beyondbrics

Rice or hamburgers? As the global economic crisis unfolded, that was the question that many food executives were asking themselves about the future of emerging countries’ eating habits. Over the last ten decades, the diets in nations from China to India have become more similar to those in western countries, paving the way for a large increase in the profitability of global food companies. But in previous crisis, diets have reverted to traditional staples – the fear was a repetition of history.

No one has a better watchtower over global food and agriculture than Cargill, the big US agribusiness. And Gregory Page, its chief executive, told the Financial Times in a rare interview that the appetite of emerging markets for processed food, meat and dairy products has confounded fears of a big drop in demand in the wake of the financial crisis.

If you just looked across the shopping basket in those countries where their gross domestic product is $3,000 to $10,000 a year . . . the diet was remarkably resilient this time, so we start from a better base than we did before.

Mr Page contrasted the resilience with the experience during the south-east Asian crisis of 1997-98, the last big period of economic turmoil in emerging markets, when some countries lost “more than a decade” of dietary advances in two quarters.

This year we didn’t see that . . . If we get global incomes growing again, I think [that] from the demand side it is going to be a reasonable environment.

Ron Trostle, an economist at the US Department of Agriculture in Washington, says that emerging markets have increased their meat consumption over the last few years. “They have also been eating more dairy products, and more fruits and vegetables. The trade off is on a per capita basis less staple foods: less rice, less wheat,” he says.

Mr Trostle says that the key is those countries whose per capita income sits between $3,000 and $10,000 per year. “The higher you go up that scale the more processed foods you probably consume,” he says. The increase in processed food, as oppose to staples, benefit large food groups, from Nestlé and PepsiCo to Kraft and Coca-Cola.

Will the global economy gain strength to continue boosting per capita incomes? Mr Page thinks so. He says that that global economic growth in the 2010-2020 period would be above the 1990s average, but below the “supercharged by the liquidity spree” rate of the 2000s. According to the International Monetary Fund, economic growth averaged 2.9 and 3.6 per cent during the 1990s and 2000s, respectively.

I don’t see any reason why we can’t have at least the 90s level of growth, the degree of which the world has unmet needs is not that much different than it was then and I think part of economic growth is about meeting what is currently unmet needs so. I think it is a reasonable bet but there are not any safe bets.