Changing economics to overcome future challenges

October 21, 2016

First, a personal story

A year ago, I moved away from Vancouver to the Okanagan Valley Region some 300 miles east from Vancouver. There, I bought a property with a decent yard where I will have a garden and with a small vineyard. In some way, it is an illustration of what is necessary to foster sustainable practices. The parallel is obvious with some of the global challenges the world is facing and will continue to face in the future. For eight months of the year, the area looks and feels quite similar to the Mediterranean. Precipitations are not abundant with an annual quantity of only 337 mm. Clearly, water is scarce and needs to be preserved, even though an extensive system of lakes fed by mountain snow ensures an adequate supply of water. The region is quite agricultural with many orchards and vineyards, all thanks to irrigation. There are also many lawns in the area and the estimate is that about 25% of the water consumed in the region is just to keep the lawns green.

My plan is to install rain barrels to collect the water from rain and snow and use it for the yard. This is where the economics do not go in parallel with all the talk from politicians about sustainability. Around the house I would need five rain barrels. The lowest and best retail price I can find is of about $80 for a 200 liter barrel. To set up my water collection system, it will cost me $400 to provide me with a 1 cubic meter storage capacity. In comparison, the price for a cubic meter that the municipality charges for water is $0.30 per cubic meter. In the most ideal situation, that is if I were able to collect all the rain and snow through my five barrels, I would at most collect about 30 cubic meters per year. In money, it comes down to a saving of roughly $10 per year. To break even, I’d better hope that the barrels will last 40 years, which they might, but considering my current age, there is a fair chance I may have moved to a much smaller underground dwelling by then. Of course, my example is about quite a small investment and if the return is lousy, it will not change my life. At least, the barrels will help me save water.

The point of my story is that the comparison between cost and benefit would deter most people to consider buying rain barrels. It just does not make financial sense, if money is what matters. I always say that money talks and what it says here is to forget about being sustainable. One of my neighbours also considered installing solar panels on the roof of their house. After comparing the price of the panels plus installation and maintenance with the electricity savings, they discovered that it would last twice the life of the panels to break even. In terms of money, solar panels are a different kettle of fish than my five rain barrels. Recently I saw the price of a propane generator that produces 3650 watts for Canadian $350 while a solar panel that produces 100 watts is sold for Canadian $250. I can understand people decide to not pursue the solar option.

The economics of water and energy savings that I just described can be extrapolated to the much larger picture. All through the food and agriculture value chains, many changes for more sustainable systems face the same kind of dilemma. What makes sense from an environmental point of view often does not make sense financially in the current economic environment. Demanding more sustainable production system is quite legitimate and sensible, but the conditions must also be there to make it happen. The numbers have to add up for farmers and businesses to make the switch. As usual, money is of the essence and it can come from different sides.

First, the purchase price and the cost of operation of alternatives have to come down and be competitive. Either suppliers are able to drop their prices or offer more efficient systems. Governments also can help through subsidies to ease the pain. Subsidies, being public money for the general interest, it is only fair that we all must pay if what we want is a sustainable. Subsidies must of course be set up properly and be effective

Second, the customers, which in a fair value chain would be eventually the consumers, have to pay for extra cost of the better production systems, simply because our consumption societies with their sense of entitlement have to understand that there is no such thing as a free lunch. Such a realization also means that producers also understand that mass production that only deplete resources do not fit in the long-term picture and that value will have to replace volume.

Searching for a new economic model

With the many challenges arising from a growing world population, it becomes more and more obvious that the economic model of the past six decades needs some refreshing. As such providing consumer goods at an affordable price for the masses is not a bad idea. Helping people to have a more comfortable and pleasant life is certainly welcome by most of us. The problem is that the so-called consumption society is not so much aboutpillars-of-economy consumption as it is about people buying and giving their money to someone else. In the current system, consumption is optional. Research has shown that consumers use 75 to 80% of the goods they buy no more than once.  What really matters is the act of purchasing the goods. It is good for growth and the GDP, currently the leading metrics for the state of the economy. The problem is that mass production has gradually shifted from affordability to cheapness and from value to price. It has focused mostly on volume and has not taken into account that consumers would have to get rid of what they bought after usage. Negative externalities have been kept external indeed. Short-term financial results have had the preference and long-term impact has been ignored. The system is hitting a wall and issues of greenhouse gases emissions and waste of resources are now becoming urgent matters to address. All industries will be affected one way or the other. Food and agriculture will be no exception.

