Transcript FORO INTERNACIONAL del BANANO 2011 The issues of financial, food, water and energy security - their impact on the demand and consumption of.

FORO INTERNACIONAL del BANANO 2011
The issues of financial, food, water and energy
security - their impact on the demand and
consumption of bananas and fruit with
particular reference to European markets.
Professor John Moverley OBE FRAgS
Chairman ,Azurance , UK
FLYING HAS
RESUMED BUT
THE IMPACT OF
THE ECONOMIC
CRISIS GOES ON
SOME OF THE IMPACTS OF THE FINANCIAL
SITUATION IN EUROPE
Greater emphasis on efficiency and
effectiveness in purchasing
Greater emphasis on food production
from own resources
Changing consumer purchasing habits and
styles
The impact in Europe is not uniform
RETAIL FIGURES FOR EUROPE – COMPARISON
DECEMBER 2010 TO DECEMBER 2009
(Eurostat Figures)
 Volume of retail sales fell by 0.6% in Euro area and
0.4% in European 27
 Total food, tobacco and drink sales fell by 1.1% in
Euro area and 1.2% in European 27
 Greatest falls in Malta, Rumania and Spain
 Increases in Poland, Latvia and Estonia
MASLOW TRIANGLE OF NEEDS (1943)
security of the supply of
food, water and energy
SECURITY ISSUES
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FOOD
ENERGY
WATER
FINANCIAL
POLITICAL
and more
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Introduction
We live in interesting times & rapidly changing times
TIMELINE
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Oil price rises – cost increases/ inflation
Re-emergence of the food security issue
A changing world – dietary, population
A Financial Crisis
Supermarket Banana Wars
Trade Agreement
Impact of currency rates & higher oil prices
Introduction
We live in interesting times
CUSTOMER RESPONSE
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Trading down
Price cutting on staple items – value lines
Unemployment & Insecurity
Cut back on recognised luxuries
New luxuries – certain food items
Food stayed relatively recession proof but some
signs of change
So what does this mean for
bananas? My presentation split into
4 main parts:
 Issues of demand & supply for food
 Consumption and Demand for Bananas
 Some live data for a UK supermarket
 Banana Prices – interesting times!
 Some issues & concluding thoughts
How recession proof are the drivers?
 Demand pull
(i) Population
(ii) Dietary shift
(iii) Policy changes
 Supply Constraints
(v) Land – finite supply & competing demands
(vi) Climate Change & Water
(viii) Technology restraints
Population Growth & Food Security
 World food demand could double by 2050
 50% increase from world population growth all in
developing countries
 50% increase from successful poverty reduction –
development = food demand
 Food Security?
 850 million people were chronically hungry before the
food crisis of 2007 (UN)
 1 billion people are the current number of chronically
hungry (FAO)
 Financial Crisis or Food Crisis?
Impact of Biofuels on Demand
billion metric tons
Demand for Food, Feed & Biofuel
Source: Goldman Sachs Commodities Research
Real GDP Growth and Trend
Source: IMF
Production
Yield Relative to Demand
Source: FAO Food Price Index, USDA, Goldman Sachs Commodities Research
Commodities & Agriculture: Just how
‘recession proof’ – what can history tell us?
800.000
700.000
7
6
600.000
5
500.000
4
Production (million metric tons)
Consumption (million metric tons)
GDP Growth %
400.000
3
300.000
2
200.000
100.000
19
60
19
62
19
64
19
66
19
68
19
70
19
72
19
74
19
76
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78
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80
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82
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84
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86
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90
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92
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96
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98
20
00
20
02
20
04
20
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20
08
.000
1
0
Global Consumption and Demand of Bananas
and Fresh Fruit
Global Production of Fresh Fruit
Global Banana Production and Consumption
2003-2007
Exports
Production
Global Banana Production Import Averages
2002- 2006
Global Consumption and Demand of Bananas
and Fresh Fruit
Geographical distribution of bananas imported in the
European Union, 1990-2007
Source: UNCTAD Secretariat from COMTRADE statistics
Recession and Bananas: What does Economic
theory tell us?
• Income Elasticity of Bananas in Europe =0.6
A measure of responsiveness of demand for a good
to change in income of people
• Price Elasticity of Demand = 0.4
A measure of how responsive the demand is to price
change
Recession and Bananas: What does History tell
us?
Global GDP Growth and Production and Consumption of Bananas since 1960
Global GDP Growth (%)
80000000
7
6
60000000
5
50000000
4
40000000
3
30000000
2
20000000
1
10000000
0
0
19
62
19
64
19
66
19
68
19
70
19
1972
1973
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
2099
2000
2001
2002
03
Production & Consumption of Bananas
70000000
Year
Production Globally of Bananas (tonnes)
Consumption Globally of Bananas (tonnes)
Global GDP Growth
The UK Position: GDP
Source: UK Office of National Statistics
Dietary Shift
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