HEADING INTO A DECADE OF MAJOR CHANGE?

So Brexit has happened and as the Leavers will tell us, “live with it”! The Remainers may talk of a second referendum but for those in the farming and food industries, we need to plan for Brexit. And as I have said, it has major implication for Irish farming. It is probably the most significant event for rural Ireland since the Emergency.

As a consequence of Brexit Ireland may be facing freer global trade faster than the anti-TTIP / Mercosur campaigners could have envisaged a month ago. Just how serious are the consequences of Ireland’s main export destination being opened up to New Zealand, Australia, Argentina and Brazil. And we may even see some surprises in that market like Russia exporting GMO-free products to the same premium-paying customers that Ireland needs to target. An independent Scotland may also be in the mix; and one can assume that the Scots will focus on the top of the English market.

Ireland sees itself as a producer of World-class food. At the moment its farmers are World-class producer of raw materials for others. This means lower prices at the farm gate. For the farmer-owned co-operatives this means lower prices at the co-op’s gate. It is a system that works well for the downstream supply-chain but not the farmer. Is it sustainable for the farmer into the future? Was it ever a sustainable model when fully-costed? Or is it one that has to be supported by the CAP/taxpayer and off-farm incomes? Low prices simply do not marry up with small family farms.

Ireland needs to position itself at the premium end of the market as its small-scale farms need premium prices to be financially sustainable. It is a reality that it has failed to grasp, not least due to illusions over its national competitiveness. A viewpoint that means it has failed to grasp the need to become product and not commodity focused and, critically, to develop a high market profile for Irish produce. If Brexit happens, it is the latter that could be apocalyptic for Irish farming and, by default, rural Ireland. Food Harvest 2020 and its 2025 successor’s expansion plans for feeding nine billion people in 2050 will then be seen for what they were; short-term, Celtic-Tiger-boom thinking that encouraged investment into a cyclical downturn [or is it a return to reality?] that may now get a whole lot worse courtesy of a Brexit.

Brexit is nevertheless just one potential change that is on the horizon. It will have major impacts but there are many other issues that may be a coming over the horizon together. They are diverse but all could lead to the next decade being one of great change for farming. Many will pose further threats to an Irish farming industry that is locked into commodity supply chains and a commodity-producing mentality [the single greatest threat to the future of Irish family farming]. If one takes a business-as-usual approach to the coming years, the future is unlikely to be rosy. However, if one recognizes what lies ahead and refocuses to meet the demands of a changing market place, Irish family farming could be well placed to take advantage of change.

The following are a few thoughts on what may be the next decade’s ‘breaking news’.

FOOD AND NUTRITION

The author is not a nutritionist so the reader may wish to take the following with a pinch of salt. If, nonetheless, one believes that there has to be clearer link between the consumer and the farmer, an awareness of food trends is needed and the nutrition debate has to be followed.

Is there a problem arising from the long-time delays between what we eat and the consequences? If one reads, for example, The Big Fat Surprise by Nina Teicholz one could be forgiven for thinking that there is. One can see the emergence of a debate around long-held views about our diet. One can also see that we will not get any definitive answers for a long-time. In terms of advice, changes may occur but they will most likely be gradual rather than radical.

The question for a producer of foods for premium markets has to be where their market segment is going. Are their consumers more aware of issues like nutrition? Are they more likely to make independent choices [ that they have the wherewithal to support]? The benefits of organic may still be debated but does that stop those who can afford it from buying it? Indeed, if the price differential did not exist between conventional and organic, just where would organic consumption levels be?

Some might say that the science questions the benefits of eating organic but ultimately what the consumer wants the consumer gets; assuming that they can afford it. And the ‘mavericks’ amongst food consumers often seem to be willing to to fund their own choices? Also, is the rise of social media increasing awareness of alternative ideas and, hence, the choices that are being made by some. All of this makes predicting where food trends are going that much more difficult.

Debates to follow include the sugar / ‘bad’ [highly refined] carbohydrates one. Some may suggest that the obesity / diabetes type 2 crisis is rooted in the over consumption of this food group. It leads onto an interesting issue of where one sources their calories from. Others are now suggesting the reverse of the low-fat / high carbohydrate model is the way to go. Just what are the implications for food producers if more people elect to try a higher-fat / lower-carbohydrate diet. As with the rise of gluten-free diets, meeting these new consumer demands is another challenge for the food and farming industries. For a grass-to-protein/fats, farming industry it may create opportunities.

