The Gherkin and the Olive Tree

Stephen DeAngelis

November 3, 2009

This the fifth post in a series about food security. In the previous posts, I’ve noted that both international agricultural trade and local agricultural sectors will be necessary to feed the world as the population continues to climb to its anticipated peak of 9 billion people in 2050. The world will need small individual farms as well as large agricultural enterprises; but, according to Sarah Murray, the private sector should be up to the task at hand [“Private sector can keep world healthy,” Financial Times, 16 October 2009]. Murray notes that defeating hunger is not about providing the right nutrition not just filling the belly. She writes:

“[In early October], about 3,000 of the world’s leading experts on nutrition met at the International Congress of Nutrition, which convenes every four years. The message that organisers want to spread this year is that, while food security is a critical issue, so is nutrition security. Most people think of malnutrition as not having enough to eat. However, equally dangerous is ‘hidden hunger’ – a lack of sufficient micronutrients, which are the vitamins and minerals that support physical and mental health. Under-nutrition is thought to affect more than 2bn people globally, giving rise to a multitude of medical ailments. Lack of sufficient vitamins and minerals leaves people more susceptible to simple illnesses such as diarrhoea. Under-nutrition stunts growth and increases risk of diabetes and cardiovascular disease. Children born to mothers deficient in iodine – a critical micronutrient in the early stages of brain development – may have a lower IQ, leading to poor performance at school and lower income earning potential later in life.”

To learn more about the connection between iodine and IQ, read my post entitled Iodine and Intelligence. Murray makes a great point. We often hear nutritionists and fitness experts telling us to avoid eating foods that are nothing more than empty calories. When you’re starving, however, even empty-calorie foods provide a welcomed if unhealthy relief from gnawing hunger pangs. Malnutrition, as Murray points out, is not just a personal matter. It has much broader and long-term social implications.

“According to one estimate, countries can lose 2 to 3 per cent of gross domestic product as a result or zinc, iron or iodine deficiencies. ‘When you think about this from an economic perspective, the cost of IQ points to a whole population is enormous,’ says Martin Bloem, head of the nutrition unit at the United Nations World Food Program. ‘So there’s a great need for countries to tackle this problem.’ Because its impact is less visible, hidden hunger often receives less attention than infectious diseases and extreme malnutrition.” ‘

If Murray’s data is correct, twice as many people suffer from malnutrition (2 billion) as hunger (1 billion). The one billion suffering from hunger, of course, make up half of the people suffering from malnutrition. The question Murray raises is what can be done about it besides just raising people’s awareness of the problem?

“The World Food Program is developing a ready-to-eat paste of chickpeas, soybean oil, sugar, rice flour and dry skimmed milk powder, which is fortified with vitamins and micronutrients. Plumpy’nut – a high-protein, high-energy peanut-based food – is now widely used in situations such as famine relief. However, in finding long-term solutions, fortifying staple foods with micronutrients is seen as the most effective strategy. … Food fortification is also cost-effective. ‘High quality micronutrients can be added to commonly eaten foods to improve nutrition with little or no effect on color or taste and at a very low cost,’ says Klaus Kraemer, secretary-general of Sight and Life, an initiative established by DSM, the Dutch life and materials sciences group, to fight micronutrient deficiencies in developing countries.”

The focus of Murray’s article is not on government and non-government organizations; it is on what the private commercial sector can do to address nutritional needs. She continues:

“While governments should run public awareness campaigns and enforce fortification of certain foods, the corporate sector plays an important role, too. DSM, for example, has worked with Bühler, the Swiss food technology company, to develop NutriRice, a rice product fortified with vitamins and minerals. Other products include Annapurna, an iodized salt produced by Unilever, the Anglo-Dutch consumer products group. Meanwhile, Groupe Danone, the French food company, has developed a milk porridge product for low-income families in Poland, and from a pilot factory in Bangladesh, the company is manufacturing nutrient-rich yoghurt for local consumers. ‘The private sector has the technological, managerial and distribution capacity to reach the world’s remotest villages,’ says [Jay Naidoo, chair of the Global Alliance for Improved Nutrition (Gain), a Geneva-based alliance]. ‘All one has to do is examine the footprint of organizations like Unilever, PepsiCo and Danone to see how one can harness this capacity to reach the billions of poor who have low incomes and make daily choices about the food they will consume.’ Gain is helping foster such business models and encouraging public-private partnerships, something Stephan Tanda, managing board member at DSM, sees as critical. ‘Partnerships with the private sector are the best way to address hidden hunger,’ says Mr Tanda. “[Companies] understand how to create food and innovative food supplements; the development community has the programming expertise. No one sector – public, nor private – can solve this problem alone.”

That is an extremely important message. Although many environmentalists dream of an idyllic return to family-run farms capable of feeding the world, alone they simply aren’t up to the task. Large corporations are essential for providing the transportation and distribution chains that will actually get the job done. I find it encouraging that large corporations are being brought into the fold of those reaching out to help the world’s poor. Even in poor and emerging market regions, international food chains can play an important economic role. Two articles help make that point. The first talks about gherkin pickles from India [“India serves up a global gherkin,” by James Lamont, Financial Times, 13 October 2009] and the second about olives from Palestine [“The West Bank’s gold,” by Howard Schneider, Washington Post, 20 October 2009].