The big question is how to change the system without having it implode. That is not an easy one to answer but sooner or later it will have to change. Vision and leadership are crucial to manage the transition. I wish I had seen more of it. So far, I see and hear more about pro this and anti that. It is highly insufficient and produces more noise than results.

In my opinion, the problem is not so much about growth as it is about what growth means. Over the past decades, growth has been mostly about volume numbers. It has been a quantitative growth. I believe that the best transition towards the next model is to focus on what I call qualitative growth. It is not so much about volume as it is about adding value to the buyer. For consumers and countries, qualitative growth would be to quantitative growth what EVA (economic value added) is to turn-over for a business. It is about prosperity.

For food producers, such a shift will lead to a different approach. The most valuable areas of value added for consumers and society lies probably in providing good and enjoyable nutrition, yet affordable, through advice and education. The industry will have to help consumers eat better and help them have healthy diets. It will go beyond just supply food. Consumers will also have to rediscover what proper nutrition is. Initiatives such as the Global Access to Nutrition Index can play a pivotal role in helping food producers make the transition towards quantitative growth. The food sector has also an important role to play in keeping our environment livable. The trend towards transparency is an important part of the evolution on both health and environment fronts.

Of course, such a change of economic model means that the economics must change, too. It is also essential that those who do the right thing must be rewarded. A new reward system must be introduced in the set of rules and regulations so that producers get the proper incentive to make the shift because adding the type of value that I mention to consumers also requires a different price tag in the store, or at least a different breakdown of costs and benefits along the entire chain from producers to consumers. How to distribute fairly the cost tag of the change is still open for debate. The reward system has to apply for the business activity by allowing margins to be comparatively competitive in the new situation. Consumers doing the right thing must also be rewarded. The reward system should also apply at the remuneration level. In particular, the share of qualitative improvements in companies’ bonus systems will have to increase at the expense of qualitative growth targets.  The adjustments needed in the food and agriculture sectors will not end in this sector. They will have to include other area of government. In particular the health sector will have to be involved, as the consequences of the quality of nutrition on health are obvious for individuals and society both at the personal as at the financial level.

I also believe that such a shift in economic model will mean that business partners within the value chain will have to challenge each other to carry out the transition and it will become a critical point in choosing with whom to do business in the future.

Copyright 2016 – Christophe Pelletier – The Happy Future Group Consulting Ltd.

 

 


Food fights will go on and it is a good thing

March 28, 2016

A funny thing happened to me when I moved from Europe to North America in 1999. In Europe, I was used to having demanding customers. Issues about how food is produced have been rather common during pretty much my whole life (I will turn 55 later this year so that you have an idea of how long it has been).

When I came to North America, I dealt with a completely different situation. I did not get some of those 30-page product specification documents from retailers, foodservice and manufacturers with all the do’s and don’ts of how to produce food. I just got some 30-page disclaimers and liability documents, for the customer to dodge any heat should there be a law suit some time down the road instead. Before, I left Europe, I remember my Managing Director from the poultry company I worked for telling me how lucky I was because “over there (North America), customers hardly ask anything, you just sell them what you produce”. I remember looking at him and thinking that it could not be possible. I was wrong and he was right. For as much as European consumers were picky on all things such as hormones, antibiotics, GMOs, animal welfare, feed composition and origin, North American consumers, and retailers as well, seemed totally uninterested about production methods. It was almost eerie and to be quite frank, it was boring, because I could not see any challenge. One of my American colleagues enjoyed telling that it was the way it was and that it would never change because that is how Americans are. I disagreed but it certainly appeared he was right for a few years. Things have changed now. The American consumer has become more demanding and the dynamics of the discussions have become quite similar to what I had known in Europe for decades. It is actually rather easy for me to “predict” the future as I am living in an ongoing déjà vu nowadays.

The debate about food has indeed evolved into food fights. If there is one thing that I always found remarkable in my professional life in the food and agriculture sector is the issue of the producer-consumer relationship. Maybe it comes from my family background, but I have never understood why the food industry is so defensive when challenged by consumers or any organizations. My father used to be a butcher and I spent quite a bit of time around the shop and with him on the markets. I discovered very early that customers would ask the weirdest things but that what matters is not the factual truth but whether they trust the supplier. If you cannot deal with that fact, I suggest you do something else than producing food. Food is loaded with emotions and that is that. If consumers were rational, there would not be any diversity in foods and other consumer goods. They always would do the right thing and would not pay attention to all the marketing efforts that support the world economy. If consumers were rational, I bet you that they would deconstruct any PR by spotting all biases. If consumers were rational, they would focus on nutrition only and they also would reject anything that is unsustainable. I have a feeling that a lot of people who resent consumers’ emotions would actually be out of business because they would deal with a much tougher audience than the current consumers. Be careful what you wish for. Further, it is also clear that those who criticize consumers for not being rational, are not rational themselves in their consumption patterns, either. Nobody is.

