1998: Sal J. Attanasio, RD, LD
FoodLinks: Promoting More Equitable, Sustainable Trade Between North and South**
**For the purposes of this paper, the term "North" refers to highly-developed/industrialized countries; the term "South" refers to less-developed/industrialized countries.
Agriculture is essential to sustainable development. No other sector of international trade has a more direct impact on food security in less-developed countries (LDCs). Farming is a source of food and livelihood for millions, employing approximately 60% of people in the South. Activities related to farming also generate important savings for investment in rural economies, making possible improvements in infrastructure, education and health care. As such, rural communities are deeply affected by the increasingly global nature of trade and its impacts on small farmers (1).
The globalization of trade has had mixed impacts on food security in developing countries. Free trade has increased employment and incomes in LDCs, improving health, longevity, and educational opportunities for many. Yet the benefits are not evenly distributed from region to region. For example, in much of Sub-Saharan Africa, civil unrest, economic instability and weak physical and social infrastructure discourage foreign investment needed to stimulate economic growth and social development Even in countries well integrated into the global economy, the benefits of trade do not often reach the poor. Too often, the South's "comparative advantage" in a global market lies in cheaper goods via low wages and poor working conditions. Less industrialized countries must also rely disproportionately on the export of raw materials, which command low, unstable prices in competitive markets relative to manufactured goods. Ironically, falling prices create incentives to step up production for export, decreasing prices further and depleting environmental resources upon which future food security depends.
Southern farmers also frequently lack access to food processing technologies and market demand information. They therefore tend to select methods of food production and processing which incur the least cost, rather than targeting the needs of specific consumers. This results in products which are low in quality, poorly-packaged, and limited to sale in local markets. It also contributes to a huge quantity of food wasted globally due to spoilage and mishandling (2). Since developing country growers are often relegated to the bottom of the food production chain, very little of the value of these exports stays in the South; the bulk of agrifood profit goes to bankers, traders, processors and distributors based in industrial countries (3).
Nonetheless, opportunities exist for developing country farmers to use free trade to their advantage. As globalization continues to blur national boundaries, consumers have become increasingly interested in culturally-diverse foods produced in environmentally sound, ethical ways. Northern food companies are seeking information and access to new and unique food products in an effort to meet these demands. In addition, markets are forming in Southern countries for low-cost, high-quality, nutritious foods across all income groups. Southern producers grow, or have the capacity to grow, food products desired in these expanding markets.
FoodLinks, a project launched in 1996 by the Canada-based International Development Research Centre {IDRC), intervenes at this point Its mission is "(to create) partnerships among food producers, processors and marketers in developing countries and the North through the provision of commercial liaison and project management services, training, and research support, leading to increased capacity, employment and incomes for developing countries in a sustainable and equitable manner" (2).
FoodLinks' various activities each represent efforts by private industry to redress inequities in North-South trade relations. Its work is grounded in research which seeks to better understand free market dynamics and the means by which these forces can better promote development The project also improves the ability of poor growers to assess market demand for agricultural goods to capitalize on new, "niche" export markets. In the process, partnerships are formed with development-conscious Northern companies committed to fairer prices for Southern products and to social goods such as environmental sustainability, gender equity, and good labor conditions. FoodLinks also increases the access of poor growers to more profitable, "value-added" processing technologies higher up on the food production chain. Finally, it garners financial and technical support from a variety of donors, and coordinates activities with many partners to share best practices at the local, regional and international level. Thus, although it does not target nutritional well-being directly, FoodLinks has advantages over more traditional "food relief" approaches because it better addresses the poverty and lack of economic opportunity which underlie hunger.
FoodLinks' four broad objectives for achieving its mission are: 1) supporting research on product ventures and on market-based, sustainable development in general; 2) establishing product ventures; 3) building and expanding communication networks and 4) generating revenue.
Research. This component of the FoodLinks project encompasses the generation and evaluation of FoodLinks product concepts as well as the broader research described above. In initial, exploratory studies, FoodLinks solicits product ideas from a range of farmer and community groups, non- governmental organizations (NGOs), research institutions, and companies in both the North and South. Publicity via brochures, a Web page, Listservs and presentations at food industry trade shows and development conferences provide more ideas and also help promote the program. Information is collected using a standardized questionnaire which uses a scoring process to evaluate each proposal. Prospective ventures are evaluated on the basis of commercial viability as well as environmental sustainability , economic and gender equity and stakeholder participation in decision making. Approximately fifty product ideas are evaluated each year, of which ten or more (fifteen in its 1997-1998 project portfolio) are deemed worthy of funding and partnership development (2).
