Farmers and the food chain

07.03.13 Farmers and the food chain discussion archive

Education, education, education – that was the key message arising from a discord between long supply chains and a lack of connection and understanding of consumers about the processes of food production chains. With more of an effort to buy British produce, the supermarkets will take note and respond accordingly.

Yet these supply chains needn’t be as long as they currently are, with too many middle men trying to muscle in and creating vagaries in transparency, and providing opportunities for the unscrupulous.

Re-establishing a power balance is important in terms of closer relationships and a more level playing field; a desire to work together in a better way, with Co-Ops cited as a perfect example of such approaches.

Yet there is still distrust about supermarket motives, with apologies seen as a PR response to appease shareholders and calm indignation, with trends in the longer-term still open to interpretation and change. The idea of supplying a big

supermarket should be enough of an incentive in itself but working with such large companies as suppliers, tied to sole contracts, was seen as too much of a risk for some.

Establishing a best practice system between producer/ supplier and retailer should apply to all produce and products, with this period within the chain seen as a good time for a review of business strategies and possible investment opportunities.

The discussion held on Thursday 28th February 2013 looked at the topic of “The Food Chain and Farmers” and generated a total of 633 tweets on the topic from 120 participants. These included farmers, agri-food businesses, rural advisors, land agents, lawyers, journalists, academics and NFU officeholders, as well as members of the general public.

Q1a. Were long, complicated supply chains a disaster waiting to happen? Does horse meat mark a sea change in supply chains?

• With a weak pound exports good so will Tesco pay enough to compensate or will they take production from other buyers
• Supply chains needn’t be as long, too many middle men trying to muscle in, had to be a matter of time couldn’t come sooner
• Too many stages in the supply chain with each one trying to make more/cut corners
• Long supply chains provide opportunities for the unscrupulous. They always will whatever the rules may be on traceability
• Consumers need to realise that you get what you pay for & several economy burgers for £1 can only be achieved off spec
• Don’t ever remember a supermarket running national newspaper ads saying ‘this is it, we’re changing.’ This is a watershed
• Yes, constant race to the bottom to provide cheap food. More middle men = more people trying to squeeze a profit out

Q1b Sainsburys announced a few days ago a commitment to buy more British, do you think others will follow suit?

• Don’t see how they can’t, as long as consumers make the effort to buy British and put pressure on
• Is that buy British born and bred? Or just imported and butchered in the UK?
• Consumer is king, if sales of British outperform imports then others will follow, if not then back to margin making
• Tesco hasn’t committed to British beef. The ad says “British and Irish beef” that have not changed and are not changing
• Apologies are a PR response to appease shareholders; management must be seen to take action. Long term will tell
• Retailers looking at what needs to happen in chains. Look at the power they have for positive change…when they want to!

Q2a  Will it affect local butchers if supermarkets stock more British meat, does it worry you?

• No. They are not competing for the same meat. Beef good enough for the butcher isn’t going to end up in Tesco Value burgers
• No. Selling direct from farmgate, as we do, creates transparency that cannot be matched by a supermarket supply chain
• Just bcos its British doesnt mean it will match the standards available from a butcher, consumer will still opt cheapest
• Provenance could be the key for local meat outlets

Q2b. Should we, or how should we, try and convince shoppers to Buy British from their local butcher or baker or farmers’ market?

• Open farm Sunday is a great tool to educate consumers where food comes from
• Yes! More people want to buy local food. We need to give them options. Supermarkets close down options!
• Plain and simply education. The consumer needs to know just where produce comes from
• YES we should and we could start with social media, promoting ourselves, what we sell and where it comes from
• Diff markets some will always shop in supermarkets other shops need to maintain point of difference and quality
• Yes – small outlets can set trend for the multiples + v imp customers maint choice while they still have it

Q3a. Tesco want to source all chicken from UK, but we are only 45% self sufficient. How do we react to that increased demand?

• Achieved by a sustainable increase over and agreed time period with tesco and suppliers. Only way for quality
• About time producers started writing the contracts then, protect your investment folks, they cannot be trusted
• Is Tescos chicken commitment about UK, or UK and Ireland? Big difference, either way lots big sheds will be needed and soon
• Need to support British farmers with a fair deal first that will allow on farm investment & reaction to demand
• I would not want to supply 100% of my produce to just one supermarket. Business suicide
• I’m a very happy Hereford beef supplier to Waitrose, no contract, no need, mutual trust is much more valuable
• Support poultry farmers with investment planning. Safe long term contracts will provide the security for expansion.

Q3b. Tesco announced two year contracts for UK farmers. Is this incentive enough for you to invest in increased production?

• I wouldn’t trust Tesco with a 20 year contract written in blood, offering good beef price now, no way
• The idea of supplying a big supermarket should be enough of an incentive but afraid of their t&c’s to supply them
• They will get farmers to invest – buy from them for a year or two and pull their pants down in the long run on price.
• Supermarkets are renowned for reducing their supplier numbers, so cautious expansion would be the order of the day

Q3c. Would two year contracts help to get Banks lending to Farms, to meet this new UK demand?

