Rapid income growth and urbanization is having profound impacts on the food system in the developing member economies of the region, creating opportunities to enhance farm-sector profitability and encourage vibrant rural areas. To achieve that potential, private and public decision makers must work to streamline and modernize the food system, embracing new approaches to link rural areas with expanding urban markets, according to PECC’s 2007-2008 Pacific Food System Outlook (PFSO) report.

To economically uplift poor rural areas, agricultural producers will need to adapt to changing market dynamics. This includes producing food products compatible with changes in the nation’s dietary habits, encompassing increases in demand for animal protein, fruits and vegetables, and processed products. Today’s consumers also demand higher quality and safety standards.

• Private and public decision makers have significant roles in the process of integration:
• More attention must be focused on lagging inland infrastructure in developing economies. Expansion and upgrade is needed of roads, railways and waterways—a crucial linkage of rural and urban markets that provides producers with timely access to markets.
• Incentives are needed for modern supermarket chains to better connect with rural areas and domestic producers
• Policy makers can help small- and medium-sized participants in the food supply chain to better respond to changes in the food system.
• Policy makers may need to help traditional markets identify and maximize their niche in the evolving food system

Pacific Food System Outlook 2007-2008: Linkages to Growing Urban Markets Spur Economic Development

In 2006, oil prices surpassed US$75 per barrel for the first time in history, and in real terms came very close to equaling the record prices of 1980. Other energy prices followed suit.

For the Pacific food system, high energy prices have direct costs in outlays for fuel and electricity and indirect impacts, such as the cost of fertilizer needed to produce crops. These increase farm production costs but, more significantly, increase the costs of transporting, processing and marketing food products to the region’s 2.7 billion consumers.

Unlike previous high-price periods, the current increase in oil prices is having a fundamentally different impact on the food system, creating a more sustained interest in agriculture as a supplier of energy, not just a consumer.

Prospects for Pacific Rim agriculture to be a supplier of energy are the focus of this report, which is based on two days of discussion at the 10th annual Pacific Food System Outlook meeting in Singapore in May 2006.

Pacific Food System Outlook 2006-2007 "The Future Role of Biofuels"

The revolutionary change occurring in the retail food sector of the PECC’s less-developed economies has significant ramifications for the region’s entire food system. Assessing these impacts is the focus of the report generated from the May 2005 Pacific Food System Outlook (PFSO) annual meeting in Kunming, China.

In the region’s less developed economies, modern supermarkets now represent 10 to 50 percent of total food sales, rapidly approaching the 70 to 90 percent levels of developed markets.

The growth of modern supermarkets is driven by rapid urbanization, economic specialization, income growth and liberalization of foreign investment. Modern supermarkets are generating centralized procurement and distribution systems, and contributing to the emergence of specialized suppliers.

The more efficient and modern food system developing as a result of these changes is broadening the geographic range of firms, lowering consumer costs, raising food safety standards, and transforming the face of traditional agriculture and traditional food-marketing channels.

• Pacific Food System Report 2005 - "A Revolution in Food Retailing"
• '05-'06 Economy Profiles

Food production is the most geographically dispersed industry in the region, while food demand is becoming increasingly concentrated in urban areas.
The region’s urban areas will grow by 590 million people in the next 20 years, twice the growth rate of the total population. Three-quarters of the growth will be in the less developed economies of the region.

Many agricultural areas in the developing parts of the region are isolated and “taxed” by inadequate transportation access to markets, resulting in large post-harvest losses, depressed farm prices and high consumer prices.

• To control urban food costs, policymakers must invest either in streamlining domestic supply chains or in facilitating food imports through market opening measures, or some combination of the two strategies.

• The food system requires not just adequate transportation infrastructure, but appropriate economic incentives, competitive transportation and logistic services, and policy reforms—within the borders of individual economies, as well as across the region.

• Development of transportation infrastructure contributes to more efficient resource allocation and greater prosperity within an economy. This can benefit consumers with lower prices for a greater variety of foods, and realign agri-food trade patterns in the region.

• Pacific Food System Report 2004:
  "The Role of Transportation Infrastructure in a Seamless Food System"
• Economy Profiles

Demographic changes in the Asia-Pacific region over the next 20 years will generate powerful economic forces that will demand the close attention of food system policymakers. The magnitude of the demographic impacts on the food system is dramatic. The region’s urban populations are expected to grow by 590 million in the next 20 years. China’s urban population is expected to grow by 300 million people, an increase of 67%; almost half of those people will move in from rural areas.

The region’s total population is expected to increase by 400 million people, though that growth will vary significantly across the region. Rapid population and economic growth in developing and middle-income economies will increase their influence in the Pacific food system, further altering production, consumption and trade patterns.

Across the region, public and private investment in domestic food system infrastructure, as well as more liberal food trade policies, will be needed to ensure the cost and operational efficiency of the food system. More affluent and health-conscious consumers will demand greater quality, variety and convenience from the food system. In response, decision makers must anticipate the needs for trained personnel to implement and monitor quality control systems.

• Pacific Food System Report 2003
  "Where Demographics will take the Food System"
• Economy Profiles

Recent highly publicized international food safety incidents can have short- and longer-term impacts on consumer perceptions and food purchasing patterns. Over the medium to longer term, demographic shifts are having a profound affect on food consumption.

Demographers project that PECC’s urban population will nearly double to 2 billion by 2025. This is a rate twice as fast as the overall population growth. Crowding in cities can raise the potential for the spread of foodborne disease as well, particularly if clean water supplies, sanitation, and other infrastructure are inadequate.

Today, city dwellers find it convenient to eat more food prepared outside the
home. Sixty percent of foodborne illness, according to one estimate,
arises from the food service sector: restaurants, schools, other institutions,
and large catered gatherings.

These shifts in both the PECC’s diet and locus of meal preparation require production, processing, and delivery of food through a complex food supply
system and sometimes long supply chains that increase the time and
opportunity for spoilage and growth of pathogenic bacteria as well as contamination of foods by viruses, parasites, fungi, and their
toxins.

• Pacific Food System Report 2002
  "Making the Region's Food Supplies Safer"
• Economy Profiles

Less than one percent of the earth’s water is both fresh and available. Water plays a key role  in the food system—from crop and livestock production, to food processing and food preparation.

Water availability or water endowment in the PECC economies and policy issues relating to the allocation, distribution, and management of water resources are determining factors in the efficiency and competitiveness of each economy’s food system.

Since agriculture is the biggest user of water in many of the region’s economies farm policies can contribute to unsustainable water use. Protectionist farm policies draw land, capital, and water resources into agricultural production when they would be more efficiently used in other economic activities. Eliminating impediments to food trade can help align an economy’s food production with its economic and resource endowment, including water availability.

• Pacific Food System Report 2001
  "Meeting the Challenge of Water Scarcity"
• Economy Profiles

RISE (Regional Integration for Sustainable Economies) is a multi-sectoral public:private initiative aimed at stimulating growth in industrial and agricultural areas beyond the urban centers, enabling rural populations to participate more fully in the global economy. 

Update of the RISE Project by Mr. HE Xiansong, Vice Mayor of Jiangmen, Guangdong Provice, China