Saturday, October 20, 2012

Sustainability. Sounds green, woolly and warm but what does it really mean for the Irish food sector?

This week in the Irish Farmers Journal I wrote about what sustainability programmes can yield to food producers. Sustainability has been a buzz word bandied around liberally in the past decade. Unfortunately it has also been frequently abused by many food retailers and manufacturers.

More recently the term has gained renewed focus as commodity prices move sharply and continuously upwards. The scramble for land in developing countries to feed our Western appetites has become a contentious issue. Here in Ireland our chief food and drink marketing agency Bord Bia has put a sustainability programme into place. In the following analysis I spoke to farmers, Bord Bia and outside voices on what issues are involved. Of huge importance to farmers is looking at the costs of more form filling against the benefits that may come in the door in terms of farm income.
So what are those benefits? Is sustainability just a word for lovers of open-toed sandals? Or is it a way of farming in Ireland that could yield us huge benefits in the future.

Greening the Shamrock; where’s the pound, shilling and pence?
Irish Farmers Journal Suzanne Campbell, 18th October 2012

Bord Bia’s Origin Green scheme had its “soft launch” earlier this summer; promoting sustainability as something far from green and woolly but as a hard business strategy for Irish food exports. As Ireland’s clean food image is already a seller, what does ticking more boxes on waste and emissions mean for Irish farmers? Is greening the shamrock a strategy that works for big food, or can tracking sustainability create rewards that will filter down to Irish farm incomes?

Sustainability is safety, and Ireland’s track record on extensive production could be worth more than we bargained for in a resource-strapped world under pressure to meet demand for food. With a population of nine billion the global marketplace is a huge opportunity for Irish exports. But it’s also placing pressure on basic but limited resources like water and land.
The new scramble for Africa is about land for growing food, and supplying Western diets from developing countries creates complex issues. Ethiopia which farms baby corn and mange tout for the UK and Ireland has suffered renewed hunger this summer after drought. According to former UN Secretary General Kofi Annan, hedge funds and other speculators bought African farmland the size of France (over 210,000 square miles) in 2009. He attacked the growing practice of “land grabbing” by which countries are buying or leasing land in other nations to increase their own food security.

Food companies cannot afford to be labelled as unethical in terms of where their food is produced and they also need to make sure that the bottom won’t fall out of supply chains. This is where Ireland steps up to the plate; we’ve plenty of rain, good grass and we’ve just began tracking exactly what’s going in and out of the system.

In May of last year Bord Bia began auditing use of water, energy, waste levels, animal feed and production practices on Irish farms. Beginning with farmers in their Beef Quality Assurance Scheme, so far 30,000 members or 94% of QA producers have participating in the sustainability survey; the first national assessment of environmental performance of farms worldwide.
One of the farmers involved in the auditing is Richard Hogge who farms sheep and sucklers in Stonyford County Kilkenny. He views the scheme as worth getting involved in, despite the additional workload. “There’s a fair bit of trust and honesty on the farmer’s part as you’re putting in all your details and costings, so I had to gather all that. Then it’s processed at the Bord Bia end and I get a chart coming back to me outlining how my farm is performing on the different elements.”
For Richard there were obvious rewards in seeing how profitability could be improved. As he has 350 ewes on the farm and 25 sucklers, it was clear from the feedback that his grass could be better utilised by cattle but it didn’t suit his sheep enterprise. “I could have shorter time with cattle indoors but as I need my grass for sheep outdoors all year this is difficult to improve on. At the same time I compared well on how I’m finishing my animals – little outside purchased concentrates, and I’m also getting a calf per cow every year. If I considered a continental bull I might get more kilos per hectare but might lose out on the better calving ratios and fattening from my Angus bull. I’m getting the heifers away at 18 months and the bulls away at 20-22 months off grass. So it’s a balancing act.”

Richard came into the scheme from his involvement in Bord Bia’s quality assurance schemes for his sucklers and sheep. “This was thrown in front of me as an option and for me it wasn’t a hard choice as I’m involved in nearly everything that can be done to improve my lot. For farmers there’s an advantage that it’s showing you what can be improved with what you’re doing, and ultimately that’s saving money ”.

Some of the top farmers taking part in the sustainability programme were rewarded at the Ploughing last week in New Ross by Bord Bia, The Irish Farmers Journal and Teagasc for efficiently producing cattle at a suitable specifications for export. One of these winners was Michael Murphy from Nenagh for his dairy calf to beef production. In a business where profitability can be tricky, Michael found the auditing gave him an outside eye on productivity on his farm.
“When the charts came back, compared to the national average I was up there near the top which made me think I was doing everything as near as good as I can. At first I didn’t know much about carbon footprint and it is difficult for farmers to understand. Sometimes they don’t think about details and may not have any plan in their head about when they’re going to slaughter what they buy.”

For Michael tracking every last figure is the only way his business works. The 200 calves he brings in yearly are fed by machine which communicates with the calf’s electronic tag. He also weighs them every two months.
 “There is a definite time span for any animal I have, you need to keep animals moving along and putting on weight everyday. I can’t understand lads not weighing cattle, I suggested a weighing scales at a discussion meeting and they called it a luxury, for me it’s essential. Overall I found the experience a good one, and if other farmers are thinking about it it will improve their efficiency without doubt.”

