In part two of his survey of the food policy areas to watch worldwide in 2017, just-food’s contributing editor Ben Cooper runs the rule over the likely developments in Latin America, Asia and Australia this year.
Food and agriculture policy in 2017 across many countries is likely to be influenced by a potentially dramatic shift in US trade policy following the election of Donald Trump but will also continue to be shaped by important existing drivers, notably concerns over nutrition and dietary health and climate change.
That one of President Trump’s first official decisions was to withdraw the US from the Trans-Pacific Partnership, a trade deal with 12 countries on both sides of the Pacific that had been seven years in the making, serves to underline how US trade policy will shape the immediate future not only of the US economy but those of so many other countries.
Critical year ahead for Mexico’s food tax standard-bearer
Nowhere will the Trump effect be more keenly felt than in Mexico, which featured so prominently in the Presidential campaign. However, 2017-2018 was always going to be a critical time for Mexico, which will itself see a presidential election in 2018.
The food policy of President Enrique Peña Nieto – particularly the imposition in 2014 of a tax on sugary soft drinks and certain foods – meant Mexico has been prominent in the debate around nutrient taxes and the contribution they may make to tackling obesity, influencing governments both in developed countries and emerging economies.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataSee Also:
The future for President Peña Nieto and his proactive policy agenda to address Mexico’s chronic obesity problem is in doubt. As the country prepares to face the economic upheaval Trump policies will inevitably cause, his approval rating has slipped to 12%, according to a poll published in Mexican newspaper Reforma earlier this month, from 24% in December.
At the current time, food security may be the more important concern for the current administration or for a new administration next year should Nieto fail to be re-elected.
“The incoming Trump administration and its agriculture policies and other policies towards Mexico pose to seriously worsen Mexico’s food security situation,” says Alejandro Calvillo, director of consumer advocacy organisation El Poder del Consumidor, a founding member of Mexico’s Nutritional Health Alliance.
Since the tax was introduced, health campaigners have been pushing for the Mexican government to increase the tax on sugary soft drinks from 10% to 20%. However, Calvillo is far from optimistic about the prospects for doing so. “Political times are difficult because we are at the end of the presidential administration, we are in a financial crisis and with a great concern about the Trump election. It is difficult to know if is possible to increase the soda tax.”
Policy to tackle obesity rising up the Latin American political agenda
Mexico may have the most severe problems relating to obesity, but other Latin America countries have experienced the same pressures, with obesity, overweight and type-2 diabetes rising as economic development changes food consumption habits. As such, other countries have looked with interest at the steps Mexico has taken.
Eugenio Diaz-Bonilla, senior fellow at the International Food Policy Research Institute (IFPRI), points out that, among developing regions, Latin America has the worst problems with obesity and overweight, in addition to ongoing issues around under-nutrition.
Aside from Mexico, Chile and Peru have been the most active in food policy to address obesity so far, but Diaz-Bonilla sees this as a growing trend across Latin America. “The fact that obesity and some of the diseases related to obesity are becoming more obvious in health statistics compared with Africa or Asia, means that in Latin America you are beginning to have more concern and legislation around these issues,” he says. “That’s a clear movement in Latin America.”
The coming year may see Chile take its policy agenda to tackle rising obesity further. Having introduced food labelling regulations last year to identify less healthy foods and drinks, Chile is considering the introduction of a tax on such products. The Chilean Health and Finance Ministries are conducting research and are expected to publish their findings during the coming months. As it stands, the government is considering whether to target any foods with a less healthy nutritional profile, or just those high in sugar.
However, while measures to combat obesity are very likely to become more common in the region over the medium to long term, Diaz-Bonilla expects for governments throughout Latin America, the impact of US trade policy will be a prevalent and predominating concern in 2017, not least on agriculture and food production.
Trump’s decision to withdraw from the Trans-Pacific Partnership has great significance for Latin American signatories Peru and Mexico, though at least that move was widely anticipated. Other countries in the region with substantial trade with the US in agricultural commodities, such as Mexico, Brazil and Colombia, will be watching developments in Washington D.C. closely.
According to figures from the United Nations Food and Agricultural Organization (FAO), Latin America and the Caribbean account for around 13% of the total value of global food production, and some 15% of total exports. As such, the stability of the agricultural economies in many of these countries, and how governments in the region will react to changes in US policy, is of great significance to multinational food manufacturers sourcing key commodities from the region such as sugar.
India looks to raise food standards and combat obesity
Continuing moves to raise food standards, tackle the problem of food adulteration and address rising obesity are all high on the policy agenda in India. The Food Safety and Standards Authority of India (FSSAI) has been tasked with raising India’s food standards to meet the Codex Alimentarius standards set jointly by the FAO and the World Health Organization in areas such as labelling and food safety. In particular, measures to combat food adulteration and regulate food fortification are likely to remain a focus in 2017. FSSAI recently published draft standards for fortification of edible oils and other foods.
