In the 50 years it has been providing Asia with protein, Singapore-headquartered agrifood giant Japfa has faced plenty of challenges.
That means it was well prepared to tackle the Covid-19 pandemic — which emerged in China in late 2019 before spreading worldwide in 2020 — and its impact on the region’s food supply.
Nevertheless, the pandemic has raised new questions about our food production and supply chains, highlighting the need to make them more resilient and sustainable in the face of disruptive geopolitical events, natural disasters, and an ever-growing population.
It’s one of the reasons why Japfa has teamed up with GROW — the impact fund and accelerator backed by AgFunder — to launch Japfa Feeds The Future, a new innovation challenge to help startups and entrepreneurs grow their ideas into viable tech solutions that can improve the nutrition of billions of people. More details on the program are available here; interested teams have until March 14 to submit their applications here.
In the second part of a two-part interview (below), Japfa CEO Tan Yong Nang explained to AFN how the company has weathered the Covid-19 storm through a combination of tried-and-tested best practices and an open-minded approach to adopting new, tech-driven solutions. You can read the first part of our interview with Tan here.
AFN: What has been the most significant impact of Covid-19 on the agrifood industry across Asia Pacific, in your view? What weaknesses and vulnerabilities have been revealed that need to be addressed?
Tan Yong Nang: Covid-19 highlighted several issues and will accelerate several trends in the protein production sector.
First is food security and enhancing resilience of the food supply chain. Supply chain disruption following movement restrictions due to Covid-19 has highlighted the importance of food security, domestic production, and self-sufficiency. It is necessary to build adequate contingency plans to respond quickly and safely to possible disruptions. Covid-19 highlighted that the food supply chain has to be considered essential and measures have to be taken to guarantee there are not disruptions.
Management quality and labor availability are also important. Local management needs to be prepared to manage critical situations and protection of employees, especially in food processing.
It is also necessary for companies to manage cost and adjust capital expenditure to respond to uncertainty.
The post-pandemic economic downturn could affect demand of certain products in some markets. Hence, it will become important to be able to produce safe yet affordable proteins. –
Consumption models are also undergoing change, for example, foodservice versus at-home consumption, and new opportunities for direct-to-consumer distribution. Moreover, there’s the matter of trust, as consumers’ concerns about food safety increase.
We also expect sector consolidation towards bigger and industrialized, integrated players.
AFN: What have been the biggest challenges facing Japfa specifically due to the Covid-19 situation?
Tan Yong Nang: On the back of a business model and a strategy that are built to handle the market’s challenges and cyclicality, we have been able to manage an extraordinarily challenging year marked by the Covid-19 pandemic.
With the Covid-19 outbreak, continuity of food supply has been a major concern for many people. As we supply about 20-25% of animal protein foods in many countries where we operate, we play an essential role in maintaining supply of staple foods. In providing an essential service, which is supported by respective governments, our supply chains and logistics have not been significantly disrupted by movement restrictions and we continued to operate our farms and feed mills safely.
Our local management is prepared to manage the situations that arise in the individual countries where we operate. As our farms are geographically isolated and adopt strict biosecurity protocols, we are naturally set up to protect our people. We have also implemented additional measures such as temperature checks, PPE, social distancing, work-from-home and other measures for office workers.
With regard to raw materials, we had sufficient stocks for the year. We prioritize local suppliers for raw materials and build strong relationships with them. We locally source approximately 50% of our corn, and we’ve invested in corn dryers to process and store corn in the farming regions across Indonesia to meet our needs and quality standards. This strategy allowed us to leverage harvest seasons to stockpile corn for our needs without worrying about supply chain disruptions. In dairy, we localize forage supply in an Asian context. Additionally, we use technology to streamline operations and improve input efficiency, accuracy, and transparency.
As a result, our day-to-day operations and supply chains have not been materially impacted by Covid-19.
When it comes to demand, the issue is more how the demand for certain products has been affected by economic downturns. In this regard, being able to produce proteins that are both nutritious and affordable is becoming even more important.
AFN: What trends have you observed in terms of product category demand during Covid-19?
Tan Yong Nang: Due to movement restrictions, consumers have changed their habits and shifted from foodservice to home consumption. Our e-commerce channels have revealed an increase in cut-up chicken or portions, and larger bulk sizes, suggesting people have recently valued products catered to convenience for home cooking. Conversely, we’ve seen a drop in small-package milk and snack products due to school disruptions in the region.
We noticed that the lockdowns and other measures introduced to restrict people’s movement in Greater Jakarta following Covid-19 increased the demand for frozen products, as people stockpile food supplies.
AFN: How has technology helped (or hindered) Japfa during the Covid-19 crisis?
Tan Yong Nang: The Covid-19 crisis is truly unprecedented. To keep our business going while keeping our employees healthy and safe, we needed to focus on communication to replace travelling and quickly shift as much of our operations virtually as possible.
Having already digitalized our top-most critical business processes, combined with the Virtual Private Network, virtual collaboration, and unified messaging technology we have in place, we were able to accomplish just that with a high degree of confidence and speed.
For those who still need to be present in the office, in Indonesia for instance we deployed a self-service mobile tool that allows our team members and invited guests to check into the facility and self-screen remotely before entering. We also deployed a self-report tool that allows Covid-19 cases to be reported and traced from symptom onset to recovery.
Our mobile field-service operation applications minimize unnecessary touch points and face-to-face interactions; as well as streamline how information is aggregated centrally. A similar approach is being applied to many other aspects of our operations to help ensure business continuity and maintain our competitiveness and productivity.
With the help of our in-house apps and IT team, as well as off-the-shelf solutions, we were able to quickly expand our e-commerce business, opportunistically testing new B2C models and channels that leverage the new trends that are emerging during the Covid-19 crisis.