• The Hop industry was built on long term contracts, so it can work
• You know how it will go! Attractive initial price will tempt farms to invest and sign up then the price & terms will be squeezed
• The difficult bit is remaining market competitive. If contracts don’t allow for UK added costs greater risk
• Surely this is a prime time for farmers to be rewriting their business plans/strategies and looking for investment
• Watched Tesco CEOs speak; amazed when he said 2 year contracts. Venture capitalists like a quick return and work on 3..!
• If banks aren’t willing to lend while the industry is riding this wave of (albeit cautious) optimism then when will they!?
• Not sure lending a major barrier where expansion is viable, but would obviously help with assessing risk
• Banks are more interested in the rising value of farmland as security than the length of the contract
• There is no problem with lending to agri as long as business is viable. All additional positives help, but viability key

Q4a Why can’t the farmer be the first to have a cut of profit for his/her hard work and long term investment?

• I don’t see why a supermarket that makes enough profit has to crush British agriculture in the process
• That does happen to some degree, they’re called Co-ops! Q is why does UK not have a good history of Co-ops?
• Because the supermarkets have screwed up uk agri as well as uk high streets and taken every £ of profit
• Agree, farmers should see some early return on investment. Won’t happen with long supply chains – too many taking a cut!

Q4b. Is a min price linked to commodities possible? Or what other ideas do you have to make it fairer for the Farmer?

• Get trading standards off our backs onto theirs.
• Farmers are in business to make a living they are not a charity. How long can farmers make a loss? Co-ops, direct sales!
• Commodities market is so unstable though,plus no pledge from processors to buy british
• People need to realize that food is produced by the farmers & that is where they should get it from.

Q5a Do long Food Chains increase food waste? Sell by dates are effectively shortened, transport & handling issues?

• It must do! I believe how this horse/beef has traveled all over Europe, and they’ve certainly wasted it now
• Unfairness, cancelled orders + dodgy forecasting can all cause food waste. Better relations in the chain can all help with that
• It’s not about length of supply chain. Educate people to eat cuts of meat. Everything else will fall into place

Q5b Would shorter Food Chains be better for perishable products too, reducing waste?

• Don’t think length of chain increases waste. People need to ‘value’ the food they buy
• Any shorter foodchain will improve food wastage and lead to fresher goods for the consumer
• Common sense says shorter chains should reduce waste – in reality economies of scale and sale mean the opposite
• Perfectly good fruit and veg wasted on ridiculous grounds by supermarkets. Waste is a moral issue
• I was involved with local food hubs previously; waste a big problem-just cos it’s local doesn’t minimise waste

Q6a. For retailers to truly commit to Buy British should they be selling more Home Grown In-season fresh produce?

• Commitment to in season fresh and subsequent weather vagaries vital to make most of the whole crop
• Yes! Seasonality is important, surely it’ll be easier for British suppliers if the demand is for things they grow?
• Seasonal produce will last longer than consumers think. Many don’t realise some fresh fruit and veg can be stored for months
• Will consumers accept only buying in season produce? Retailers will supply what people want to buy
• That’s so out of touch with buying public it’s untrue
• I wonder if long food chains also add to the risks around Food Security. Losing touch with local producers devalues them

Q6b. Does this “new look” Food Chain policy apply to all produce, or just Meat, Poultry and Eggs? 

• Retailers only sell what consumers want to buy!
• It should but vital that farming looks at its side of the chain
• Worth adding the sustainable element in. 2012 proved reliable commodities can go short making new supply chains vital
• Best practice between producer/ supplier and retailer should apply to all produce and products

Q7 Will this latest commitment from supermarkets to create better partnerships rebalance the power between supermarket & farmer?

• I’m not sure it will rebalance it, but it’s certainly a step in the right direction if they stay truest their word
• It shouldn’t be about re-balance of power but a desire to work together in a better way
• Because of this commitment local farmers through local butcher shops are able to sell their produce directly to customers!
• Nope do not trust them ever, shareholders & profit margins is all they r about, integrity, traceability just buzzwords 4 them
• I’m sceptical I think it is just talk to get them off the hook with the public give it 6 months and it will be forgotten!
• Supermarket commitment is to keep customers, no evidence will give farmers fair deal, unless no alternative and customer pays
• Leopards and spots, caught at it, big time, lots of platitudes in short term, no trust in the long term
• Fundamental changes needed to make things better. Needs to start with educating consumer. Supermarkets will follow them.

Q8a What should supermarkets do to build better working relationships with their suppliers?

• Not abuse them
• Have heard that Sainsburys have good relationship w. suppliers & invest via grants etc, sounds like a good starting point
• Let us see their accounts and decide for ourselves if the price we are paid is fair! Same goes for milk processors!
• McDonalds don’t have a formal contract with their major burger supplier, their relationship is built on trust
• Employ more people with ag experience in supply chain roles!

Q8b. Realistically, what do you think will come out of the Horse Meat Scandal, short term & long term?

• Less greed and more honesty over many years before a true trusting relationship can be achieved
• Pay a min amount to producers to ensure they make a profit
• A boost for short supply chains, local butchers, grocers and farmers plus happy customers. BUT needs collective initiative!
• Short term backlash from consumers against highly processed food. Long term back to normal-more EDUCATION from a young age!
• Short term: indignation. Long term: no change.

Simon Haley, Reading Agricultural Consultants, and Alan Spedding, 12 March 2013