Monthly Archives: October 2017

IT IS TIME TO RESET THE ENVIRONMENTAL AGENDA

This post first appeared online at http://www.thatsfarming.com on the 6th October 2017

In recent days another report emerged about methane emissions from livestock. Cue, a vocal response from the environmental lobby. Before that a more specific report concerning the declining state of Irish rivers. Cue, a vocal response from the environmental lobby. Then we had another about the impact of herbicides used to control rushes on drinking water quality…

If you a farmer none of this makes great reading or listening. If like so many, you also consider yourself an environmentally-aware farmer, it is worse. Some may portray farmers in general as climate-change deniers, and there may be a few around, but they are probably far from a majority. What is, however, more common place is worried farmers who daily read and hear about others demanding that they change their ways.

Farmers are being told that they are in the wrong but not how they can change for the better. They are also aware that change means extra cost and additional costs do not bare well on an often too fragile bottom line. Very, very few are the profit-driven agribusinesses that some like to portray, they are family farms where the aim is to provide a decent living for the household, nothing more.

Whilst following and communicating with those from the ‘green’ lobby, I also follow many environmentally aware farmers. There are those who recognize the need for change and are actively working out ways to do it. They are changing their farming systems and, often, creating products around those changes and finding ways to deliver the complete package to the aware consumer. It is happening, but it is happening outside the mainstream; and therein lies the problem.

We have reached the point where we need to move on from highlighting the problems, that is the easy part, to identifying solutions and working out how to implement them. We need clear cut planning. And to start with we must clarify what the objectives are.

The environmental lobby are highlighting the big picture; that we need to reduce GHG emissions, albeit too often in the context of gross and not net emissions; largely because the accounting and science has not yet caught up with the reality of carbon cycles and sequestration. To the list we can add; cleaning up our rivers, ditto our water supplies, reversing the dramatic decline in farmland biodiversity and, especially, the vital to our food-security, pollinators.  We now need the detailed targets to aim for.

What should those targets encompass. How about, just for starters:

lower nitrogen usage to reduce emissions, run-off and fossil-fuel use [in fertilizer production]

raise sward diversity to maintain productivity with less N and to enhance grassland biodiversity

improve the farmland environment to help reinstate flora and fauna and, especially, pollinators

create income-effective upland farming systems that also effectively manage water catchments

reduce animal farming’s dependence on liquid-manure housing systems and all that they entail

develop on-farm energy generation and storage solutions so farms can be energy independent

find husbandry-based methods to support solutions where efficacy is threatened by resistance

minimize the usage of antibiotics in farming to preserve their availability in human health care

Do not let anyone suggest that dealing with the abundance of problems facing our food production systems, and hence, our farmers is not hugely complex. It is certainly not fully appreciated by those who demand change. Once we have identified and agreed where we all want to go, there is also the equally complicated issue of how to provide transitionary support to the farming sector to encourage and facilitate the necessary change. Objectives, policies and mechanisms are all needed.

And last, but not least, we must work out how to deliver all the above whilst enhancing the future of those who produce our food and manage our landscapes and our rural communities.

This is no small undertaking and it can only be achieved by the farming and food and ‘green’ communities getting onto the same page. We need to have a farming/food/environmental/rural policy for Ireland that begins with an agreed set of objectives. Frankly, what we have at present does not fit the bill. We must start again but that is going to take time, energy and cost. We must stop dissipating our collective resources on fighting with each other, it is a waste. They need to be channelled into finding a way forwards. The unacceptable alternative is to continue to bicker and to regress, remorselessly.

 

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SEPARATING THE MILK FROM RURAL EMPLOYMENT

This post first appeared online at http://www.thatsfarming.com on the 15th September 2017

Last week saw the opening of a new milk dryer; it would provide economies of scale and strengthen the capacity of the co-operative to supply ingredients. What caught my eye, however, was the celebration of the 80-odd new jobs that it would create. Is it a reason to celebrate?

Typically, a milk dryer needs a staff of about fifty people. As they require the centralization of hundreds of millions of litres of milk, they inevitably create a few more jobs in the haulage sector. The presence of the new dryer should also enhance the economic future of the milk suppliers.

This is not the first new dryer in Ireland to be commissioned in the immediate past. Indeed, much of Ireland’s post-quota, expansion-milk has been dried. We should now begin to see the success of these investments reflected in the farm-gate milk price.

The milk processors ability to deliver a farm-gate price that can sustain its suppliers will depend on its product mix. How much will be sold as finished products and how much will be ingredients for others to convert into consumer-facing, branded products?