Last week, a report in The Times of India added to speculation the Indian government may move towards taxing sales of sugar-sweetened soft drinks and packaged foods high in salt and saturated fat. This follows the decision last year by the state government in Kerala to levy a 14.5% on foods such as pizzas, burgers and other less healthy foods.
The Kerala move and last week’s report that the issue had been raised with prime minister Narendra Modi by representatives of a number of government department, underline that taxes on unhealthy foods are without question on the policy agenda in India.
How close India might be to following the example of markets as diverse as Mexico and the UK is difficult to gauge. When questioned by just-food, a senior FSSAI official declined to discuss the issue or confirm if such measures would be included in the next budget.
However, Sudip Sinha, an analyst at Rabobank, expects India’s government will focus this year on implementing its plans for a national Goods and Services Tax (GST). “From a government perspective, that [tax on unhealthy foods] is not the priority. The priority is very much getting the GST in line.”
As in Latin America, growing affluence and market development is leading to rising obesity in many developing economies in south-east Asia and Sinha sees the introduction of policies such as sugar taxes as a regional trend as economic development continues. Thailand and the Philippines are probably the countries most likely see progress towards introducing taxes on less healthy foods and drink during the coming year, while such measures were also debated in parliament in Singapore last year.
Vietnam scrapped plans to introduce a soda tax but, like India and China, is placing increasing emphasis on raising food standards. According to Professor Wendy Umberger, executive director of the University of Adelaide’s Centre for Global Food & Resources (GFAR), food authenticity has become a priority for policymakers in Vietnam because it is “big concern” among consumers, not only in the burgeoning middle classes but also among those still on relatively low incomes.
Looking longer term, Rabobank’s Sinha sees closer harmonisation within the ASEAN trading bloc influencing food policy, notably with regard to labelling legislation. While ASEAN member states have expressed support for harmonising food standards, progress has been very slow and this is unlikely to be a prominent factor influencing specific national food policies in the coming year.
China looks to a healthy future
China, too, is looking to address the alarming rise in obesity levels that have accompanied market development. To that end, Beijing launched its Healthy China 2030 preventive health plan last October.
Running to some 29 chapters, the overall objective of the plan is to increase average life expectancy in China from 76.34 in 2015 to 79 by 2030. It extends to a broad range of policy areas including public health services, environment management, medicine, drug abuse and food safety.
Certainly for the time being, however, there appears to be little prospect of the Healthy China 2030 plan including significant measures impacting on the packaged food market. In fact, there are concerns the Chinese government is failing to learn from the experience and ultimate policy response to rising obesity in other countries.
Barry Popkin, Professor of Nutrition at the University of North Carolina, who established and heads up the China Health and Nutrition Survey, believes as it stands Beijing’s plan is not placing sufficient emphasis on changing diet.
In its current iteration, Prof. Popkin foresees “minimal impact” on the growing packaged food sector in China. “The current Healthy China 2030 is really focused very little on diet and certainly not on the types of rigorous dietary changes other countries are trying to make to improve health,” Prof. Popkin tells just-food.
Data from the China Health and Nutrition Survey speaks to the change in consumption habits China has witnessed. In 2011, according to the five-yearly survey, packaged food accounted for around 28.5% of calorie intake in China. Figures for 2016 are yet to be published but Prof. Popkin estimates that percentage may well have risen to between 50% and 60% over the past five years given the growth of the country’s retail sector.
A plethora of policy issues to watch in Australia
The relationship between the farming and food manufacturing sectors and Australia’s two largest food retailers, Coles and Woolworths, is an ever-present issue in the country’s food policy. The coming year will be no exception with Australia’s Food and Grocery Code of Conduct, intended to ensure a fair relationship between producers and retailers, due to be reviewed in 2018.
Food retailing in Australia remains highly concentrated but, principally as a result of the growth of Aldi, the share of Coles and Woolworths has declined to just over 70% from around 90% a few years ago.
The Australian Competition and Consumer Commission (ACCC), which administrates the Code of Conduct, is also conducting an in-depth inquiry into trading practices in the dairy sector, which will be published later this year. The two-year review of the Australia’s Health Stars front-of-pack nutritional labelling system is also expected by the middle of 2017.
Sustainability issues, meanwhile, are expected to loom large in Australian agriculture policy during the coming year, particularly in relation to water use. The withdrawal of the US from the Trans-Pacific Partnership (TPP) will also be keenly felt by the Australian agricultural sector.
However, negotiations among the 11 remaining TPP partners to salvage the deal will be welcomed by Australian farmers. Australian exports of numerous commodities, including red meat, dairy, fruit and vegetables, sugar, grain and seafood, stand to benefit from the TPP which the National Farmers Federation (NFF) describes as “transformational” for the country’s agricultural exports.
Indeed, as it became clear the US would not be ratifying the TPP, the NFF stated that did not mean the deal was “dead in the water” as the “most significant gains for Australia lie with the deals struck with Japan, Mexico, Argentina and Canada”. Nevertheless, the lost opportunity for Australian farmers of increased sales to the US speaks to the impact the election of Trump is likely to have on agriculture policy in other countries.