Ongoing in all phases of FoodLinks ventures is research conducted by IDRC in collaboration with a variety of other development institutions. Its goal is to synthesize lessons learned in exploratory studies and to answer the broad question: "How can the market be used to promoted equitable and environmentally sustainable development for Southern farmers and producers?" Subtopics explored include the potential of various food industry subsectors to support sustainable development, gaps in the production-to-consurnption chain which keep poor producers out of the global economy and the potential negative impacts on local markets of expanding production for export. Though these efforts, FoodLinks ventures benefit from an always-growing understanding of global market forces and of how these can be used to benefit the rural poor.
Product Ventures. When a venture is deemed feasible by the above criteria, additional research and development (R+D) is provided to both products and processes to capitalize on market opportunities identified. This is accomplished in two stages. In the Project stage. R+D activities are carried out in both the North and South. Specific, measurable goals, action plans, performance indicators and timelines are established. Training of Southern entrepreneurs (i.e., in product and enterprise development and value-added technologies) is undertaken. A prospective business plan is drafted, including the identification of partnerships to be formed in bringing a particular product(s) to market. In the Implementation stage, selected private industry partners invest capital and business activity begins. Throughout operations, a range of social, environmental and economic impacts are closely monitored.
Networking. FoodLinks uses both existing and incipient information and communication technologies to create "knowledge connections" within and between developing countries, donors and development agencies. These linkages will promote information-sharing and cooperation in market assessment, product development, methodology refinement and project planning and evaluation. For example, FoodLinks used these technologies to solidify and expand its work with PRODAR in Latin America (a network established to link institutions promoting rural agroindustry in the region), which included the development of a product screening process. IDRC will continue to cultivate these connections via consultancies with its information technology partners. FoodLinks also plans to establish an electronic networking component of the Global Collaborative Post Production Research Network. Through this network. IDRC would collaborate in its production-to-consumption research with a host of actors in food and agricultural research in the South; these connections could, in turn, substantially increase co-funding to the FoodLinks Initiative (2).
Revenue Generation. Although FoodLinks was funded primarily by IDRC in its first few years (i.e., in 1997. it received grant approval for $2.5 million Canadian). it ultimately aims to become self-financing via expanded collaboration with a variety of donors. FoodLinks funds its activities in several ways, including contract services, co-funding, royalty arrangements, and grants. Efforts are ongoing to obtain co-funding and contract research with international agencies such as the World Bank, the United Nations Development Program (UNDP) and the International Fund for Agricultural Development (IFAD). This sharing of resources among partners to achieve economies of scale is especially desirable given declining development funding in recent years. Royalty income, which derives from innovative technologies or processes developed by IDRC, is a less labor-intensive source of funding. Strategies for obtaining large amounts of revenue relatively quickly from the private sector via grants and co-funding are continuously being developed.
FoodLinks is exploring ventures in different regions of the world, including Latin America and the Caribbean (LAC), Asia and Africa (primarily in the former two). In LAC, most projects originate from ideas provided by NGOs, farmer organizations and technical associations in the PRODAR network. To promote efficiency and local self-determination, IDRC will ultimately establish a FoodLinks office in this region and delegate the management of its projects to PRODAR In Mexico, efforts to link growers of organic foods to firms in Canada and the US will give IDRC the chance to test, "in vivo", approaches to development which are as diverse as its partners (i.e., the Rodale Group, World Wildlife Fund and Bancomext). In Southeast Asia, efforts to build export markets are being complemented by the development of new and interesting products for domestic and regional sale. For example, a cashew apple juice venture, launched in Vietnam, is likely to extend elsewhere in the region, initially to Sri Lanka. At this time, there are no FoodLinks ventures operating in Africa; however, IDRC is exploring opportunities in the region to market a variety of fruits, nutrient-fortified fruit drinks, honey and agroforestry products, among others.
