How can public institutions, development agencies, investors, researchers and producers work together to build a food sector that propels economic growth, meets demand and helps maintain social stability? Consulting firm McKinsey & Company principals and directors Nicolas Denis, David Fiocco, and Jeremy Oppenheim look for answers in their latest report.
In many economies, food systems are seen as an economic burden where subsidies, food and cash transfers and emergency relief plans are a must to feed the population. But this needn’t be the case, argue the authors.
“Reducing these in favor of strategic investments in the food and agriculture sector could turn such liabilities into sources of economic opportunity,” they write.
In countries of ranging demographics, weather systems and terrain, there are four building blocks to help countries avoid economic shocks from food price volatility.
- efficient agricultural production that takes advantage of innovative technologies and practices
- tailored trade and investment approaches
- well-functioning domestic markets
- strategic reserves of food and water
The firm reviewed hundreds of indicators to assess overall food availability, affordability and quality and discovered progress and potential for improvements.
“What is required is an ‘integrated food economy approach’: a cohesive strategy that strengthens the entire food system,” they write. “This is a complicated topic, and there is no single right answer to define a nation’s ideal food system, but our findings show that many countries do not yet think holistically. Our goal is to present a structured way of thinking about sustainable food systems, including innovative ways to balance scarce natural and financial resources. Certainly some of the innovations will turn out more successful than others, but our main point is that it is worth thinking hard about the food system’s design. Every country can move toward a well-functioning food economy if the public and private sectors work together to plan and invest for the long term.”