Copyright HDC 2014

World Food Security Summit 2014

24 Feb 2014

Challenges in Securing Halal Food Supply

Presentation outline

INTRODUCTION

Why Halal Industry?

Food Security Issues as a Driver of the Global

Halal Market

Halal Superhighway – Link the Global Supply

Chain

2

Conclusion

Challenges in Halal Supply Chain

Presentation outline

INTRODUCTION

Why Halal Industry?

Food Security Issues as a Driver of the Global

Halal Market

Halal Superhighway – Link the Global Supply

Chain

3

Conclusion

Challenges in Halal Supply Chain

4

Source: PeW Research, HDC and Ernst &Young Analysis

Key Driver 1 :

(a) Global Muslim population is 1.8 billion (23%) , (27% of total population by 2030)

(b) Emergence of new markets

Emergence of new markets:

Country Estimated Muslim

Population (mil)

Indonesia 204.6

Pakistan 178.1

India 177.3

Bangladesh 148.1

China 40.0

5

Market potential of Halal food in ASEAN

Many ASEAN countries still have relatively low per capita trade-able food consumption. Indicating: that future demand potential is strong. At present, per-capita chicken meat consumption in Indonesia is about 4 kg/ year. With a projected increase of per-capita consumption to 8 kg/ year in the next 7 to 8 years, implying an additional chicken meat demand of 1.3 million MT. With a growing economy, rising disposable income as well as increase in Halal awareness; Traded Halal products, especially meat and food products will also increase exponentially

6

Market potential of Halal food in GCC

The six (6) members of GCC are the most important countries in the Middle-East

Competitive markets: There are “NO ENTRY BARRIERS & EXIT BARRIERS”

Total population is only about 40 million in 2011 and projected to rise 40% by 2030;

Although small in population; total imports of Halal meat into GCC countries (chicken and beef) exceeds 1 million MT annually;

Influential in issues related to Halal trade

7

Market potential of Halal food in EU

Major retailers in EU such as Carrefour and TESCO are now starting to include Halal meat in their product’s assortments;

Non-Muslim Dutch consumers have shown interest in Halal food where the total demand is estimated to reach about US$ 3 billion annually;

Port of Rotterdam has a Halal dedicated storage facility

French Muslims spend about 30%-35% of their income

on food products. Quantity of meat consumed by Muslims

in France amounts to an average of 400,000 MT annually.

The average income of a Muslim in France is about Euro 1,220/ month. This is lower than the country’ average at between Euro 1,550 and 1,850/ month.

8

Key Driver 2 : Purchasing power of Muslim is growing

“Muslim GDP per capita has grown faster

annually than its global counterparts over

the period from 1990 to 2010.”

Source: PWC Analysis

“Between 1990 and 2010, GDP per capita

for Muslims worldwide has grown at a

Cumulative Annual Growth Rate (CAGR) of

6.8% (Global CAGR: 5.0%).”

Source: United Nations, IMF, PWC

Presentation outline

INTRODUCTION

Why Halal Industry?

Food Security Issues as a Driver of the Global

Halal Market

Halal Superhighway – Link the Global Supply

Chain

9

Conclusion

Challenges in Halal Supply Chain

Preserving Halal integrity throughout the supply chain

10

Farming input Farming Manufacturing Packaging and

distribution

Retail

Food services

• Breeders

• Animal feed

• Livestock

• Poultry

• Abattoirs

• Processed foods, cosmetics,

personal care, chemicals

etc.

• Warehousing

• Repackaging

• Cold room

• Supermarkets, groceries,

restaurants, hotels

Halal Logistic

Halal Logistics is the process of managing the procurement, movement, storage and handling of materials, parts, livestock and finished/semi-finished

inventory both food and non-food through the organization and the supply chain in compliance with the general principles of Shariah Law.

Towards zero contamination with non-halal materials / ingredients along the supply chain

INTRODUCTION

11

Towards zero contamination with non-halal materials / ingredients along the supply chain

12

High Alcohol

Content

Beverages

Flavorings / Colorings /

Seasonings / Additives

Fermented Products Cosmetic Products

Personal Care Products Confectionaries

13

World Demand Supply

- Halal food

Demand

Main Players Products

Australia Beef

New Zealand Lamb

Brazil Poultry

Malaysia Processed Food,

Ingredients, Non-food

Thailand Processed Food

Supply

1.8 bil Muslim

Value USD 680 bil

Issues: Food Insecurity

• Global supply chain

• Trade (especially intra-OIC is less than 15%

Source: HDC Analysis

Presentation outline

INTRODUCTION

Why Halal Industry?

Food Security Issues as a Driver of the Global

Halal Market

Halal Superhighway – Link the Global Supply

Chain

14

Conclusion

Challenges in Halal Supply Chain

15

Food Security Issues as a Driver of the Global Halal Market

Global Food Hunger Index

16

“Undernourishment in Sub-Saharan Africa

has increased by 11.8% - highest prevalence

of hunger (32%)”

“Asia and Asia Pacific has the highest

number of undernourished people in the

world”

(Source: FAO)

Global Hunger Index in IDB Member Countries

(Source: Global Hunger Index 2009)

Increasing Food and Oil Prices Impact the Supplies

17

“International food prices increased steeply

from mid 2010 to 2011, raising alarm bells

across the developing world about a

repetition of food price crisis of 2007-2008.”

