Monthly Archives: August 2014

GRASS-FED : CHEAP OR PREMIUM?

The following is an extract from AFS’s review of Food Harvest 2020 published on 17/03/2014

The author has been pondering the question of what is meant by the term grass-fed? Although it seems obvious, is it possible that it can actuallymean different things to different people? Below are two interpretations.

  1. Grass is a low-cost source of metabolizable energy for ruminant livestock. Hence, farming systems should be designed to maximise the use of this low-cost feed; preferably tending towards the exclusion of all other feeds.
  2. The use of grass-fed livestock farming systems can provide the raw material, be it milk or meat, for natural, healthy, high-quality, differentiated products that command a premium price in the World’s food markets.

It is very clear with beef and lamb that grass fed is recognised as a premium product. It is seen by some as a more  natural product and by others as a healthier one. In the United States where growth hormones are used in beef production there are consumers who clearly wish to differentiate between grass and cereal-fed beef. There will also be those who have ethical, animal-welfare and GMO questions concerning what happens within beef-lot systems.

The presence of a grass-fed, premium milk market is more debatable. There are, however, occasions where, for example, cheese-makers will specify that no fermented forages are to be used in their milk supplies. The question is, can a case be made for products to be differentiated on the basis of, a) being entirely from grazed grass [maybe possible with some grazing only beef and lamb], b) being derived from grazing and hay and/or silage, or, c) being derived from grazing and hay and/or silage plus a limited use of cereals [possibly derived from a conservation grade type farming scheme and/or a quality-assured scheme]. All may have appeal to certain consumer groups.

Selling beef and lamb from any of the above systems is, location and breed permitting, feasible. It becomes more difficult when considering dairy products as those customers seeking ‘healthy’, grass-fed or predominantly grass-fed, products will be seeking a diverse range of products that includes both fresh and longer-life products. Given the current emphasis on developing highly-seasonal, no-winter-milk production systems in Ireland at present, the farming systems themselves are actually moving further away from providing milk for grass-fed-milk products. A key point here is that the farming systems needed to provide milk for a 12-month supply of grass-fed fresh dairy products have to be organised from the ground up to create the product.

What is evident to someone looking at Irish agriculture from the outside is how different its dairy sector is from others in Europe. It is very highly focused on grass utilisation and the use of supplementary concentrate feeds is very limited. It is also different from others that focus on grass-fed as it appears that Ireland is seeking to move to a system where minimal grass forages are harvested for use in a very short winter feeding where the cows are dry and no milk is produced. The objective being that all milk [or as much as feasibly possible] is produced off grazed grass. The ideal is to very closely match energy-from-grass requirements to seasonally available grass. To achieve this the focus is on tight calving at the start of the growing season to maximise the use of available grass. It is a system that appears to have its origins in the System1 (see footnote below) grass-based dairy-systems of New Zealand.

At this point it is interesting to have a look at what has been and is happening in New Zealand. There has been interesting work in NZ on classifying their different grazing systems (see footnote below). In essence they have devised a 1 to 5 system that describes the relative contributions of grazed grass and other feed. In system 1 the main source of feed is grazed grasses from the milking platform. For successive systems the amount of grazed grass declines.

Bruce Greig fromLincoln University in New Zealand presented a paper a couple of years ago on Changing NZ dairy farming systems that showed to what degree each systems was in use in the NZ dairy industry. The time frame approximated to the first decade of the 21st Century (2000-02 to 2009/10). System 1 declined from 41% to 10%, system 2 was fairly constant (31% to 32%), system 3 rose from to 17% to 36%, system 4 from 11% to 18% and system 5 from to 1% to 4%. Overall there has been a clear trend away from grass-only systems to using systems
that included a far greater proportion of brought in feeds, cereals and proteins.

Clearly there has been a significant change in New Zealand since the turn of the Millennium. Previously the system choice was heavily towards home-produced grass only (system 1) or home-produced grass with low feed ‘imports’ (2). The first two, low-input, grass-based systems accounted for 72% of production. Since then system 1 usage has fallen by three-quarters. System 2 usage has remained static but that is to be expected as many producers probably make progressive changes of systems rather than going direct from system1 to system5. The  figures do, however, show a major shift in emphasis within New Zealand away from System1.