 

The first article about gherkin production in India is interesting because it highlights what can happen when best practices are implemented in developing countries. Lamont writes:

“Over a rain-swept corner of a field in the southern Indian state of Karnataka, dark monsoon clouds are massing. Farm workers scuttle along muddy embankments heading for the shelter of a nearby seed store as strong winds pull at their clothes and a heavy shower begins to fall. Yet the gherkin farmers of Medleri village in Rannebanur district are taking no chances with the monsoon. Their fields are criss-crossed with small rubber hoses fed by Israeli drip irrigation technology. Next to the seed store is a newly dug reservoir and a shiny pump. It is not just the water that is different. Gherkin plants are sown and fertilized according to European methods. Experiments are tried from far afield. In one row, gherkins are grown up poles as they are in Vietnam. In another, the ground is under plastic sheeting, similar to what is found on the so-called Costa del Plastico in southern Spain. Mechanization is also being slowly introduced, and Global Green, the company the farmers work for, has already developed a harvester to suit small acreages of its Indian operations.”

All of this modernization has nothing to do with feeding Indians, because, Lamont informs us, “gherkins – otherwise known as cornichons or pickled baby cucumbers – are shunned by Indian consumers.” They are growing them “exclusively for export to suit the tastes of consumers in the US, Canada, Israel and Europe.” Lamont continues:

“While India’s outsourcing prowess has become well known during the past decade in areas such as IT and back office business processing, the same trend is now under way in the global food supply chain – thanks to low labor costs and a climate that allows for three crops a year. ‘Cheap labor and climatic conditions are the key drivers of agricultural production being out-sourced to another continent,’ explains Vineet Chhabra, Global Green’s managing director. ‘It’s more than about quality when you are supplying to the developed markets. You have to be 50 per cent better than others. The cucumber out of India is a wonder. It’s nothing to do with me. It’s the climate and the weather.’ Large supermarket groups are seeking out the cheapest agricultural suppliers and India is among a competitive peer group that includes Turkey, Ukraine and Mexico.”

Although it may sound exploitive — and to some extent it probably is — the fact remains that growing specialty crops for export provides jobs and income that will eventually lead to a growing global middle class and improved quality of life. By implementing best practices, working conditions are better than they would be otherwise and continued profitably of the business is enhanced. That means job security. Lamont continues:

“Food company executives talk glowingly of the opportunities of ‘arbitrage at the Indian farm level’, where a day’s wage is a little above $1. In Global Green’s sorting and bottling plant on the outskirts of Bangalore, Karnataka’s capital, bottles spin off the production line labelled for Lidl, the German discounter, Sobey’s, the US supermarket chain, and Safeway. Global Green, a subsidiary of the Delhi-based Avantha Group, markets itself as the ‘World’s Pickle Packer’. It entered the gherkin business 15 years ago. Then, says M.R. Chandra Mouli, the company’s head of agri-business, it was a ‘small business’. Now, Global Green, which is headquartered in both Bangalore and Belgium, is the largest gherkin supplier outside of the US, the third-largest in the world, and accounts for a third of India’s production. … In addition to gherkins, the company supplies customers in 50 countries with onions, capers, peppers, cherries and sweetcorn. International expansion is still on the cards. In pursuit of year-round crop availability or four growing seasons a year, it is weighing acquisitions in Chile, Peru and Vietnam. The company’s forecasts are bullish. It expects to treble turnover in the next four years from current revenues of $130m. … Last year, the company produced 65,000 tonnes of gherkins for global markets; 55,000 tons came from India. And, in spite of the global downturn, orders have held up. ‘Pickles are recession proof,’ says Mr Chandra Mouli.”

Traditionally, being “in a pickle” means that one is in a quandary or some other difficult position. Global Green is bringing a whole new understanding to that term. The question is: Can serving up pickles help feed the world? The answer is: maybe. Indian farmers are learning a lot about how to squeeze the most out of the conditions in which they find themselves.

“[Mr. Mouli says], ‘India has to be competitive. The yields have to be better.’ As a result, a productivity revolution is under way among the contract farmers of Rannebanur, most of whom tend small holdings. At one level they are like many farmers in India, concerned about the water table, subsidies, the availability of credit and labor shortages. But at another level they are at the sharp end of agricultural experimentation, contracted by a company pushing out middlemen with ‘seed-to-shelf’ control and trying to bring them up to European standards. Greater productivity among these farmers will widen Global Green’s profit margins. That quest has been championed in the Avantha boardroom where Gautam Thapar, group chairman, speaks of the benefits to be reaped by making Indian farmers even a little more like their highly productive German counterparts.”

Lamont does concede that even the most modern agricultural practices can’t overcome all of the challenges associated with food production.

