{"id":12727,"date":"2016-11-04T17:59:47","date_gmt":"2016-11-04T21:59:47","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/danish-food-manufacturers-are-at-risk-of-future-supply-disruption\/"},"modified":"2016-11-04T17:59:47","modified_gmt":"2016-11-04T21:59:47","slug":"danish-meat-manufacturers-are-at-risk-of-future-supply-disruption","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/danish-meat-manufacturers-are-at-risk-of-future-supply-disruption\/","title":{"rendered":"Danish meat manufacturers are at risk of future supply disruption"},"content":{"rendered":"

Danish\u00a0meat industry<\/strong><\/p>\n

Denmark is a relatively tiny country in the northern Europe with a population of 5.7 mln people [1]. But it is an agricultural giant, home to 30m pigs. In 2011 farm products made up 20% of its goods exports. The value of food exports grew from \u20ac4 billion ($5.5 billion) in 2001 to \u20ac16.1 billion in 2011. [2] The biggest manufacturers of meat are Danish Crown, Arla, Rose Poultry and DuPont Danisco, also there are plenty of smaller firms. Danish firms are thriving at the high as well as the low end of the business: Noma, a celebrated restaurant in Copenhagen, has helped to create a cult of Nordic food, including pig\u2019s tails, supplied by Danish Crown.<\/p>\n

Greenhouse emissions\u00a0&\u00a0meat supply industry<\/strong><\/p>\n

As far as reducing carbon emissions becomes a serious concern of policymakers and environmentalists, the food industry becomes more and more scrutinized. And it is justified by the facts. According to UN estimates global meat industry accounts for roughly 15% of greenhouse gas emissions. [3] It is more than all cars, trucks, ships and planes combined. Most of the emissions come from animal husbandry, the rest is from processing and distribution of meat. The first example of recognizing an issue with the food industry in Denmark is recommendation by the Danish Council of Ethics to impose an initial tax on beef with plans to extend the regulation on other types of meats. \u201cThe Danish way of life is far from climate-sustainable, and if we are to live up to the Paris Agreement target of keeping the global temperature rise ‘well’ below 2\u00b0C, it is necessary both to act quickly and involve food,\u201d the council said. [4] In addition to environmental issues the ethical aspect is considered. \u201cFor a response to climate-damaging food to be effective, while also contributing to raise awareness of the challenge of climate change, it must be shared,\u201d said council spokesman Mickey Gjerris. [4]<\/div>\n
<\/div>\n
Disruptions in\u00a0meat supply industry<\/strong><\/div>\n
<\/div>\n
Given the high attention from Danish and global authorities and policymakers towards greenhouse emissions associated with meat supply industry it is possible to outline several key consequences for\u00a0pork suppliers in Denmark:<\/div>\n
1. Additional tax burden and possible environmental restrictions<\/div>\n
2. Brand\u00a0and\u00a0reputation risks as consumers become aware of environmental aspects of food supply industry<\/div>\n
3. Shortage and resulting growth in prices of livestock as farmers might switch to other agricultural sectors in fear of future losses<\/div>\n
4. Decline in demand for finished products as changes in consumer preferences, i.e. in an effort for healthier lifestyle consumers tend to switch to increasing proportion of vegetables in their diets<\/div>\n
5. Shortage of water supplies as water becomes a scarce resource<\/div>\n
<\/div>\n
The outlined above risks become even more serious considering future prediction for meat demand growth. For instance, it is expected that demand for food will rise by 60% by 2030. [2] Consequently, potential supply disruptions are a real threat.<\/div>\n
<\/div>\n
\n
Potential mitigation actions<\/strong><\/div>\n<\/div>\n
<\/div>\n
In order to mitigate the risks of potential future food supply disruptions Danish food manufacturers could consider the following set of measures.<\/div>\n
\n
Firstly,\u00a0they need to diversify livestock sourcing toward growing livestock in emerging markets where environmental regulations can be not as strict as in Western Europe<\/div>\n
Secondly, in order to secure water supplies they need to either acquire licensees for guaranteed water resources, or hedge the risks of water supply disruptions using financial markets instruments.<\/div>\n
Last but not least, they need start investing into building sustainable business models by i.e. developing environmentally friendly technologies of meat processing, investing into recycling of food products, replenish natural reserves of water, funding research in the area of mitigating environmental damage.<\/div>\n<\/div>\n
<\/div>\n
(608)<\/div>\n

Sources:<\/p>\n

    \n
  1. https:\/\/en.wikipedia.org\/wiki\/Denmark<\/li>\n
  2. The Economist, “Bringing home the bacon”, Jan 4th 2014, http:\/\/www.economist.com\/news\/business\/21592605-tiny-denmark-agricultural-superpower-bringing-home-bacon<\/li>\n
  3. Financial Times, “Cloned cows create a new beef over climate change”,\u00a0Nov 26th 2015, https:\/\/www.ft.com\/content\/caebefb6-9378-11e5-bd82-c1fb87bef7af<\/span><\/li>\n
  4. Business Insider, “Denmark is considering taxing red meat to fight the ‘ethical problem’ of climate change”, Apr. 28, 2016, http:\/\/www.businessinsider.com\/denmark-planning-to-tax-red-meat-to-fight-climate-change-2016-4<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"

    Livestock industry has been \u201cforgotten sector\u201d of climate change, but as soon as it attracts more attention serious issues for Danish manufacturers could emerge<\/p>\n","protected":false},"author":1818,"featured_media":12741,"comment_status":"open","ping_status":"closed","template":"","categories":[],"class_list":["post-12727","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"\nDanish meat manufacturers are at risk of future supply disruption - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/danish-meat-manufacturers-are-at-risk-of-future-supply-disruption\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Danish meat manufacturers are at risk of future supply disruption - 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