Globalization, safety, regulation, efficiency, and refrigerants are now leading variables in the complex food-delivery equation. What the food delivery system will be in a decade will depend largely on industry creativity. Innovation across a wide range agenda will be required. It’s important to first look at the full range of forces driving industry change and how they interact.
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People and Production
In 1910, the U.S. population was about 92 million people, according to the U.S. Census Bureau, of which about 46 percent lived in cities. A century later, in 2010, the population had exploded to more than 300 million people, approximately 80 percent of which lived in cities. In three generations, the U.S. transitioned from largely rural to overwhelmingly urban, while more than tripling its population. These trends continue today.
Simultaneously, agricultural production experienced a revolution. In 1870, 70 to 80 percent of America’s population worked in agriculture. According to USDA estimates, a mere 2 to 3 percent of the population provided the national food supply in 2008—made possible by advanced industrial technology and modernized management.
The fundamentals are shifting not only in the U.S. It is estimated that the global population will increase by two billion in the next 25 years, a number that cannot be fed unless advanced agriculture becomes a global tool. But if it does, the quality of life around the world will be transformed.
The picture that emerges is of a new kind of global society and a new kind of global agriculture making possible a quantum leap in the conditions of lives everywhere. But these changes can be viewed from other angles. For example, food prices in the U.S. have increased 35 percent since 2009 and 48 million people in the U.S. become sick each year because of foodborne illness. Shifts in U.S. population growth and urbanization, plus the development of technology, more sophisticated supply chains, and the broad need to do more with less, have transformed American food delivery. And growing reliance in the U.S. on globally sourced food will fuel a similar movement beyond American borders. It will also provide both added price pressures and greater support for embracing safety and efficiency as central themes of all future strategic thinking on food worldwide.
Retailers now reach around the world to optimize costs, as well as for wider varieties and substitutes for foods scarce on local shores. But globalization has large implications for food safety, not least because exporting countries vary in safety standards. For example, global food supply chains now dominate the seafood marketplace for Americans. According to the National Oceanic and Atmospheric Administration, 91 percent of the seafood consumed in the U.S. is imported. But a 2011 study by Johns Hopkins Center for a Livable Future notes that only 2 percent of imported seafood is tested for contamination. So, while profit margin pressures have driven globalization of the food chain, globalization has also imported a vast breach in the U.S. food safety regime, which carries risks for brands and of financial liability.
The Demand for Safety
Food safety has long been a keystone in food-delivery strategy. But improvements in food delivery have created new vulnerabilities in safety, even as earlier risks are better addressed. Changes in warehousing strategy, for example, mean refrigeration needs change as well—both within buildings and during transportation. More processed food means less spoilage of whole foods, but also more and varying points of contamination risk—during processing and in moving from the processing plant to the grocery store.
More fundamental safety challenges, however, may now arise from technology. Technology makes modern food possible. It also gives rise to a delivery chain that is steadily more complex, agile, dynamic, and multi-dimensional. Each link in the chain involves discreet and quickly evolving possibilities and needs—in the field (whether domestic or overseas), perhaps at more than one location, in multiple transportation avenues, and in new storage and display facilities. The safety challenges resulting from such changes in food delivery are essentially the result of the broad trend toward faster, deeper technological innovation. They will be as complex and ever changing as the technologies that create them.
The Food Safety Modernization Act, or FSMA, of 2011 was designed to address not only domestic food safety issues but also the quality concerns associated with the globalization of food made possible by technology. It was the biggest change in American food safety regulation since the FDA was created, and it effectively shifted key responsibilities for ensuring the integrity of food from the FDA to the private sector. In lieu of inspections and enforcement, the Act relied heavily on setting outcome standards and leaving it to the private sector to decide how the outcome would be achieved.
The Occupational Safety & Health Administration (OSHA) regulates the safe use of refrigeration systems, such as those that use ammonia. Despite its Process Safety Management (PSM) program, which has been in place for over 20 years, safety incidents involving high-charge ammonia refrigeration systems still exist. While resources to address facility safety have expanded, a tension has developed between the culture of past practice, with growing economic pressure on one hand and the PSM priorities on the other. To comply with PSM appropriately, the industry needs to change the basic design of facilities and systems and retrain its workforce.
The Need for Efficiency
Logistics and processing are vital to achieve efficiency in food distribution. One of the most defining revolutions in American industry has been the shift to just-in-time delivery systems, and “just-in-time” is now reshaping the world of food. Grocery chains are re-crafting their warehouse strategy, reducing inventories, streamlining transport processes, and cutting costs.