One has read recently in the Irish press that average milk production costs per litre in NZ have been rising. This is not to be entirely unexpected as classical economic theory would expect that if milk production is profitable more resources will be dedicated to milk production. It is unlikely that the additional resources will be as cheap as those already employed. Yes, there are economy of scale options for individual units [NZ has seen continuing herd size expansion] but for an industry resource unit costs will inevitably rise with expansion. The obvious one is land and these are rising and a part of the reason for NZ milk cost rises. Simply, as land prices rise, will extensive grass-based, land-using systems remain the most economic option; especially if lower-land-cost-per-unit sources of metabolizable energy [and proteins] are available and substitutable [imported grains and palm kernel cake in NZ’s case]? How will this issue pan out in Ireland with current [and future] prices for buying and/or otherwise accessing?

A second rather relevant opinion was published on February 2nd 2014 by Keith Woodford, the Professor of Farm  Management and Agribusiness from Lincoln University. It was entitled Reworking our Dairy Systems. To quote: “The New Zealand dairy industry has always prided itself as being different. Whereas most other countries developed their dairy industries based on the housing of cows for much or all of the year, the New Zealand industry has always been pasture-based. The cows harvest the grass themselves, the cost of production has been
low, and the image was of “clean and green”. Prof. Woodford is arguing that, due to managing the environmental issues associated with autumn and winter grazing, cows need to be off-pasture for a significant period be it on “stand-off (non-roofed) pads or partly enclosed sheds”. And “stand-off pads bring their own problems. There needs to be collection of all effluent and, without a roof over the pad, the effluent pond needs to be at least double the normal size. So in most cases, it means that there have to be roofed sheds”… “there are now several hundred farms in New Zealand that already house the cows in winter”… [including] “the 2013 winner of the New Zealand Dairy Business of the Year”. Hence, times in NZ appear to be changing.

The 5 production systems  Source: http://www.dairynz.co.nz

The Five Production Systems are a way to group farm production systems by their usage of imported feed. As New Zealand pastoral farming is about profitably balancing feed supply and demand, five production systems have been described by DairyNZ primarily on the basis of when imported feed is fed to dry or lactating cows during the season and secondly by the
amount of imported feed and/or off farm grazing. The definitions do not include grazing or feed for young stock.

System 1 – All grass self-contained, all stock on the dairy platform. No feed is imported. No supplement fed to the herd except supplement harvested off the effectivemilking area and dry cows are not grazed off the effectivemilking area.

System 2 – Feed imported, either supplement or grazing off, fed to dry cows. Approx. 4 – 14% of total feed is imported.  Large variation in %as in high rainfall areas and cold climates such as Southland,most of the cows are wintered off.

System 3 – Feed imported to extend lactation (typically autumn feed) and for dry cows. Approximately 10-20% of total feed is imported. Westland – feed to extend lactationmay be imported in spring rather than autumn.

System 4 – Feed imported and used at both ends of lactation and for dry cows. Approximately 20 – 30% of total feed is imported onto the farm.

System 5 – Imported feed used all year, throughout lactation and for dry cows. Approximately 25 – 40% (but can be up to  55%) of total feed is imported.

*Note: Farms feeding 1-2kg ofmeal or grain per cow per day for most of the season will best fit in System3

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The value of so-called ‘quality’ assurance

At some point in the last 25 years or so, quality assurance systems became all the rage. Some private-sector schemes like organic and Conservation Grade (in the UK) have been around for even longer although their focus is on giving the customer reassurance about the ecological impact of production. When it comes to quality food assurance schemes the original was the appellation d’origine controlee (AOC) system from France. As to generic ‘quality assurance’ schemes, they probably have their roots in the food crises of the mid-1980s and BSE and the enactment of food safety legislation [as for example the Food Safety Act of 1990 in the UK] that required retailers to show that they had shown due diligence in monitoring their supply chains. The rush to create and implement further Quality Assurance schemes appears to still be gaining momentum after the recent horsemeat scandals.

