Better Food Safety, Better Business
IFC convened our 7th International Food Safety Forum for the first time in Asia this year, with support from the governments of Slovakia and New Zealand. Under the theme “Better Food Safety, Better Business,” IFC set out to change the narrative on food safety and change the focus from scary statistics and complaints about bureaucratic compliance, to the marketing opportunities that better food safety practices can bring to the food industry, not just for exporters but for companies selling to domestic markets as well.
IFC chose Ho Chi Minh City, Vietnam as our host city to showcase how the Vietnam Food Safety Project, launched a year ago has helped companies in Vietnam improve business. Our colleagues at the World Bank estimate that unsafe food results in productivity losses in Vietnam of around $740 million per year. Two of those companies, Belga and Pan Food, shared personal stories about their food safety journeys with the Forum participants.
We were surprised to learn from surveys that Food Safety is the top concern for the Vietnamese people--even ahead of issues such as corruption, wages, and employment! What makes Vietnamese food so delicious also makes it risky – 80 percent of food is sold in fresh/traditional markets in Vietnam. Most of Vietnamese people prefer warm and fresh foods – posing additional risks for contamination.
During seven panel discussions, we heard from 18 senior-level business leaders and representatives from governments, associations, the World Bank, and the investment community. Over the course of the two days, some themes cropped up repeatedly.
Food Safety is an investment, not a cost
Dr. Abigail Stevenson set the stage by sharing her experience from over 25 years at Mars, where her colleagues are fond of saying “If it’s not Safe, It’s not Food.” Mars leads by example, investing for the long-term, and embracing Public-Private Partnerships, such as the Mars Food Safety Center in Beijing, China, led by Dr. Stevenson. Food Safety is not optional, she said. It is considered “Pre-Competitive” at Mars – they use the power of data, analytics, and technology to ensure that they have a scientific foundation in all that they produce. Furthermore, they are always listening to their customers.
As investors, IFC assesses costs and risks. It was interesting to hear Rob Koojmans of Food Safety Experts in the Netherlands explain his model for “Quantifying the Cost of Non-Quality,” an innovative idea for tracking hidden costs and measuring the benefits of food safety investments.
While food safety is essential for long-term brand building, many speakers also shared stories about increased sales due to better food safety. Mr. Nguyen Quoc Hoang, CEO of Pan Foods, noted that food safety has been a “client magnet” for his company, opening up new marketing opportunities. Pan has also managed to decrease waste by 20 percent. Alex Zhang, Founder of Hosen Capital, said that waste in the fruit/vegetable sector typically hovers around 22 percent, but that one of his clients was able to reduce that figure to three percent thanks to better food safety practices.
Mindset is the hardest thing to change
Mrs. Uzma Chowdhury, CFO of PRAN Group in Bangladesh, spoke candidly about her food safety journey. During a “Fireside Chat,” Mrs. Chowdhury said the company, which exports to 134 countries and employs over 95,000 people, had to change its business model. As a highly visible player in the Bangladesh food industry, PRAN has to work hard to keep up with continuously changing standards and regulations. Despite much investment in infrastructure, “Changing the mindset is the hardest thing; changing perspectives is hard,” she said. Continuous progress requires constant communications and motivation from the top-down. Change happens one step at a time, she added.
Small steps can add up to large-scale change. PRAN has become a role model in Bangladesh, and their competitors now are eager to replicate their success. When employees leave PRAN for other companies, they also take this experience with them and understand that the industry must make food safer. One worker at a time, PRAN is improving food safety, nationally.
Encouraging small-Holders is key to success
Large multinational, retailers, traders, domestic companies and input suppliers all agree that small-holders dominate production in Asia and that they need support, both in financing and in know-how. “it all starts at the farm,” New Zealand Ambassador Wendy Matthews said. Mars considers the concept of “mutuality” as essential to its strategy – everyone along the supply chain needs to benefit from increased food safety for successful implementation. In Vietnam and other neighboring countries, there is a “two-tier” system, where the top farms have high standards and can export products to stringent markets such as Japan, the US and EU. But for most farmers, the standards are low, posing risks in the food supply chain. While many farmers complain about new standards in the beginning, implementation is never as painful as farmers expect, said Ryan Galloway, Chief Growth Officer of Nafoods Foods JSC. Most important is to help farmers get started. Fred De Vis, Managing Director Southeast Asia of Bel Ga Joint Stock Company, said that in his experience, “Vietnamese farmers are dynamic and eager to learn.” Kohei Sakata, Managing Director of Bayer Vietnam Ltd, did caution that not all farmers today will be the farmers of tomorrow. Interestingly, in neighboring Cambodia, Saran Song, the CEO of Amru Rice, remarked that there has been a transformation in the mindset from “producers” to business owners.
Technology is not yet disruptive
Technology—Blockchain in particular— are hot topics in the agribusiness sector, but have yet to take firm hold and scale. While evidenced-based decision making depends on good data, most projects are still at a nascent stage. That over 90 percent of farmers in the region are small-holders complicates the spread of technology. There’s also the common misperception that technology is the end solution, when really technology is only a tool for collecting data. Technology, however, cannot judge or guarantee data integrity. John Keogh, the Founding Chairman of the Vietnam Food Integrity Center, shared his “cake” analogy, where “Blockchain is the recipe”, but there are still many ingredients that go into the cake, and the cake has to get baked!
The private sector cannot solve food safety challenges alone
All participants agreed that celebrating individual firm accomplishments is important, one company cannot solve the problems alone – and neither can governments. Food Safety is a shared responsibility – governments, associations, companies and consumers need to work together to ensure safer food. Steven Jaffee, Lead Agriculture Economist from the World Bank, shared results from his recent study, The Safe Food Imperative, which found that unsafe food costs low- and middle-income economies about US$ 110 billion in lost productivity and medical expenses each year. Steve emphasized that governments and companies need to move from crisis management to risk management, and that consumers need to be more involved as well. Ambassador Wendy Matthews and Lisa Winthrop, Agriculture Counsellor, from the New Zealand Embassy to Vietnam both explained the transformation that their country has made in terms of the approach to food safety surveillance. They emphasized the importance of starting out with clear principles, rather than regulations, and including business leaders in the early discussions. Oversight shifted to predictive, or risk-based interventions based on evidence and data. Lisa said, “you need two things for a safe food system: it needs to be effective and efficient.” On the consumer angle, Mrs. Kim Hanh Vu, President of the Vietnamese High Quality Products Association, reiterated that unsafe food is a top concern for consumers, and yet they are overwhelmed with information. We need to find a way to share information in a simpler, better way without scaring people, she said.
In sum, participants walked away from the Forum inspired to improve food safety practices at their own companies and armed with ideas on how to work towards safer food for consumers. During the last poll of the conference, 100 percent of participants said that they will use the knowledge that they gained from the Forum when they returned to work. Participants were also happy with the networking opportunities – one visitor from Bangladesh is hoping to set up operations in Vietnam, as a result of the event!