A Proposal for the Improved Provision of Emergency Food Aid through Industry Engagement: Mario Casotti

6 October 2015 FDI Team

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Key Points

  • Australia is committed to being a disaster relief provider for theregion.
  • The impact of regional disasters is becoming more acute as climate-related events become more severe and frequent.
  • The capacity may exist for improved government and private sector collaboration to more efficiently maintain and deliver food aid stock for regional disaster relief.
  • This collaboration could reduce the costs and improve the availability of food aid and disaster relief.

 

Summary

Australia is committed to responding promptly and effectively to regional humanitarian disasters. In some circumstances this will require the provision of aid in the form of the basic requirements of existence: water, food and shelter. The Federal Government, through the Department of Foreign Affairs and Trade, has issued an invitation to the private sector to engage in regional aid and development. The potential may exist for collaboration between Government and the private sector to manage emergency food aid stocks from within the existing food industry.

 

Introduction

The Australian Federal Government, through the Department of Foreign Affairs and Trade, has articulated a commitment to building regional resilience by humanitarian assistance, disaster risk reduction and social protection. Our region is highly vulnerable to humanitarian shocks caused by natural disasters, conflict and economic instability (such as food and fuel price fluctuations) and the impact may become more extreme if climate-related disasters become more severe and more frequent. Australia is committed to responding promptly and effectively to humanitarian disasters. In a crisis, cash transfers are one means of addressing the most pressing needs. In truly dire circumstances, however, when the basic subsistence requirements of water, food and shelter are urgently required and where distribution infrastructure is damaged, the provision of cash may initially be inappropriate. Direct provision of basic human life essentials may be the only meaningful contribution. In these circumstances water and shelter can be relatively easy to procure and do not pose significant storage or transportation problems. Food aid, however, can present significant management and distribution problems.

The delivery of fresh food aid, particularly when provided as disaster relief presents challenges not routinely encountered in the domestic retail market. Fresh and processed foods are perishable and the time between delivery and consumption is uncertain. The maintenance of bulk, long-term stock warehousing of food aid stocks is expensive and can be impractical. The alternative of short-notice, large-scale procurements from the domestic market can be difficult to meet and can have adverse consequences upon domestic producers and consumers. In addition, the cost of packaging and cosmetically preparing an item for the domestic market is, at times, in excess of what may be necessary for delivering the same item as food aid. Transportation requirements may also differ, as a response to humanitarian disasters often uses chartered or Defence Force assets. These challenges, however, may have advantageously coincided with changes to government aid policy that will facilitate a partnership with the private sector to help resolve these issues.

On 31 August 2015, the Minister for Foreign Affairs, Hon. Julie Bishop MP, presented an invitation to the private sector to collaborate in regional aid and development. The statement identifies the private sector as an essential partner in the nation’s regional, aid and development policy. One Australian businessman, Mario Casotti, the Managing Director of Karragullen Cool Storage, the largest fruit grower in Western Australia, is proposing that, with a relatively small capital cost outlay or disruption to current industry resources, food stocks can be made available at very short notice to move in order meet the nation’s crisis response obligations to the region.

 

Commentary

FDI: Mr Casotti, could you first give us a general outline of your concept?

MC: I believe that, for a relatively small capital outlay, stocks of Australian fresh and frozen food could be permanently maintained in readiness to meet regional crisis response responsibilities. I have developed this concept based upon my experience in the Western Australian fresh fruit industry but I would be surprised if, with minor variations to meet specific industry processes, the same arrangements could not be applied to the vegetable, grain, dairy and packaged meats industries. The economic marketing of fresh produce relies upon relatively accurate forecasts of demand. It does not respond well to short notice fluctuations. The capacity exists, however, to maintain, without wastage, a portion of stock under existing warehouse and distribution arrangements in readiness for emergency relief at significantly lower costs than can be achieved outside the industry or by emergency procurement when a crisis occurs.