Simultaneously, there has also been greater emphasis on near-the-field processing, chilling, and freezing, which have further mandated changes in food transport, refrigeration, and energy.
While vast improvements in efficiency have been achieved, and the evolution of logistics and processing is likely to be a major part of the future of food, forward-looking refrigeration product innovations could harbor the potential to yield even greater unexpected efficiencies—and business opportunities. But the evolution of efficiency is not without challenges.
The portion of America’s food supply that is processed before it reaches the grocery store has grown geometrically over the last decade. The shift was initially driven by consumer demand for greater convenience, but more recently the shift also is being driven by logistics and cost—which pay back to both price-conscious consumers and ROI-conscious investors. So, while food may now see fewer steps in segments of the distribution chain, there will for some foods be more steps in the early stages of the chain, as more food is moved through processing procedures instead of arriving at the grocery store in whole form. And since many of the new processing steps represent new points of vulnerability in food safety—i.e., storage, handling, and potential exposure—the quest for efficiency and the quest for safety are in tension with one another.
Compromised safety can mean wasted food and perhaps a crippling hit to a brand, both of which will minimize the benefits sought through efficiency. Compromised efficiency can weaken sales in the face of price competition and undercut returns to investors. The tension between safety and efficiency, then, is an inescapable systemic challenge facing food delivery for the foreseeable future—and, as if more were needed, the challenge has recently taken on even further complexity.
There is now an emerging demand for fresher foods, which has meant that whole foods are moving from field to store faster. The quest for freshness adds new time pressures to the food chain. Typically, the task is to provide a safety-ensuring chill early and consistently through the increasingly rapid transportation process. Yet, the matter is not always straightforward, since some pathogens, now more numerous and globalized than ever, have been discovered to flourish in cold temperatures.
The relationship between safety and efficiency is not getting simpler, and the need is growing for a new approach to both: better integration of refrigeration strategy and equipment design, with systematic input from the science of food safety.
Energy and Refrigerants
In 2010, the USDA reported that 15.7 percent of the nation’s energy consumption in 2007 went into food systems, up from 14.4 percent in 2002. Globally, according to the Food and Agriculture Organization of the United Nations, agrifood accounts for 30 percent of world energy consumption—70 percent of which is consumed beyond the farm. As the developing world industrializes, the percentage of total used energy absorbed by food delivery will shrink. But the clear message is that food delivery is a massive consumer of energy, and that consumption grows and keeps growing nominally as an economy becomes more mature.
In the U.S., according to the USDA, food’s rising energy use accounts for a whopping 80 percent of America’s total increase in energy consumption over recent years. If that is not enough to command attention, consider this: World agrifood energy accounts for 20 percent of the world’s greenhouse gas emissions. Moreover, the third of world food that is wasted accounts for 38 percent of the energy consumed by world agrifood.
The energy challenges confronting the food chain inevitably draw attention to issues of refrigeration and refrigerants. Refrigeration is a core function within the food chain, and refrigerants are its life-blood. But the primary elements of the refrigerant regime are in flux, with consequences for both refrigeration and energy.
According to a recent study, the average household has a climate impact related to food of about 8.1 tons of CO2 per year, a significant portion of which is related to the energy used in refrigeration. The U.S. has increased efforts to phase down the use of hydrofluorocarbons and is moving toward low global warming potential (GWP) solutions. In the alchemy of refrigerants, this action in turn brings to the forefront the issue of whether refrigerant charges can be reduced.
Low-GWP solutions include both non-carbon and high-efficiency options. Both cut the global warming impact of refrigeration, as do efforts at leak mitigation. So while timetables are uncertain and final decisions on applications are challenging, companies operating as part of the food chain will soon be moving onto the “fresh ice” of new refrigeration technologies driven in part by efforts to cut electrical power consumption.
From population growth to global economic development and shifts in urbanization, a transformation of food fundamentals has already begun. Globalization of the food chain has redefined the industry’s safety risk profile. Rising demands for efficiency reshape the safety challenge. And all of that is occurring while refrigerants and refrigeration are being rethought from the ground up because of concerns over energy and climate.
The world of food is now confronting fast moving pressures that have washed through many industries, and none of those industries have looked the same a decade later. Food will be no exception. Perhaps the most urgent task for the executives who lead the food industry is not that of meeting the specific challenges, but of redefining their basic orientation to accommodate change that is constant, scope that is global, and safety, efficiency, and technological demands that will require a new caliber of management.
Tryson is director, corporate communications and public relations, for Danfoss. Reach her at LisaTryson@danfoss.com.