One immediate point to make with respect to Quality Assurance schemes is to question the use of a term that appears to be borrowed from the industrial factory environment [where product quality audits are made at various points within an assembly procedure]. To what degree do the quality assurance schemes used in the agri-food sector actually assure quality? Is the answer, ‘not at all’? Marks and Spencer in the UK uses the term ‘Farm Assurance’ and that is a more realistic title. Another that would better describe what these schemes are all about is ‘Supply-Chain Assurance’ as that is essentially what they are. They are about providing entities within the supply-chain assurance that those upstream have operated to a specific set of rules.

Given their prevalence nowadays [it is becoming a necessity to be quality assured] it is becoming confusing for the final retail consumer to know what is what. And when all the product offerings are quality assured, just how much difference do they make to the consumer purchase decision or the price they are willing to pay? Demanding of suppliers that they are quality assured is becoming a necessity for those in the retail chains, but is it really about giving the final consumer assurance about the quality of what they are buying or is it more about those in the supply-chain ensuring that they have done their due diligence? ‘Quality’ Assurance schemes have added costs to the supply-chain but to what degree has the final retail consumer or the farmer at the other end of the supply-chain really benefited from them?

Ireland has put significant resources into the creation of a number of quality assurance schemes. Their creators also seem to place significant faith in their ability to advance the cause of Irish products within the market place. Is this faith well placed or has the prevalence of other such schemes amongst competing suppliers already begun to negate any such advantage? That is likely to be the case in Ireland’s main beef market where local-to-the-market producers have also been adopting a variety of similar schemes. They also have the advantage of being local producers in a world where being local may actually outweigh being foreign and quality assured. In addition, UK producers have been far faster at acquiring protected origin status for their products (i.e. ‘Welsh’, ‘Scotch’ and ‘West Country’ Lamb and Beef all have EU Protected Geographical Indication status) than their Irish counterparts. These are in addition to being within various independent and retailer-driven quality [or farm] assurance schemes.

Is there in fact a harsh reality concerning the quality assurance schemes. Are they in fact schemes that guarantee that farmers are following the rules although they are just using good husbandry and animal welfare practices? Are they actually doing anything that they would not normally be doing? Are they doing anything that could be considered to be enhancing the quality of the product in terms of tangible consumer characteristics like, with beef, improved flavour or texture? If the answer is no, do the schemes provide any mechanism of improving the returns to the farmer in exchange for the time and effort and costs associated with being quality assured? The answer is probably no. The reality is that quality assurance has become a baseline market entry ‘ticket’ [as the Irish beef farmer is now finding out] that is a must have for a farmer but which thereon provides little tangible reward.

A message for Irish agriculture from the music industry.

We are often being told to innovate to create new processed products and to become more efficient on farm, but where does this strategy lead? We have long since known of the treadmill of technology in agriculture; we run faster and faster but to what avail? Is it time to get off?

I have been around agriculture long enough to be able to look back and ask whether all the advances in agricultural and food technology have led to a better quality of life for farming communities. Yes, the growing urban communities have been fed and at a cost that has allowed them to spend less on food and more on property, on entertainment and on all kind of consumer consumables. But I find myself asking whether we have not been indulging ourselves in the greatest experiment in human history; that of how we cheaply feed the hundreds of millions whose lives have become totally reliant on a technology-focused food industry.

I can understand how Ireland’s agricultural industry became to be seen of minor importance within the Celtic Tiger. It was not then about creating employment and ‘low-grade’ economic activity within the rural regions; that was for those with less dynamic, less modern economies. Now times have changed. From sunset to sunrise industry in a handful of years. But what of the legacy of those years? It is a legacy of taking the raw materials from the farm and processing them in a highly technical, capital intensive, labour efficient, centralized fashion that shows little concern to the welfare of rural communities. True, in some ways the processing industry created during the ‘boom’ is highly successful, but is it an agri-food model that has led to sustainable farm businesses? Or is it a model built upon weak and now crumbling foundations?

Is it time to ask if this model has run its course? Does it have a time-defined limit on its future?

