Home Marketing Food Security and Sustainability: Investment and Financing along Agro-Food Chains
Food Security and MNC-Led Global Value Chains
The agro-food industry provides a clear case where we observe how MNC-led GVCs determine sustainable development for developing economies. Food security and sustainable development are global concerns included in the UN SDGs. Food and nutrition insecurity is a problem affecting billions of people globally (von Brown 2014). Climate change and population growth among other factors have put under stress agricultural resources (Godfray et al. 2010) whilst agriculture remains the main source of income for most of the developing world (Townsend et al. 2013).
Increasing investment along the food supply chain is one efficient and effective way for food security and poverty reduction. Consequently, responsible investment in the agro-food systems (FAO 2014; OECD 2014) and the impact of MNCs at both global and local levels of value chains, such as the interaction of large retailers and producers with small farmers, need to address issues of sustainability and development and demand well-informed policy tools and managerial decision making (Lall and Narula 2004).
Investment along the entire supply chain, from farm to food distribution companies and the provision of public goods are important for increasing productivity and efficiency of food systems. MNC-led GVCs play a crucial role linking small farmers to global food distribution chains and technology networks (Rama and Wilkinson 2008 and Oman et al. 1989). A recent Organisation for Economic Co-operation and Development (OECD) report (2012) acknowledges that value chains in agribusiness are both producer- and buyer-driven and they are dominated by MNCs. Gereffi and Christian (2009) point out that GVCs in agro- food evolve around two dimensions: the first is the global dimension represented by MNCs: “This configuration is mainly driven by multinational lead firms: agro-business giants, diversified food manufacturers, fast-food franchises, and global retailers” (Gereffi and Lee 2009, p. 5). The second is the local one and is represented by the local farmers, producers, local franchises and retailers. The interaction of “global and local food value chains” sets two major challenges for the global community: the first challenge relates to the restoration of competition and empowerment of the stakeholders in the local value chain. The OECD (2012) provides evidence of the strong presence of emerging and developing countries in agro-food GVCs. It also confirms the increased length of the GVCs and the importance of both the international and domestic components observing at the same time enough variation between the two components among countries. Nevertheless, it does not address or directly measure the impact of diversified subsidiaries in the length and share of GVCs.
The second challenge concerns the safeguarding of quality standards in GVCs by the lead firms. For example, in April 2014, PepsiCo accepted the Voluntary Guidelines on the Responsible Governance of Tenure whilst there was a recent pledge by Kelloggs, Nestle and others to stop targeting children in advertisements of unhealthy food. Thus, responsible investment by MNCs is central in achieving quality standards. In this spirit, the New Alliance for Food Security and Nutrition (https://new- alliance.org/) is committed to “ increase responsible domestic and foreign private investments in African agriculture, take innovations that can enhance agricultural productivity to scale, and reduce the risk borne by vulnerable economies and communities”.
The recentlypublished OECD-FAO (2016) guidelines for responsible agricultural supply chains are directed to all types of enterprises involved in the agro-food value chain with the ultimate goal of securing sustainability in all relevant areas characterizing the value chain. Similarly, the inaugural Inter-Agency Task Force (IATF) (2016 , p. 73) report stresses that the Addis Agenda further supports initiatives coming especially from MNCs to “embrace business models that have social and environmental impacts, and that operate sustainably”.
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