FoodLinks has made substantial progress since its inception two years ago. Examples include:
- The launch of its first product venture. Mona Lisa bananas, grown in Costa Rica, are now sold by a major Canadian supermarket chain. The income generated has provided small growers in Central America with incentives to adopt the environmentally-sound system by which these goods are produced. The venture has also provided added revenue to IDRC via product commissions.
- The marketing of value-added processing technology. A Canadian juice processing company has agreed to adopt a cashew juice processing technology developed with IDRC support in Vietnam. As a result, Vietnamese growers benefit from the added income provided by the venture. For its part, IDRC receives a 2% royalty on sales of the product, which has fully recovered IDRC's investment in the processing technology. These funds will be re-channeled into Vietnamese communities by financing future ventures, scholarships for local capacity-building and agricultural and market research.
- Promoting alliances in agricultural research. FoodLinks has worked to connect Consultative Group on International Agricultural Research (CGIAR) centres with the Global Collaborative Post- Production Research Network. The CGIAR, a global consortium which funds and conducts research on crops relevant to Southern producers, will now have access to important developments in post- harvest research, including the study of current versus optimal crop use, reduction of losses, market opportunities and incentives for farmers to adopt disease- or drought-resistant crop varieties.
- Links forged with key development agencies. FoodLinks project coordinators led promising talks with a number of bilateral donor agencies, UN agencies and development banks, including the World Bank, UNDP, IF AD and DANCED. Discussions concerned the potential for collaboration with FoodLinks on issues specifically related to food security, poverty alleviation and public-private partnerships in development
These achievements notwithstanding, FoodLinks coordinators do not consider their project the "magic bullet" to eradicate poverty and hunger. FoodLinks interventions typically target small rural farmers who would benefit from improved access to markets and more equitable terms of trade. However, it is not presently positioned to assist the millions of Southern poor who lack entitlements to even the most basic of food-producing resources, such as land, water, agricultural inputs and equipment Nor does it fully address the plight of women in developing countries, who contribute decisively to household food security yet often lack access to the means of food production and influence in family finances. Clearly, future efforts must be directed at mobilizing a range of civil society organizations to push for policies which ensure that global markets will benefit, not exploit, the poor. International cooperation is needed to set basic standards between industrial and developing country governments on policies concerning land reform, educational opportunities, employment, womens' rights and the establishment of minimum wages. In this regard, FoodLinks' recent efforts to collaborate with large development institutions, which have substantial political clout and decades of experience promoting food security and alleviating poverty, are very promising.
FoodLinks has enormous potential to benefit Southern producers and Northern country firms alike. To the former, it can provide vital capacity-building at the community level in market assessment, product and enterprise development and food preservation and processing. Southern growers would then be better equipped to target more lucrative Northern and regional markets and to command a greater share of profit in the agrifood production-to-consumption chain. The cumulative effects of these developments on rural economies would be dramatic: increased employment, incomes, savings, physical and social infrastructure and environmental integrity. At the household and individual level, this would translate into enhanced health and nutritional status by means of improvements in the quality, quantity and safety of the food supply.
Northern country firms can also gain from FoodLinks. In a literal sense, it will open up a whole world of unique, quality food products for which there is rising demand in global markets. Improving Southern capacities in food production, storage and processing will also reduce the business risk associated with investment in developing country agrifoods. Furthermore, participants will enjoy the boost in their public image that comes from their support of products with a "social conscience".
Since its inception, FoodLinks has received substantial recognition as well as financial and technical support from private industry, NGOs and other donors. The donor community acknowledges FoodLinks' leadership in an approach to rural capacity-building and income generation which is still quite new. Through project activities to date FoodLinks and IDRC have gained extensive knowledge and experience in food product development, communications technology and free market research in both Asia and Latin America. IDRC is encouraged by its progress in addressing the root causes of poverty in developing countries and by the prospect of using FoodLinks as an instrument of improved food security throughout the world.
References
(1) "Hunger in a Global Economy". Bread for the World Institute's Annual Hunger Report, 1998.
(2) International Development Research Centre (IDRC) Project Proposal, File #03666. September, 1997.
(3) World Hunger: 12 Mvths. Institute for Food and Development Policy (Food First), 1986.