A second debate is the good / bad fat one. Are traditional animal fats like butter becoming ‘rehabilitated’. Consumption patterns may support this view. A move to a higher-fat diet may benefit beef, butter and hard cheese producers. Then there is the Omega 3 versus Omega 6 question and whether mainly/totally grass-fed dairy and meat products are the healthier option.

Another debate is highly-processed versus low-processed foods. Is low-processed [often traditional, artisan and ‘natural] the way to go? Is it a food trend that correlates with to premium products? Will this provide opportunities for Irish farmers to produce natural, ‘simple’, traditional foods and thus get closer to one particular consumer?

Clearly there is a demographic that is happy with highly-processed, ‘innovative’ foods that have technological and scientific origins and this cannot be ignored in a country that has a food-tech capability. How much the food-tech sector trickles benefit through to the farming community is another matter, but one cannot under-play ‘agri-foods’ role in Ireland.

As an aside, one would suggest that a clear demarcation between the ‘agri-food’ and farming sectors is made. It would help clarify confusion over, for example, imported raw materials for food processing. A case in point is the use of palm oil as the fat in baby nutrition products. Infant formula is often heralded as an Irish success story but does it yield returns to farmers? It would be better if farmers understood the nature of the agri-food sector and the farming press and others stopped hood-winking them about the benefits they gain from supplying raw materials to a sector that could source the same ingredients via international trade [thus helping to peg local Irish milk prices to the wider ‘global’ dairy market]. The farming community should then aim to shift towards providing for supply-chains that can provide the farmer with a better income.

The next few years for nutrition is going to be fascinating. Will there be a revolution, gradual change or a verification of what has been preached for decades? For instance, will the food pyramid with its emphasis on carbohydrates survive? Or will we move to teachings about balancing blood sugar levels? If it is the latter it will have major implications; not least for our sourcing of calories, the combination of foods we eat and understanding of, for example, the glycemic index. These changes will have consequences for farmers and food producers and interpreting them will be a challenge; not least in the context of seeing a change and translating it into an opportunity for Irish farmers.

CONSUMER DEMANDS

The Irish farming industry is supply-driven rather than market led. In part this is due to its historical distance from its export markets. It is still inherent in its commodity emphasis and its concentration on cost efficiency as opposed to price enhancement; something that is embedded by a disconnect between its two national research/advisory and marketing agencies.

Market-led means understanding what your targeted consumer wants and producing a product that fulfils that demand. It is not about billions of people want to eat so just produce food [when you hear talk of feeding the nine billion by 2050 you can be pretty sure that not much sophisticated marketing is happening]. In comparison, the feeding of the premium-price-paying consumer requires sophistication and a willingness to understand the multitude of factors that are driving their choice.

So what are ‘produced-on-the-farm’ product consumers looking for in their products?

ANIMAL WELFARE is clearly a major issue. It is interesting to see the promotion of ‘free-range’ cows in the UK. Will it catch on? If free-range eggs now account for more than 50% of eggs sold in the UK, maybe there is a lot of mileage in free-range yet. One tends to talk dairy and beef in Ireland, but will this impact upon demand trends for poultry and pigs? Should Ireland be looking to develop its pig and poultry farms to meet the ‘ethical’ demands of consumers and, if so, does this provide tillage farmers with an opportunity to supply eco-friendly grains to a premiumized livestock sector?

CLIMATE FRIENDLY [as well as eco-friendly] will become an important product characteristic for some. Here we are talking about enhancing consumer-facing credentials [which are not to be confused with business-to-business accreditation of sustainable supply-chains].

In recent years much has been made of emissions from cattle farming and it is a major issue in Ireland. It is, however, a debate that needs to move on from emissions per se to net emissions. It may be the case that emissions-reduction concepts have not yet caught up with the idea that some livestock systems may be a valuable [possibly invaluable] tool in returning carbon from whence it came, the soil. We need to ensure that we are not about to throw the baby out with the bath water in our haste to identify ways to reduce emissions. This is not to provide an ‘opt-out’ for Ireland, it is about ensuring that the systems used for livestock production are the least damaging [or enhancing] ones possible. The merits of the systems then want placing in front of the food consumer.