Infant formula is so often cited as a flagship product for the Irish dairy industry. Is it really such or is it a formulated product manufactured in Ireland that needs ingredients from multiple countries? Finally, from judging by recent press articles, it is at last being realized that its production, sales and branding is controlled by a handful of multi-nationals. The co-operatives owned by Irish farmers produce some of the ingredients but the profits go elsewhere in the supply chain.

Just how much does the major growth in infant formula exports to China benefit farmers? If one scratches the surface, one would probably find examples across a myriad of food businesses; the Irish dairy farmer does the heavy lifting whilst others take the cream from their milk.

Given the recent massive investment in expanding milk production and processing the additional milk, this is now the de facto position. What is done is done, the money is spent and dairy farmers and their co-operatives are committed to a course of action.

When dairy expansion was advocated, we were told that it would create employment. It does appear to be creating a demand for milkers, but few seem to want to provide their labour, at least at the salaries offered. In a functioning labour market, pay should now rise to bring labour into the sector. That of course assumes that a labour shortage creates a milk shortage and a milk price. That is not happening; thus, leaving the individual farmer to work harder to fill the shortfall. It is an inevitable consequence of the supply-driven rather than market led expansion model chosen.

With an emphasis on milk for milk powders Ireland has chosen to follow a New Zealand approach that has been effective for NZ during the Chinese-market expansion years. It was facilitated by NZ’s trade agreement with China.

To compare the prime numbers in NZ’s South Island expansion regions of Canterbury and Southland with Ireland is a sobering exercise. At is simplest, the average herd size is around 800 cows in Canterbury and 600 Southland. That is around 8-10 times greater than Ireland. Labour productivity in the NZ regions is around 180 cows per person, probably about three times that in Ireland. Hence, beyond grass, where was the logic in entering the same commodity markets as New Zealand?

A novel key performance indicator to consider is the milk processed per person employed in processing. For Canterbury, it was 3,500,000 litres rising to 3,900,000 in Southland. From a rural employment perspective, milk dryers are not exactly great creators of rural jobs! In the European artisan sector, one could probably find jobs that require a fiftieth of a differentiated milk type. It will be the same in Ireland, 80-plus jobs are not a massive return for the milk processed or, for that matter, the investment made. If you are wanting to highlight job creation, don’t dry milk.

The rural population density in South Island is about a 1/10th of that in Ireland and in Southland a lot less than that so are milk-processing jobs vital sources of rural employment in NZ? One could argue that given the response to Ireland’s current need for milkers, there is full employment in rural Ireland but one suspects not. Maybe it is that dairy expansion is creating the wrong jobs?

Hence, should we have been focusing on creating rural jobs in milk processing rather than in the milking parlour? Should we have been focusing on value-added and higher-value as opposed to more milk for centralized and automated processing? Should we have been focusing on maximising the farm-gate value of milk, lowering the volume needed for viability, and thus reducing and not increasing the pressure on those doing the milking? The current situation suggests that we need a farming and processing system that needs less milkers, not more.

Rural Ireland needs jobs and its family farms need off-farm income and we need to take a long hard look at whether these should not actually be coming from milk and food processing. Maybe we will discover that they are no more attractive occupations than milking, but we should find out.

It is a radical suggestion given that local processing will mean different products and alterations to the milk supply side, but it is one that needs investigating. The alternative is just to accept that the future of Ireland family-owned dairy farms is entirely tied to the milk for milk powder strategy; an approach that will also not provide many wider benefits to the country’s rural communities.

FROM THE CONSUMER’S FORK TO THE FARM-GATE PRICE

This post first appeared online at http://www.thatsfarming.com on the 8th September 2017

If the consumer pays a premium price for the final product who gains? Where in the supply-chain is the value added? Is it attributable to using higher-quality raw materials and is the raw-material supplier properly rewarded? These questions are frequently asked by Irish farmers, their representatives and the farming press, albeit rarely explicitly so. But how often is a thorough investigation done to ensure that the farmer is properly rewarded?

Farmers believe that whilst they produce the best beef cattle around they do not get properly rewarded. Only this week, Irish butter, that is seen as best in class in Ireland, is selling at a lower price than others. Some are inferring that others are gaining at the farmers’ expense.

Farmers must, however, ask if the end consumer can identify the origins of the final product and do those origins premiumize the product? If they do, why is the added value not transmitted back down the supply-chain? Of course, no traceability of that value added means no farm-gate premium.

The grey area is with industry wide ‘marketing’ schemes. If everyone is certified as having a particular attribute nobody is visibly rewarded price wise in comparison to their neighbour. It is what happens with the quality assurance schemes; they are about market access for most if not quite all Irish produce and they support the broader competitive position. They do not confer a visible premium; something that is now understood, even if reluctantly so, by farmers.