Is there a problem in that as it becomes more ‘advanced’ it has become less tied to a specific raw material supply base? Is it so dependent on Irish-farm produced raw materials that it can afford to pay a premium for Irish raw materials? Or is its ability to turn a sow’s ear into a silk purse [as it has successfully done with whey] mean that it needs to find the lowest cost supply so as to enable it to compete on global markets?. Is it a race to the bottom when it comes to supplying raw materials to such a technologically-advancing processing industry? Is this why we constantly hear the cry to consolidate farming and for farmers to become ever more ‘efficient’?

We do not seem to stop to ask whether this is the best solution for the Irish farming industry. It just seems to be accepted that it is all about accepting what is best for the processors.

If one starts from the premise that the Irish agri-food sector can only be truly sustainable by being economically viable within the natural and ownership constraints placed upon it, does one need to rethink the whole innovation / invest in ‘modern’ technology approach? Is it really appropriate to adopt an agri-food strategy that seems to want to start from somewhere else? A somewhere else that does not have a fragmented, immobile land base and small family farming structure. Is it right to adopt an agri-food strategy that asks farmers to accept a policy that requires most of them to exit the industry? Or should we look for solutions in another direction.

Having spent much of the last year observing and assessing the Irish farming and food industry, my deduction is that there are some deeply embedded characteristics that one has to work with. I find that I have to ask if characteristics are really well suited to Ireland being a low-cost producer of raw materials to an agri-food processing industry focused on what can be best described as ‘premiumized’ commodities that are focused on global markets? I, and I suspect many within the farming industry, would say not. Instead, should we develop an agri-food strategy that builds upon the strengths of Irish farmers as opposed to eradicating them?

But why mention the music industry? Well I was listening to some tracks that back 30-plus years or so ago we would have expected to disappear into the mists of time. But no, it is still with us. Looking back, did we not reach a peak in the 1960s and 1970s in the evolution of a particular genre of music? Sure the music industry has not stood still since, but how many of us would have predicted that the stalwarts of those days would have been so with us today?

And to illustrate my point a video of a definitive song of the 1960’s but recorded in 2006 Yes its presentation has evolved but to many of us it is still a product with am unquestionable heritage.

So I am asking myself just how great is the desire for ‘heritage’ products in the food sector? And just how great is the desire for the simpler, less processed food products of yesteryear? Should we be innovating by looking backwards instead of interpolating forwards the buying trends for ‘technological’ food products. It is often wise to think outside the box when making predictions as it is not always about using what I term ‘straight-line economics’. There lies the way to buy into an about-to-go bust property boom; although for some that is still an unlearnt lesson.

For a small [being honest in a global context] producer like Ireland, is not the future about creating products that meet the demands of that part of the population that desires traditional, ‘old-fashioned’, less-processed but still premium products? And if so, are those products not products that are best created via the adoption of ‘new’ quality-orientated farming systems and more ‘artisan’ and smaller-scale processing? They will not be the same products as offered many years ago; they will in various ways be brought up to date. But they will be products where the value is created on-farm or within the local communities; and that is what is required to create sustainable farming and rural communities in Ireland.

How to create quality beef Irish-style

How to create quality beef Irish-style

or otherwise known as the:

Lowest Common Denominator Scheme

1. you take any old breed of bovine
2. you confirm that it is of Irish origin
3. you write ‘Quality’ on its forehead
4. you stamp a Shamrock on its rump

and, hey presto

5. it is ‘quality-approved’ Irish beef

and the result of the above approach

1. the Q in QA is it not about quality
2. it subverts the very term ‘quality’
3. the consumer becomes confused
4. the farmer wants a ‘Q’A premium
5. there is no market-‘quality’ extra
6. it undermines trust and integrity

Is the farm or product quality assured?

1. the farm is being quality assured
2. the product quality is not assured

so do not try to tell the consumer it is

otherwise you end up with:

1. quality-assured commodity beef

and

2. implementing the L.C.D. Scheme

when your beef farmers need:

1. to sell a premium-quality product
2. with clarified quality demarcation
3. to consumers who demand quality
4. and want genuine quality products
5. where they understand the origins
6. with husbandry linked to product

and in a fair and equitable way

1. to receive premium-quality prices

as a reward for

2. their capital and investments and
3. their time, skills and management

and if this does not happen:

Irish beef farming is not sustainable