Agriculture Reference
In-Depth Information
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Gains from economies of scale.
Economies of scale characterize production
and distribution processes in which an increase in the size of the firm results
in lower long-run average cost. Recent years have witnessed the rapid con-
solidation of the food distribution system worldwide. For instance, in most
European countries, the market share of the five top supermarket companies
was above 70% in 2004 (McLaughlin, 2006). Supermarket concentration in
emerging countries is increasing rapidly, and the market share of the top five
companies in 2003 reached 53.7, 45.3, and 40.5% in Chile, Argentina, and
Brazil, respectively. Although increasing size of retail firms may decrease
costs in food supply chains, it is possible that retailers use the size to their
advantage by exercising market power with their suppliers and consumers.
the consumeRs: tRends And Issues
What factors shape global food demand, and what forces will determine whether
there is adequate food for all in the future? Perhaps the most important demand factor
is simply the size of the population. Along with this factor come other demographic
dimensions, such as the age profile of the population. Income levels and the distribu-
tion of income also importantly shape demand and help determine whether people
can purchase and obtain access to the food they require. Increasingly, particularly as
consumer incomes increase, convenience and time, whether it is time spent in pur-
chasing or in preparing food, become significant determinants of demand, hence the
rise in food away from home and prepared foods. Also, as consumers achieve higher
income levels and meet basic nutritional needs, they tend to place emphasis on food
quality, freshness, and variety as well as on how the food is produced.
P
of P u L a t i of n
a n D
D
e m o g r a P h i C s
Over the last century, the world grew from a population level of 1.6 billion to 6.1
billion people, an unprecedented increase in global population of 4.5 billion. At the
present time, the world adds roughly 82 million more people to its overall popu-
lation each year, with the bulk (80 million) added to the less-developed countries
(Population Reference Bureau, 2007). The combination of public health (particularly
in the areas of sanitation and nutrition) advances and medical improvements have
led to longer life expectancies, and these, along with high fertility levels, explain the
current population growth rates.
i
n C o m e
a n D
r
e a L
P
u r C h a s i n g
P
o w e r
Since the mid-1970s, food security analysts and researchers have emphasized the role
of income, purchasing power, and access to food as principal reasons explaining hun-
ger and food insecurity. The importance of poverty and a lack of income in explaining
hunger were heightened by statistics that demonstrated that while globally sufficient
food quantities may exist, poor people simply lack sufficient economic resources to
purchase food. Moreover, since many of the poorest people live in rural areas and