A priority must be to develop products that add value to what is produced on farm and, hence, to premiumize the farm-gate price. Invariably, this means changing on-farm practices. The most obvious example is to operate a certified-as-organic farming system where the produce is identifiable and a premium farm-gate price paid.

The Angus and Hereford beef breed schemes provide another example. They offer a price premium for producing beef sired by breed-registered bulls. Doing so does mean some farming system change. Nonetheless, as the schemes certify sire-only beef, there is little to constrain supply volumes with the result that abundant supply can soon erode premiums. With no farmer control over the supply side within the scheme, the benefits of any retail premium may end up elsewhere.

Recently there has been the approval by the USDA of the Irish grass-fed beef label for use in the US market. It was needed given that a grass-fed definition was already in operation states-side. The parameters for Irish grass-fed beef include: the diet must be more than 80% from grass, the beef is traceable from farm to fork, it is from QA farms, minimum annual grazing period are adhered to, the cattle are raised on family farms and reared without the use of growth hormones. From an Irish beef sales-into-the-USA perspective, this is a significant step forward.

In the interests of transparency though it should be noted that A Greener World which certifies Grass-fed Beef in North America is demanding that the USDA requires labels to clearly specify that it is only 80% grass-fed as existing US labels demand 100% grass-fed and 100% outdoor raised.

From an Irish farming perspective, is the advent of the new Irish grass-fed beef label going to lead to a farm-gate premium for those who supply the beef? Or is the reality that so much Irish beef will qualify under the given criteria that there will, effectively, be no supply constraints and no need for processors to pay a premium? Was the label about selling more Irish beef per se, or was it about designing a designated-origin system from the ground up? Is it a scheme that farmers have to qualify for? Does it have transparent links from fork to farm and the mechanisms to transfer premium consumer-paid prices through to the farmer? The latter is what the Irish beef farmer needs.

Without doubt, Irish meat and milk does come from cattle and sheep that obtain most of their nutrition from grass. Glanbia Ingredients Ireland highlights this with its Truly Grass Fed™ label. Do their milk suppliers gain a premium from supplying the milk for the label or does it provide all suppliers with a higher price than they would otherwise get?

To quote from http://www.trulygrassfed.com: “Truly Grass Fed milk comes from 4,800 farms located in Ireland’s most fertile land. Each farm has an average of 80 cows on approximately 150 acres, which is only about one cow for every two acres. 
Now that’s what we call room to roam… Truly Grass Fed cows dine on a diet of at least 95% grass with a little added clover for nutrition”.

I recently asked if Ireland’s livestock industry should go GMO-free given the cost implications of sourcing and certification. If the farming industry makes such a choice one would expect that farmers would only do so knowing that it would reward them with a farm-gate price premium. It may, therefore, come as a surprise to know that GII is already on the ball and that it already has certified GMO-free status in place. Clearly some in Ireland do recognize the market opportunity that is GMO-free. Do their milk suppliers receive a farm-gate premium for being the foundations of a GMO-free supply chain?

To quote again from the same source: “A core element of the Truly Grass Fed™ offer is non-GMO and we’re now delighted to announce that the products offered under our Truly Grass Fed™ range have been verified by the Non-GMO Project… The Non-GMO Project is a US based non-profit organization committed to preserving and building sources of non-GMO products, educating consumers, and providing verified non-GMO choices. It is North America’s most trusted seal for GMO avoidance for consumers who are concerned about what’s in their food.”

Firstly, is there a separate milk collection system for such milk? Secondly, do milk suppliers have to jump through hoops to supply a scheme? As far as one can see from the website, it applies to all 4800 milk suppliers. Hence, if everyone is involved, everyone benefits from the premium generated by having GMO-free certification. In theory, this is a positive move that responds to a market evolution but will it deliver the full benefits of being GMO-free to the farmer? It is after all they who are operating the farming systems that are GMO-free as per the rules of the certifying body.

As laudable as these schemes are in raising the collective bar, and they show that some are fully aware of the market potential of fully portraying the Irish family farms and their mainly grass-based farming, further schemes must be developed whereby there is an enhanced link between the product’s market-place characteristics and the farm-gate price. Schemes need to be designed from the ground up and in such a way that they deliver a clear market-derived premium to the farmer via an enhanced farm-gate price. Their design must have farmer input and there must be significant farmer control of the schemes and the volumes approved by them. If it is the farmers actions taken on farm that add value, the rewards must go back to the farm. We are very good at talking about farm to fork, but for the farmer it is the reverse that really counts, it is about from fork to farm.