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Demand Loops For Food Security
Food security will not be delivered by making supply chains better. We should start thinking about ‘demand loops’.
A food supply chain takes something from a farmer, handles and processes it, and delivers it to a consumer. In reverse a ‘demand chain’ builds a consumer’s need or want for what the supply chain can deliver. So a supply chain physically draws materials to manufacture a product, and a demand chain is a marketing effort to build desire for that product in a consumer.
The problem with supply and demand chains is that they are linear relics of industrial age thinking. Supply chains get ‘better’ by increasing efficiency, i.e. standardising, scaling, lowering costs and limiting risks. Demand chains get better by encouraging more buying of products that can be delivered by existing supply chains. One end of the supply/demand chain always produces, and the other end always consumes. This relationship never changes.
Food supply/demand chains are by their nature exploitative. They are predicated on each link in the chain servicing or delivering to the next. The incentive is always for each link to extract as much value as possible for itself. When transaction costs vary or increase within such a chain, the consequences are felt at the ends: farmers must be paid less or consumers must pay more. Besides profit maximisation at each link, supply/demand chains have no incentive to change business as usual, as changes incur cost. Innovations are encouraged within links, but not across links. In other words processes are expedited or made more efficient by one link to deliver the same output to meet the needs of the next link. The system as a whole doesn’t change. Such conditionality is not compatible with any future vision of planetary food security that promotes equity or shared value for the consumers and farmers at either end of the chain.
Instead of a chain, let’s think of a loop that begins ends with People. Some are farmers, others are not. All are consumers. A ‘demand loop’ aims to fulfil the demands of everyone within the loop. All consumers demand safe, nutrious and affordable food. Farmers demand livelihoods with dignity and respect. Circling the loop we find small businesses demanding honest opportunities to profit by delivering transport, refrigeration and other produce-handling services. They may have workers who demand decent work in safe workplaces. The communities where produce is grown demand schools, clean water, safe housing, reliable rural and municipal services. Everyone demands opportunities for advancement and also demand that these are not curtailed by corruption or unfairness. Regulators and governments demand that whatever resources they have – land, labour, technology – can be used optimally to create and drive growth, and not exploited or wasted. And they demand that they be allowed to make their own decisions about how best to use their resources. Multinational companies demand that their reputation and brands are not tainted by irresponsibility or wrongdoing. Shoppers demand that brands are trustworthy and do not make them accessories to propagating poverty, destroying the environment or causing climate change.
Such a loop demands integrity to positively reinforce trust between all actors on the understanding that everyone is actually doing their part to fulfill the demands of the others.
A supply chain is a linear series of transactions where any claim of responsibility or sustainability of the whole is limited by the weakest link. A demand loop is a set of fundamentals to establish trust and shared values between everyone in the loop.
Supply chains buy at a price. Demand loops won't sell at just any cost.
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