The term CARBON SEQUESTRATION has become of significant interest to the author as he has researched just how to incorporate carbon emissions into farm management planning. The latter should be straight forward; just determine the emissions from different production choices and then work out how to maximize farm income within the context of an emissions constraint. Apparently the information regarding carbon emissions from agricultural activities is not yet that sophisticated. It begs the question of how much carbon emissions related policy is being done on the hoof? At present, are we being asked to make serious policy decisions on incomplete information or, worse, information that is becoming dated and superseded?

A number of people in the farming industry are now talking about net emissions and saying that we are quantifying emissions but not sequestration. Are there major differences between farming systems in terms of net emissions and are they being over-looked in favour of the more headline-grabbing emission figures of recent years? The devil is in the detail but why let that get in the way?

This is not about making excuses for the livestock industry; it is about taking a holistic view of the situation. And not least because there is a school of thought that is saying that livestock and some farming/grassland systems can be net sequesters of carbon and that by taking a blanket-thinking approach to carbon and livestock systems we may be ignoring vital knowledge. If a large proportion of global warming can be traced to carbon released by crop production, maybe we need to be looking more closely at how to develop farming systems that sequester carbon into the soil. Grassland management and ruminants may be key to doing so.

Achieving carbon neutral foods [or better] is likely to be a fast evolving subject. In the context of global climate change agreements, it may also move up the agenda and into the realms of consumer awareness. If so, and given Ireland’s emphasis on pasture-based farming, Irish foods need to be to the forefront in terms of the farming systems used and how the ensuing products are presented.

SOIL MANAGEMENT has been something of a Cinderella subject over the years. Will it now become something of a trendy issue? France is indeed setting about increasing the carbon stored in its soils by 0.4% per year. Will we all begin to ask about the health of soils and those billions of organisms that lie within? In a decade’s time are we going to see food being promoted on the basis of how soil, the most fundamental of resources, is being managed? Do not rule it out.

On a related note, will ARTIFICIAL NITROGEN USAGE become an issue of greater consumer interest? Will using less be a broader than regulatory issue. One cannot expect to see a seismic switch to buying organic due to market price differentials but do not be surprised if farming systems that are less reliant on artificial nitrogen come to the fore. Irish farming is dependent on imported nitrogen fertilisers; will this have to change? Will there be an increasing emphasis on the use of clovers? Will this extend to using more multi-species swards? Are we going to see the rise of the [nitrogen-fixing] legume? Hence, will the term ‘diversity’ [not just biodiversity] play a greater role in farming decisions and in farm enterprise diversity? Will the premium-paying consumer be interested in buying into farming systems where diverse objectives are a highly visible priority?

And one has not even touched on the question of nitrates and water quality. Are these all issues that need to be considered not only in terms of regulation but also within product promotion? At every turn there is what could be considered a constraint; or are they opportunities?

One can already hear the ‘technologists’ screaming ‘foul’. Is one suggesting that it is about EMPLOYING LESS TECHNOLOGY? In a fashion one is but it is really more about replacing one technology with another. Technologies reach their use-by date and others replace them. The new ones may look ‘retro’ but they will evolve and they will certainly need as much management as current systems. It is always about change and that means that some ‘modern’ approaches become superseded. And ultimately the choice lies with the consumer not the provider.

There are many issues ahead of us and we do not have the answers to many. It may mean creating new techniques and technologies and for some they will be a backwardo step, to discard the modern for what may be viewed as more traditional. Ultimately one has to recognize that the consumer is king and it is the consumer who will decide what is acceptable or not. And the further up the value ladder one goes, the more aware and demanding that consumer will become.

The choice for Ireland, a small country ‘designed’ for niche market food production, is whether it is going to go with the flow and produce for an issues-aware, premium-paying customer or is it going to go down the techno-food route even though that may only deliver for its food industry. It is the route it is taking at present and one could argue that farm incomes reflect the choice.

It is interesting that a slogan of the Brexit Leave campaign was “Take back control”. Are we now at that juncture for the Irish farming industry. Does its survival depend on taking back some control beyond the farm gate? Does it need to have a greater say in how its routes to market are operated [and owned]? Equally, does it also have to take back control when it comes back to the resources it uses and reducing its dependence on technologies owned by others? If so, rethinking is needed.

