Pumping, parsnips and peaches: what Davos had to say about the state of the world’s supply chains

26 January 2016

Leonardo DiCaprio receives a Crystal award at the 2016 World Economic Forum in Davos, Switzerland for his humanitarian endeavours. © World Economic Forum/swiss-image.ch

The hashtag #pumpinginDavos suggests that the 2,500 people lucky enough to be invited to this year’s World Economic Forum had a great time.

The overarching theme of the four-day conference in the Swiss mountain village was preparing for the next industrial revolution, aka Industry 4.0, but the delegates and business leaders (who paid £19k each for their ticket) also found the time to ponder climate change, Eurozone debt and Indian innovation while giving Leonardo di Caprio and Will.i.am a Crystal award for their humanitarian endeavours.

One of the unexpected stars of the forum was Hubo, a prototype of a new robot that does household chores. Even though most of Davos’s well-heeled participants have already outsourced their domestic tasks – to servants – the glimpse of a robot that could pick things up off the floor and walk up stairs with them caused quite a stir.

With 40 heads of state, 14 Nobel laureates and 10 heads of national banks in attendance, Davos wasn’t short on prestige or brainpower. That said, with markets in chaos and regions in conflict, some of the leaders admitted to being perplexed – one CEO going so far as to say: “The idea that I know what we should be doing is absurd.” The recurring question about Davos is whether anything that actually happens – or is discussed – in this exclusive Alpine resort matters in the real world?

Steve Hilton, the consultant who was David Cameron’s director of strategy, believes it does, though not in the way the organisers probably hoped. In an impassioned article in The Guardian he argued that it revealed, “with devastating clarity, the concentration of economic and political power in the world. The fact that business and political leaders can, over the space of a couple of days, meet “everyone who matters” is exactly what’s wrong with it and the world.”

Just in case any reader had missed the point, Hilton dismissed Klaus Schwab, the German economist who founded the forum in 1971, as a “pompous sleazebag”, and declared: “If you’re in business, attending Davos should be as damaging to your reputation as running a sweatshop with child labour."

The issue of human dignity in supply chains did feature on the agenda at Davis 2016, with US Secretary of State John Kerry highlighting that modern slavery has become a $150bn business, but didn’t get much traction in the media.

Michael Elliott, president of ONE, a global campaign against poverty and preventable disease, fretted about another consequence of global supply chains, fearing that “just at the moment African countries might hope to turn growth into sustainable middle-class jobs, technology and the sophistication of global supply chains may be conspiring to create a global glut of low-cost manufacturing.”

The ability to build a strong manufacturing industry, to provide jobs for millions of people leaving the countryside, was, Elliot suggested, one of the prerequisites for a modern economy, and the wrong kind of structural changes in the global economy could bring Africa’s rise to an abrupt halt.

The World Economic Forum has never been afraid of big ideas – two years ago, the grandiose theme was “reshaping the world” – but this year such ambitions became more specific. One way of reshaping the world was the launch of a $130m initiative to halve food waste and loss by 2030. The Rockefeller Foundation estimates that such waste costs $1trn and could feed 1.5bn people. The heavy hitters in the 30-strong Champions 12.3 coalition include Unilever, Nestlé, Tesco and the World Resource Institute.

The idea was sparked by conversations between the president of Iceland and some fishermen seven years ago. The fishermen complained that they routinely discarded fish heads, bones and tails that were prized soup ingredients in parts of Africa. The Rockefeller Foundation estimates that smallholder farmers in Africa can lose 15-42% of their fruit and vegetable crops due to improper storage, limited access to finance and an inability to reach developed markets.

Food waste is a problem in the UK too – not just in the 15m tonnes a year of food consumers throw away but also in the supply chain. In Norfolk, many parsnip sellers have considered quitting the business because Morrisons rejected 30-40% of their parsnips, deeming them imperfect (often they were slightly too large). The grocer said it had tried selling such parsnips in the past but shoppers didn’t like them.

It is no coincidence that Tesco’s chief executive officer Dave Lewis is chairing Champions 12.3 as, despite Morrison’s parsimony on parsnips, this is one area where British supermarkets lead the world. By agreeing to stock Kenyan beans that hadn’t been chopped down to fit plastic packets, Tesco saved one supplier £50k a year. The grocer also discloses its record on food waste in its annual report.

American late-night talk show host John Oliver wasn’t at Davos – too busy – but he has launched his own personal crusade against food waste. Reflecting on some perfect, but discarded, peaches, he remarked: “That should not be how we treat our fruit. It should only be how we treat our celebrities.”

Food waste, modern slavery and preparing for a fourth industrial revolution – at a time when many developing countries are still trying to join the second industrial revolution – are not the kind of issues that even 40 heads of state, 14 Nobel Laureates and 10 central bankers can resolve in a year. Yet one simple, positive step they could make at Davos 2017 is crackdown on the waste from the gourmet dinners which have become a trademark of this event.

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