Commodity Champions: Experts discuss business of food, production going green

The cost of your next meal could keep rising, according to experts who fear that disruptions to the global supply chain that began with the pandemic are set to persist. Labour shortage is also a reason for concern as the global system continues to see competition for more workers. Strained labour forces have led to plants not running at full capacity, constraining food production.

The situation is the same on the agricultural side of food production, where urbanisation and industrialisation have led to less sowing. This trend has been seen in India where low agri yields are now a reality, with India's level 47 percent less than that of China. These concerns have led to fears of structural inflation and the search for new themes to improve production.

So, what can be employed to control the situation? To discuss this, CNBC-TV18’s Manisha Gupta spoke to Varun Deshpande, MD of Good Food Institute India, and Anand Ramanathan, Partner at Deloitte India.

Talking on smart protein, Deshpande said, “There is a specific segment on which we work, which is known as smart protein. The reason that we focus on this area is driven by a lot of the things that you already mentioned. Especially in light of the COVID 19 pandemic, there has been increased cognizance of the burdens that our protein supply places on the planet. We currently get our proteins, that is meat, eggs, dairy, etc., from an industrial animal supply. What a lot of these smart protein producers are doing is, they are switching the source of proteins. They are producing plant-based or fermentation-derived or cell-cultivated meat, eggs and dairy. So, the idea here is to give people what they want, something that tastes the same or better than the foods that they are used to eating, but costs the same or less in terms of its impact on the planet, on public health, etc.”

He added, “Especially in light of the COVID-19 pandemic, this is an area that is incredibly exciting. There is vast orders of magnitude, fewer requirements in terms of land, less water use, greenhouse gas emissions, non-renewable energy, etc. It is really something that we need to take a step back and think about how we are going to actually feed 10 billion people by the year 2050. One-sixth of those people are going to be in India. So, the topic of this discussion today is very pertinent -- from now through 2050 -- and if we are going to do that, we absolutely have to think about using technology and using these tools at our disposal to switch our source of protein.”

On investment required for producing smart proteins, Deshpande said, “We are at the very beginning of a decade-long journey. What is really exciting is that globally, this sector is soaring. So, this is really the leading edge. It is at the vanguard of food innovation globally. In 2020, we saw about $3.1 billion of investment across all categories of smart protein globally, and in 2021, through three quarters (this figure) has (been) eclipsed at about $3.4 billion. Very little of that has come into India. So, we are seeing that this is emerging very rapidly.”

On food demand, Ramanathan said, “In terms of the future of food, following the pandemic, there have been changes in consumption. People have become more oriented towards health, around convenience, especially ready-to-cook, ready-to-eat foods, and sustainability. These have become really important, particularly from the Gen Z and millennial standpoints. So, what we have seen is that this consumption change, along with rising incomes, has led to changes in the traditional food pyramid in terms of dietary patterns. There is more focus now on proteins, on fresh produce, on processed food, and therefore, we have also seen greater levels of organisation within different food sub-segments. So, whether it is staples, a whole host of new staples, I mean poha, daliya, or red rice, a lot of these are getting organised, similar to what we saw with spices and dairy in the past, where there was a shift from unorganised play to branded play.”

“Going forward, we will see that there will be increased demand for processed food, and hence, the outlook for the sector looks very good. However, certain changes need to happen. There is inflation, and it has had an impact on both the commodities because in food about 50 to 60 percent of the cost comes from the raw material, and hence commodities and sourcing of commodities at the right prices will be an important success factor, along with keeping the cost of packaging under control, because these are all going to be areas where we will see inflationary pressure.”

On India’s production and productivity, Ramanathan said, “Now a lot of these countries are looking at their own food security programmes. So, to that extent, there will be the opportunity for Indian companies to work together with these countries, to help them with food security. But it will also lead to issues around availability, particularly in areas that are growing a lot quicker. So, given the changes in the food consumption patterns, pulses, oilseeds, these are all going to be areas where India already imports a lot and going forward, we are going to be seeing further stress on supply, because demand is growing. Again, we will see a lot of substitutes emerge. So, if you look at animal protein itself, we will have alternative proteins come into play. If we look at oilseeds, there will be an effort to look at other sources of fats beyond plant-based oil. Hence, these are all going to be areas where we will see innovation happen and new products emerge.”