“If India’s ‘seed-to-shelf’ agricultural outsourcing story seems to good to be true, it probably is. Mr Chhabra acknowledges the swift success of India’s gherkin crop and the bankable relationship it has opened up with big retailers. But he is under no illusions about the sheer unpredictability of farming. ‘It looks like a simple business. You grow a few cucumbers and put them in a jar,’ he says. ‘It’s far more complex than that because there are so many moving parts. There’s the rain, the weather, fruit flies, the logistics, warehouses, barrel prices, foreign exchange and the customers. It’s hugely variable.’ … But that caution is unlikely to slow Indian agri-business. Almost 200 years after the jar of pickled gherkins became a commercial product in France, at least one Indian company has taken it for its own.”

In addition to pickles, the world also has a taste for olives. Palestinian growers hope it stays that way. Since olives and the oil they produce have been staples of the human diet for thousands of years, Palestinian growers are likely to get their wish. Schneider, writing from West Bank, reports:

“For centuries, olive harvesting here has been a mostly local industry. Farmers, their relatives and neighbors beat the trees with sticks or strip the olives from branches by hand, then cart them to a local press and sell or trade the oil in nearby markets. Harvest workers keep a share of the crop for their labor, and olive press owners keep a share of the oil — a testament to the small-scale, bartered nature of the undertaking. That model can help sustain a household, but in a new factory on the outskirts of this northern West Bank village, an effort is underway to reshape the olive industry so it can help sustain a wider Palestinian economy. With savvy marketing in the United States and Europe, and fair-trade and organic certifications that attract top dollar from Western consumers, a six-year-old farmers cooperative is breaking some of the traditional bounds of the olive industry and beginning to pull in hard currency from abroad. The Palestine Fair Trade Association now has 1,200 farmers and 20 olive press owners who take advantage of a guaranteed ‘fair trade’ price from Canaan Fair Trade, an affiliated company set up to market Palestinian-made products abroad. The arrangement means higher prices for the farmers and, perhaps as important, a way to turn the year’s crop into a lump sum of cash, rather than the trickle of money many received by selling oil or olives through the year.”

It is this kind of arrangement that makes me a strong supporter of globalization. Anyone who has followed what has been happening in the Middle East knows that the Palestinians need all the economic help they can get. Schneider continues:

“Developed by a U.S.-trained anthropologist, the venture sent 350 tons of olive oil to the United States and Europe in 2008, about $4 million worth, with projections that the amount could triple in a couple of years. Canaan Fair Trade has become the chief olive oil supplier to the Dr. Bronner’s Magic Soap company and is breaking into boutique food stores with its own gourmet olive oil brand. There are smaller sales to major grocers like Whole Foods and Sainsbury’s. … Olives are also the largest Palestinian crop, accounting for more than 40 percent of the land used for agriculture, according to U.N. figures. But earnings from olive trees are disproportionately low — roughly $120 million in 2008, or 18 percent of all agricultural production. International trade officials say that despite the industry’s historic roots, it remains underdeveloped and beset by informal practices that limit crop yields. … The same olives whose oil sells for a few dollars a quart locally can be run through the half-million dollar Swedish press at Canaan Fair Trade’s new plant, put in a bottle with an organic and fair-trade certified label, and sold for upwards of $50 a quart at retail stores in the United States. Projects like that are considered critical to boosting the $6 billion Palestinian economy and trying to lessen its current dependence on international aid.”

Just as with any agricultural endeavor, however, the olive harvest is subject to whims of nature. This year nature hasn’t been so kind. Schneider reports that a poor harvest has had mixed blessings:

“Access to water can be a major issue in long-term planning: a well-organized, well-maintained and irrigated olive field can produce perhaps 15 times as much fruit as the less formal groves typical in the West Bank. The area around Berqin and the nearby city of Jenin boasts one of the chief concentrations of olive trees in the Palestinian territories. Abufarha, 45, said that one hope of the cooperative is that, by generating more cash, it will encourage farmers to invest more in their fields and farming practices. This is a tough year for the idea. With a multiyear drought underway, a windy May stripped the trees of most of their blossoms, leaving them nearly barren of fruit. The olive harvest runs in two-year cycles, with bumper years followed by scarcity. But the yield in this off-season is down even more than expected, by an estimated 80 percent — so much that the area may need to import some oil to meet domestic needs, according to international development officials. That has pushed the co-op’s offering price to more than 25 shekels, or nearly $7, for a liter of olive oil — more than triple the existing market rate the year the co-op started in 2003, Abufarha said. It has been enough to prompt farmers such as Mahmoud Mansour, a co-op member for three years, to begin planning with his brothers to acquire new plots of land, knowing that, after each harvest, they will get a check from the co-op to support new investment and help maintain the fields. … But the difference now is that instead of bottling the oil himself, it will go into a designer package and off to a market halfway around the world.”

If relations between the Palestinians and the Israelis ever improve, it could be a real boon for the area’s agriculture. The Israeli’s have been developing some unique agricultural practices that, if shared with the Palestinians, could make their efforts much more productive. Encouraging agricultural cooperatives like those discussed above should help convince small farmers to improve their practices so that they are more competitive with larger agricultural enterprises. As I wrote at the beginning of this post, we need both family farms and large agricultural enterprises to feed the world in the decades to come.