And when it comes to issues like GMOs, the debate has a way to run. Nonetheless, the author would short-circuit this debate by asking the simple question; are they technologies that your consumer wants to see employed in the production of their food? If the answer is no, that is the decision made. Of course this point will be rejected by many who say that the consumer should trust the science and they should actually not be allowed to halt the adoption of certain food-producing technologies. It is fair to say that many consumers do not have an issue with some technologies [or is it a case that they cannot afford to?] but are they the target consumers for an improving-farm-incomes-focused Irish farming industry? Consumers have to be listened to or they will take their custom elsewhere. Simply they prefer to make their own judgements and they may not be made following due consideration for the science; that is just the nature of consumers.

I am not sure if the term ‘FARMER WELFARE’ is one that would ring well with the consumer but given the on-going farm income crisis maybe it should? That said, the concept of ‘Fair Trade’ is now well established and it is not an issue that should be over-looked, not least when products actually have their roots down on the family farm. It is a characteristic that is not well presented within Ireland’s food products and it needs to be. Is, however, promoting the family-farm origins somewhat inhibited by the presence of a processing sector that is, by and large, industrial in scale?

LOCALIZATION is something that I have written about before. It is a difficult band-wagon to climb aboard when you are an export-orientated country. The idea of being ‘everybody’s local’ is one to consider. It is not just about being local; it is about presenting a range of characteristics that illustrate that the product is what you would be able to buy locally even if you cannot. In this, Ireland’s strong international image is a big plus. There is also no reason to believe that Ireland’s Diaspora would not help promote the charms of rural Ireland that ‘local’ would encapsulate. There is an image of Ireland and its food products that is still poorly presented and, sadly to say so, very poorly presented in its vital English market. That needs to change. And maybe a start would be to identify what premium-paying English consumers are looking for; it may just be that its near neighbour is better positioned to provide it than it currently realizes.

TRACEABILITY AND CREATING THE COMPLETE PRODUCT is a necessity when meeting the requirements of demanding consumer. To begin with traceability has to go beyond the broad, all-inclusive nature of national quality-assurance schemes. They can set a base line but given the large size of the hoops they put in place [so as to be near all-inclusive] they become easily mimicked. They confer market access and as the first-mover advantage wains; little or no premium. Packaging and presenting the unique selling points of a product is somewhat more challenging, and it needs to be. If it is not, why should a consumer pay a premium for the product? The creation of complete, premium products is something that Ireland is particularly poor at and especially so, for an island that sees itself as a food island with a glowing international reputation for its food.

BREXIT MEANS FAR MORE EXPOSURE TO INTERNATIONAL MARKETS

One cannot doubt that Irish farming will be more exposed to broader international markets post Brexit. It is something that will rapidly make ‘feeding the growing global population’ look like the hoary old chestnut that is. For a country of Ireland’s size, playing a role in feeding the World’s population is not that relevant. Its scale and farming structure means that it needs to focus on consumers who can pay a price that makes Irish farming economically sustainable. It is a shift in mind-set that is more important now, post-Brexit, than it was before. And it was important then.

To this end, one cannot under-estimate the importance of understanding your own production and cost base [in absolute terms and compared to market competitors]. It needs to be fully appreciated going forwards, not least because marketing decisions need to be based on an understanding of what is technically AND financially feasible. One also cannot underestimate just how crucial the coming year or so will be to Irish farming and to rural Ireland. Does farming continue to focus on producing low-cost commodities with an almost inevitability that farmers will be forced out of the industry to make way for a few? Or does it decide to embrace change AND the consumer.

Brexit may well reduce the CAP pot and, consequentially, reduce farm support payments. Brexit and a greater exposure to global markets will most likely bring a further chill wind. Is it realistic to assume that Irish farmers, who are already facing pan-sector income crises, will be able to economize their way out of trouble and into greener pastures? If the answer is ‘probably not’, just what is the solution? Does it lie in seeking to get greater rewards from the market place?

An analogy is to look at local food production. In the past the countryside was dotted with small creameries but they were replaced by large-scale centralized processing. Farming will follow suit and farmers will exit the industry due to unfettered economic forces. That may be acceptable to some but it will not be to others. The question is whether the latter are going to demand that this future course is changed. If they do not, rural Ireland will not be as before. For those who wish to see a thriving rural Ireland, it is a time for a long-overdue change to the financial outcomes from farming and that means concentrating on farm-gate price premiumization. And that is a whole new ball game, but then again what else is Brexit itself but a whole new ball game?

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