"With the globalisation of the retail market, comes a heightened sense of the vital need to address food security and this goes hand-in-hand with rising food prices and commodity price volatility," he said.
"South Africa is part of the globalisation of the market, with growing engagement by retailers in food security and the need to participate in the world market place. As the world becomes more of a global village, international experience is sought after, and international experts are watching the continent closely."
Food security is no longer a matter for debate, but a real and pressing issue that must be addressed by retailers worldwide. Food would replace the 'old world' commodities of precious metals as the most sought after commodity as the world's population grows.
"Even the smallest increase in food prices will be severe, especially among the poorest 30% of our population as inflation for even the most basic food basket will be significantly higher."
Food security is key to socio-political stability. "We only have to look at the political fall-out from the Lonmin strike and the truck drivers' strike to realise that economic security is at the root of political security. There needs to be meaningful and appropriate co-operation between business and government to entrench socio-political stability.
There is no central global oversight or planning to secure sufficient food stocks as a buffer. Food is controlled by the market, not by logic, and it is inevitable and wrong that farmers and retailers will be blamed for these increases. Consumers and the government need to understand the nature of the food value chain if we are to develop effective mechanisms to arrest an unremitting series of food hikes. "We have to find a way to force food prices down in the value chain in South Africa, which is why we welcome foreign competition."
"Healthy competition between retailers offers the chance to bring prices down, but for this to happen retailers and suppliers need to find a way to put narrow sectarian interests aside where possible to join in the crusade to lower food prices."
In terms of the supply chain, he called on suppliers to take note of the fact that costs in the supply chain needed to be better controlled and managed and to accept the fact that the world's markets are open to retailers, producers and manufacturers. "While we want to build a sustainable food supply chain within South Africa the reality is that we have to provide food at a cost that can be borne by the market and is affordable to our customers."
Food prices have a wide impact on general socio-political security. "The less people have to lose, the more risk they are to security generally. For example, one can see how the 2007/08 surge in food prices, driven largely by the effect of the oil price on production costs, affected food insecurity and led to food riots, from Egypt to Mozambique and Mexico, spurring on the so-called Arab spring. Governments who fail to recognise the fragile nature of social compacts do so at their own risk."
The solutions to these impediments can only be political. "We must demand of governments serious political commitment, backed by concrete actions, that delivers democracy, respect for human rights, social justice and economic prosperity for the rural populations on which most parts of the world depend for agricultural produce."
There is an urgent need to revisit the land tenure regime in South Africa's traditional rural areas, where communal tenure should be converted to individual land ownership. "To date the land reform policy in South Africa has not been successful and intervention is needed to ensure that land reform and redistribution of land is managed in such a way that valuable agricultural land is protected and that those who benefit from land reform policies are assisted in becoming meaningful and sustainable contributors to the food basket. Ultimately, we need to stop taking food for granted. As history has shown, we do this at our peril."
"Another development that has impacted on the retail industry is the rapid technological growth that is taking place in communications. Twenty years ago the desktop computer was the domain of the privileged; advances in technology, smartphones at affordable prices, tablets and easy and relatively cheap access to the internet mean that retailers have to be alert to access consumers have to the world market. It is no longer necessarily the local retail store that makes the sale, people have the power to buy from anywhere in the world. With the growth of new online payment options, it is not only the bankable who have access to world markets. As retailers we need to be able to respond swiftly to these trends and leverage our business off them through online shopping and convenience to our customers.
"In Africa, our population will become younger and more affluent and the economic growth prospects for retailers will depend on how these advantages are leveraged."
At the same time, it is imperative that as diets change with a shift to the middle class and increased appetite for protein, retailers are alive and responsive to the need for affordable protein sources that do not negatively affect the environment.
"Sustainable development is a vital link in the food security chain which is why the group invests over R50 million a year in sustainable projects that bring emerging farmers and producers into the retail supply chain.
"Companies will increasingly have to become aware that sustainability is not just a buzzword, but about doing business more intelligently and efficiently. Success will need to be measured by how retailers respond to a more challenging and shifting trading reality, and how they increase the shared value created for others, because that is what our customers will measure our success against."
Businesses, including the food retail business, need to be as sustainable "and by this I mean deep sustainability, we need to build in cost efficiencies, local supply chains, ethical products, and engagement with our customers," he concludes.