To illustrate the feasibility of my proposal, I use the exiting retail fresh fruit and vegetable market as an example. On the shelves of the major retail stores you will find fresh items from as far away as China, South Africa, North America and Western Europe. The infrastructure required to move fresh produce globally is well established, reliable, practical and economically sustainable. With only minor adjustments, the same networks, I believe, can be used to store, distribute and deliver fresh food aid and disaster relief from Australia to regional areas of need. Even when local transport assets have been disrupted, produce can be delivered with sufficient residual shelf-life to allow reasonable distribution ranges beyond the main air or sea port of arrival.

FDI: In a little more detail, can you tell us how your proposal could be made to work?

MC: Again, I will use my own area of industry expertise as an example. Fresh fruit is a highly perishable commodity but with the appropriate handling it can be stored for up to ten months between the orchard and consumption, depending upon the variety and time of picking. The industry depends upon quite technical storage arrangements and a highly efficient transport network to move stock from storage to the major retail outlet. This critical infrastructure exists and is rarely used to maximum capacity. With appropriate warning and funding, storage capacity can be allocated.  It can also be delivered to an air or sea port as cargo, potentially for worldwide distribution by either commercial or chartered resources. Once stowed in the standard 10, 20 or 40 foot commercial sea container, it could be treated as routine cargo. There is only one item of “hardware” I believe, missing. The dimensions of the existing industry standard produce crate do not facilitate easy packing in a standard sea container. The procurement or fabrications of an appropriately-sized packing crate would reduce handling costs and speed distribution.

FDI: What do you see as the benefits for Australia in this proposal?

MC: I see this proposal as a “win-win” for Australia. It would provide some stability and a measure of guaranteed income to an industry group that faces cost pressures and reduced profit margins from efforts to compete with overseas producers.The benefits of market security extend far beyond business profit margins. When business managers have a sense of security in at least a portion of their income it makes progressive decision making in other areas, such as capital investment and workforce arrangement much easier. Good capital investments maintain long-term competitiveness. Workforces are not commodities; they are people, and people make up communities. There are communities in regional Australia that depend heavily upon some of these industries. In Western Australia, communities like Manjimup, Donnybrook and Mullalyup, for example, rely on the fruit industry for much of their economic stability. There are towns and communities like these across the nation. A strong and confident industry feeds into these communities in many positive ways.

There are also significant benefits for the other stakeholders. The Federal Government would be able to meet its obligations regarding regional disaster relief without the burden of procurement, warehousing and stock management costs. For the region, it provides the assurance that, should it be required, fresh food supplies can be delivered at short notice as crisis or disaster relief. Finally, the domestic market is protected from large-scale, short-notice demand that can influence cost and availability.

FDI: In an earlier question, you mentioned that you believe that this could be established and maintained with minimal costs?

MC: Fresh produce destined for sale to the Australian consumer has a wide range of associated costs. Many of these can be avoided or reduced if a product is committed to disaster relief. In the fruit market, for example, the standards imposed by the domestic, large-scale retailers and of the Australian consumer do not significantly affect the quality of the product. The procedures of picking, grading and classification, packaging, cosmetic presentation and wastage all add costs that are passed on to the consumer. Under this concept, much of these costs can be largely eliminated without compromising the basic nutritional quality of the product.

To the best of my knowledge, the only additional cost I would recommend is the construction or procurement of purpose-built storage and transportation containers, as discussed above.

 

 

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About the Interviewee: Mr Mario Casotti is the Managing Director of the Casotti Group of Companies. He started working in the fruit industry at around the age of seven years, bagging apples with his father after school. From there, he gained experience in all aspects of the business from sweeping the floor to picking orders. Following the completion of his secondary school education, he continued to develop his experience across the business in roles such as truck driving to picking fruit. Once he had experienced every business role, at around the age of 25, he assumed responsibility for the management of the business. That is what he has been doing ever since, as he finds the demands of managing a modern, multi- faceted and growing business and the demands of a family takes most of his time.

 

 

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Any opinions or views expressed in this paper are those of the individual interviewee, unless stated to be those of Future Directions International.

 

 

 

 

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Any opinions or views expressed in this paper are those of the individual author, unless stated to be those of Future Directions International.

Published by Future Directions International Pty Ltd.
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