Food and agribusiness survey
As with our survey in 2012, respondents identify West Africa and sub-Saharan Africa as the most risky regions to engage in agribusiness activities. The Middle East and North Africa (MENA), followed by Russia and the CIS, and China and India, are also considered higher risk regions.
42 per cent of respondents are concerned about contractual risks, followed by land title (27 per cent respondents) and enforceability issues (21 per cent). They note that these risks are generally heightened for transactions in emerging markets.
Several respondents highlight the difficulty in enforcing contracts and rights. For some, the legal environments with which they deal can be unpredictable and the amount of time it takes to enforce their rights can be lengthy.
About a quarter of respondents see bribery and corruption risk as being 'high' or 'very high'. Respondents highlight Africa and Asia as the main regions where bribery and corruption risk in the sector is high.
Respondents point to the price-fixing scandal involving infant milk formula in China. Price-fixing investigations also regularly occur in the developed world in the agricultural sector as well as other industrial sectors.
Respondents note that profit margins can be expanded by targeting emerging markets, but that this may increase exposure to bribery and corruption.
Many respondents (77 per cent) have seen no change in the potential for exposure to bribery and corruption; a few (6 per cent) report a decline.
"Essentially as a PLC we need to make sure that what we do can withstand the scrutiny of the stock exchange and shareholders."
Stephen Wheatcroft, Trader, Wilmar Oils and Fats
Respondents comment that more instances of bribery and corruption have been exposed in recent years, and this has served to encourage organisations to address potential internal problems. As regulatory and investigative agencies around the world are more active in seeking out bribery and corruption, companies are taking extra steps to mitigate the risk of prosecution. Several respondents suggest that bribery and corruption is becoming a bigger problem because of the growing status and influence of emerging nations in the food and agribusiness sector.
A large number (81 per cent) of respondents have formal anti-bribery and corruption compliance programmes. Antibribery and corruption compliance programmes may also be included in general corporate compliance programmes, policies and procedures.
However, it is noteworthy that one in five organisations does not have a formal anti-bribery and corruption compliance programme.
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