Jim O’Toole at Bord Bia was one of the driving forces of the sustainability monitoring, previously working on the Quality Assurance schemes. Quality Assurance has been a huge success for the marketing of Irish food, and customer feedback shows shoppers identify with traceability and “safe food” assurance. But why the move into the more “open-toed sandal” area of sustainability? For O’Toole it was a natural progression from the monitoring they were already doing.
“We did work that was completed in 2009 with some of the bigger customers of Irish food – food service, retailing and manufacturing to see how important sustainability was and we concluded it was an important issue. Our natural production in Ireland would resonate with that perception, but what we felt was that companies wanted more evidence.”
Bord Bia returned to the topic in 2010, asking respondents again about sustainability. Instead of falling in importance as recession dug in, it seemed sustainability had hardened in importance. For customers of Irish food and particularly beef and dairy, sustainability was now on the slate of key words and concepts, but what was driving the impulse for food buyers?

“The debate about sustainability is often described as a triple bottom line – environment, financial and social” says O’Toole. “If there isn’t a financially sustainable supply chain that supply chain could break down. There is also benefit from efficiencies by improving their environmental performance in terms of reducing waste, energy etc so there’s a cost saving there as well as enhancing brand value”

The scale of ambition of Origin Green is huge. To date 27,500 of Irish farms have had a carbon footprint assessment done. 45% of Irish export food and drink production has signed up to the scheme; retailers, food service operators, manufacturers, Unilever, Nestle, McDonalds, Danone and Tesco are already involved. For retailers like Sainsburys with their “20 things for 2020” strategy, auditing our own sustainability on Irish farms can’t fail to be an attraction as it means someone else doing the hard work for them. It’s a move that has put Ireland ahead of the pack, potentially yielding us a competitive advantage.
But farmers might ask - if retailers are so interested in sustainable food chains, why don’t they just pay farmers more? Would Tesco’s investment of £25 million in the Sustainable Consumption Institute at University of Manchester be better spent rewarding extensive farming systems we already have. Sustainability is clearly a great buzz word for retailers and at the corporate table, but where or when is the payback?

“It’s too early to tell” says O’Toole. “The cheap food debate isn’t one that isn’t going to get settled very quickly but from our experience with this programme the buy in we are getting from farmers it means Ireland can secure markets in the future. What we’ve got to do is prepare our industry to compete and win business so it’s a strategic long term initiative.”
Padraig Brennan, senior information analyst with Bord Bia has been working with Teagasc and understands that Origin Green needs to appeal at farm level. “There’s no point in being environmentally sustainable if you can’t make a living out of it. Being sustainable comes down to getting more output from the same input, more beef and more milk on a daily basis – a combination of management, genetics, and using resources on farm.”

As it stands, many food companies aren’t making demands on suppliers in terms of sustainability but as Padraig points out, it’s about Irish producers getting in before the rest of the posse. “We are putting structures in place so rather than waiting for when it happens and being forced into certain things, we’re being proactive in this area and creating that point of differentiation.”
But how important is sustainability to our European customers of Irish food? Marine Digabel, a journalist with Agra Alimentation in Paris came to Ireland this month with a group of European food industry writers, visiting Richard Hogge’s farm and the Glanbia plant in Ballyraggart. “In France there is a real interest in sustainability but  after the French election,  local food and French jobs have become more important.”
With financial woes being felt among France’s retailers and consumers, several things are happening in their grocery market. Apart from poultry, meat consumption is decreasing overall but organic meat is growing its share. Sustainability may have been overtaken by local, but as it makes sense to bottom line, it’s a strategy not being ignored among large French companies like Danone.

“Definitely they are all working towards less energy, less carbon, less waste” says Digabel “probably not because they’re deeply interested in environment but its more about reducing costs all along the chain.” Does getting on the sustainability train early create advantage for Irish producers?  “I don’t know if the Origin Green programme in Ireland will make people switch from one supplier to another. But it might make them more tempted to change. Definitely simply the fact that it’s measured – that companies know they’re working with people who have quality assurance and traceability and tracking the environment, is good for a long term perspective.”
Padraig O’Donnell agrees. Auditing sustainability is about creating solutions for customers of Irish food who may not be ready now, but will need assurances on sustainability in the longer term. “We explain to buyers what the programme is and what it’s trying to achieve. As we get more food and drink manufacturers on board we want to show commitment from a 3-5 year plan and also roll out advice at farm level. We want the companies who are supplying them with product to show the targets they have achieved. A lot of these customers have set out targets to reduce energy, waste targets here and they want their suppliers to help them meet those targets.”

Whatever way the food market moves, Ireland is better off one step ahead than one step behind. We mightn’t have valued it twenty years ago but the homogeneity of our production systems is something other countries have now bypassed, making branding themselves sustainable more difficult. “It’s definitely quite easy for Ireland to set up a programme like this as you have extensive grazing” says Marine Digabel. In northern France it’s similar to Ireland but in some places we have intensive production so there is huge disparity. The same scheme in France would be difficult to implement as you are saying “this type of production is better than another”.
“For me the material payback is in lowering costs” says Richard Hogge. “It’s no good to me unless I can improve profitability, the farm I’m running is a business not a charity. For scheme for me has pointed out where money can be saved without affecting the environment. It’s like bringing the euros and the farm along together.”

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