelihood and contribute to the country’s food security.

“By integrating an inclusive business model and training on environmentally sound agricultural practices into the program, we aim to strengthen our commitment to support the local corn industry through full utilization of corn yields while creating an alternative corn supply for Cargill feed mills in the Philippines.”

The company said it’s also committed to implementing sustainable practices, noting that it plans to reduce global greenhouse gas emissions from its global supply chain by 30% by 2030.

Axelum, meanwhile, said it has instituted an evolving sustainability agenda to address or mitigate various climate and environmental risks.

“Our manufacturing operations make full use of the coconut, resulting in zero waste generated from raw materials,” it said. “We constantly modernize our equipment and infrastructure, while optimizing logistical activities to further reduce our direct carbon footprint.”

The companies hope the government will boost the country’s access to international markets through trade agreements and export incentives.

By doing so, “the government can reduce trade barriers and create more opportunities for Filipino agri-food products in the global marketplace,” Cargill said.

Export incentives would also harness the potential of the Philippine coconut industry on the global stage, Axelum said.

Mr. Ilagan said the government needs to simplify and harmonize regulations across the agro-food sector, strengthen the push toward consolidation of operations in the agriculture sector and broad adoption of new technologies, and popularize sustainable or regenerative agriculture.

“All these are important areas of reform that must be pursued to set the country up to weather these longer-term challenges around food security.”