Food supply chains need long-term relationships

15 March 2013

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16 March 2013 | Adam Leach

Food supply chains should be based on long-term relationships and share information right across the different tiers so they can respond to challenges more quickly.

In a report, published last week, the Food & Agribusiness Research Advisory unit at Rabobank said the traditional model of short-term relationships that are independent of each other is insufficient to deal with changing supply dynamics. Instead it called for suppliers, processors and the buying company to enter into longer-term partnerships, where information relating to each link of the chain is shared across parties, enabling greater flexibility.

Justin Sherrard, global strategist at Rabobank, said: “Closer cooperation of this sort will transform the nature of food and agricultural partnerships from transactional ones that are centered around chasing price, to a system focused on creating value.”

The bank said to drive adoption of the new model, it was vital the significant players in the food and agriculture market show leadership and put initiatives into action the will increase collaboration. It cited the move by Mars to release the cocoa genome sequence into the public domain to support its sustainable cocoa-sourcing goal.

Barry Parkin, global chocolate procurement and sustainability head at Mars, said: “[We] believe that closer cooperation, both up the supply chain with suppliers, origin governments and NGO’s, and across the supply chain with other manufacturers, is critical to achieving the cocoa industry’s growth and sustainability goals.”

The report argued pressure is stronger than ever on companies in the sector to secure supplies. It cited the growing demand for agricultural commodities for the production of biogas and alternative fuels as adding an extra dimension to supply dynamics.

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