“Showing an opposite trend, food stocks

has reduced and the stock-utilization ratio

has increased”

(Source: Economic and Social for Commission for Asia and the

Pacific)

Food commodities trade statistics 2009 – Majority of OIC countries are in importers category

18

Food Commodity Producers Exporters Importers

• China (29.2%)

• India (21.0%)

• Indonesia (8.5%)

• Bangladesh (6.8%)

• Vietnam (5.6%)

• Philippines (6.6%)

• Nigeria (6.2%)

• EU (3.9%)

• Bangladesh (3.6%)

• Iran (3.6%)

• Thailand (30.8%)

• Vietnam (16.7%)

• India (13.1%)

• USA (10.2%)

• Pakistan (9.2%)

Market share data is provided in brackets. Countries in red indicated OIC countries.

Source: FAO

• Brazil (23.7%)

• India (11.2%)

• EU (11.0%)

• China (8.2%)

• Thailand (4.7%)

• India (11.3%)

• EU (6.7%)

• USA (4.5%)

• Russia (4.3%)

• Indonesia (4.1%)

• Brazil (47.4%)

• Thailand (9.6%)

• Australia (6.8%)

• EU (3.8%)

• Guatemala (3.0%)

• Brazil (33.7%)

• USA (33.4%)

• China (9.2%)

• EU (8.8%)

• Thailand (5.7%)

• USA (20.0%)

• China (18%)

• EU (12.5%)

• Brazil (12.0%)

• India (2.7%)

• China (16.4%)

• Hong Kong (9.4%)

• Japan (8.8%)

• EU (7.3%)

• Mexico (6.3%)

• USA (22.3%)

• EU (15.1%)

• Canada (13.7%)

• Russia (12.7%)

• Australia (9.1%)

• EU (20.6%)

• China (17.0%)

• India (11.9%)

• USA (9.3%)

• Russia (8.8%)

• Egypt (7.4%)

• Brazil (5.3%)

• EU (5.2%)

• Algeria (4.4%)

• Indonesia (4.2%)

The demand for Halal main food items by OIC Countries has increased tremendously

within the last decade

Main Food Item Y 2000 Major OIC Importers

6.7

Wheat

Maize

• Egypt

• Algeria

• Indonesia

• Nigeria

• Egypt

• Iran

• Turkmenistan

• Malaysia

Y 2010

14.9

(USD Billion)

2.3 8.1

Source: FAO

• Egypt

• Malaysia

• Guinea – Bissau

• Indonesia

Cattle meat

1.0 4.1

122%

252%

310%

Sugar

• Indonesia

• UAE

• Malaysia

• Nigeria

3.0 11.8 293%

Main Suppliers

19

Intra – OIC trade for food and ingredients is less than 15%

20 Source: OIC

Beverages & Tobacco, 0.8%

Crude materials, inedible, except fuels, 3.4%

Commodities n.e.s., 3.6%

Animal and vegetable oils, fats and waxes,

4.1%

Miscellaneous manufactured articles, 5.7%

Chemicals and related products, n.e.s., 9.7%

Food & live animals, 9.8%

Machinery and transport equipment, 13.8%

Manufactured goods classified chiefly by material, 21.3%

Mineral fuels, lubricants and related materials, 27.8%

Source: Estimates from the COMTRADE database of the United Nations (2008).

* Since not all countries have yet reported their trade statistics, mirror statistics were used to the extent possible to obtain more accurate results.

Presentation outline

INTRODUCTION

Why Halal Industry?

Food Security Issues as a Driver of the Global

Halal Market

Halal Superhighway – Link the Global Supply

Chain

21

Conclusion

Challenges in Halal Supply Chain

Halal Superhighway link the global Halal supply chain

New Zealand

Australia

Qingdao, China

Xinjiang, China

• Beef

• Dairy products

• Processed food

• Livestock

• Rice & Maize

• Maize

• Sugar

• Soybean

• Rice

• Cassava

• Chicken

• Livestock

• Wheat, Maize & Rice

• Fruits

• Olive oil

• Potatoes

• Vegetables & fruits

• Vegetables & fruits

• Maize

• Yams & Cassava

• Poultry

• Maize

• Animal feed

Brazil

22

• Dairy

products

MIDDLE EAST

Ensuring a controlled and efficient supply of Halal products to Muslims all over the world

Europe

750 million population (6% Muslim)

High purchasing power

Ningxia, China

Indo-China

MALAYSIA

Indonesia South East Asia

500 million population

(50% Muslim)

North Africa

Nigeria

Africa

1 billion population

(40% Muslim)

Presentation outline

INTRODUCTION

Why Halal Industry?

Food Security Issues as a Driver of the Global

Halal Market

Halal Superhighway – Link the Global Supply

Chain

23

Conclusion

Challenges in Halal Supply Chain

24 24 Hotline 1800-880-555 Visit us at: www.ghsc.com.my

Discussion / Q&A

Conclusion

• 1.8 billion Muslim population. Supply for Halal food and non-food products is not enough to cater the demand.

• Challenge is to develop a more robust and efficient global supply chain benefitting Muslim world

• Hence, opportunities are enormous.