The companys place in the food system

Miracle Farm Blueprint

Organic Farming Manual

Get Instant Access

The two main food channels are the fresh product channel and the processed product channel. The fresh products channel has increased a great deal in importance in the last few years and it is predicted to grow further because of improved distribution technology and consumers' evident wish for fresh products. The processed products have been the mainstay of the food industry because of their enhanced storage life and the amount of variation that can be achieved in the products. The next decision is to decide on the stage of the food system: production, ingredient processing, manufacturing, distribution or retail. There is increased innovation in the production sector with many new types and varieties of fruits and vegetables; farming of an increasing variety of fish; organic farming; new types of animals. This is as well as genetic engineering, which up to now has concentrated on farming methods, such as resistance to herbicides and higher yields, rather than potential for product innovation. Innovations from the ingredient processors have increased markedly and this is an increasingly powerful part of the food industry. Food manufacturing has mainly concentrated on incremental changes, with some new innovations such as UHT processing and extrusion. The retail sector is a continuous area for innovation, both inside the supermarkets with own label products, organic products and boutique stalls, and outside with the increase in food stores associated with petrol stations and the rising growth of takeaways and restaurants. Some possible innovation strategies for the various stages in the food industry are shown in Box 2.2 (Earle 1997).

Vertical integration has been an important innovation strategy in the past, for example in the chicken industry, and in large multinationals which have combined ingredients processing with food manufacturing. Recently in some companies there has been a breaking of the integration with selling off the ingredients processing section by large food companies and of contracting farmers instead of owning farms in the production, processing and marketing integration. Retailers increasingly have a high degree of integration, although not always ownership, with production, processing and manufacturing, and are more strongly involved in innovation in the food system. Food manufacturers are increasingly directed in innovation by the food ingredients' processors and the retailers. It is interesting to speculate how the food manufacturers will develop innovation strategies in the future; it would appear that today's strong influence on their innovations of retailers and ingredients suppliers may make them redundant in innovation or spur them into new directions.

Was this article helpful?

0 0

Post a comment