Last year, a book titled No more food fights hit the shelf. Considering the author is actually supporting the conventional agriculture and has a problem with consumers and activists who challenge the food system, it is actually ironic. It reminded me of the words of my Managing Director about the North American market. What could be better than the good old days when the agribusiness could push their products to lethargic consumers? It sure must have been a good time, but it is gone. The book’s author, just like the agriculture sector, does not want anybody questioning the food system. They don’t want anyone looking over their shoulders and find out the bad and the ugly, at the risk of not showing the good either. I do not understand the food producers’ reluctance. If you are proud of what you do and what you produce, as they claim, you are proud to show the world and to share that goodness. You are also willing to always improve and make your customers satisfied. In my opinion, the attitude is really more about being production-driven –or should I say production-centred- than market-driven. The difference is that the former is about oneself and the latter about others. That difference actually reflects quite well in term of whom consumers trust. They trust the latter group, but are very distrustful of the former. I can understand both attitudes because I have filled functions that were more oriented towards technical operation as well as commercial functions.

I started my professional life in a position in a technical and scientific field, which suited me well by then because I was a hard-nosed rational fellow with a tendency of not accepting unfounded non-sense. Then, by accident, I got myself involved in a commercial role, which opened me new doors, and my eyes, too. The successful experience led me to other commercial positions and the lessons that I had learned in my father’s shop, I rediscovered on a daily basis in the multinational company. There is a huge gap of perception of the customers between the different departments of a company. Very often this discrepancy is reflected in the dynamics of the sales and operations departments of a business. One wants to say yes and the other wants to say no.

Food fightPersonally, I find being challenged a very good thing that can happen to a producing company. I would agree that negative feedback is never pleasant, but even though the message can be rough, it is feedback after all. In this regard, it should be handled in the same way as customer complaints, the good kind of handling that is, not the denial kind. The latter is usually more of a reason for a customer to drop a supplier than the problem that occurred in the first place. Business, like it or not, is first of all about human interaction. Money is only a means to secure it. In the course of my career, I had to deal with “consumer resistance” in quite a few occasions, but what it put into motion brought me most interesting and rewarding experiences. They helped me to learn about business and to understand the complex dynamics of entire value chains faster than ever. They helped me grow and that experience has made me one of those who understand the ins and outs of marketing, production and management in a variety of discipline the best. I am thankful to my “difficult” customers forever.

The reason is simple. By being very demanding, customers forced us to be better than ever and be resourceful to find ways of both meeting their expectations and allow us to remain profitable. Quality only improves through pressure from customers and a competitive environment. It very rarely happens as the result of a voluntary decision, simply because there is a cost at first. In the case of my past professional experience, needless to say that adjusting to consumer demands was never an easy process internally. On the one hand, there was the source of the company’s revenue – in other words salaries – at stake, and on the other hand, the natural drive to keep production costs under control. The key was to not lose our focus on the one essential parameter: the margin. Margin management with market vision really delivered amazing results in such situations. Another essential point was to negotiate everything and always get something in return for any effort made on our part. I remember some very tense conversations with Marks & Spencer in the time the talks were about the removal of meat and bone meal from animal feed. We showed them the impact of their demand on our bottom line and made clear that if they helped out on the bottom line we would go along. Because we were offering top quality chicken, we were able to find an agreement. For as much as we could not afford to lose their business, they did not want to lose us as a supplier, either. The willingness to accept challenges from the market and the drive to always improve our products and service served us. We would not have been in a position to ask anything in return if we had produced a basic commodity. By aiming at being the best, we had a sustainable competitive advantage. Finally we were able to have them accept to buy more from us so that we could dilute the extra cost over a larger volume and have more efficient logistics. The result for us was actually more volume of above average margin products. The customer had to say goodbye to some suppliers who were not ready to go the extra mile for them, and we also said goodbye to customers who would not support us in the cost effort. In the end, a very tough challenge ended up in a strong long-term profitable win-win situation. We came out of a crisis that could potentially have destroyed us stronger and more respected than ever. This is only an example of a tough market challenge. I went through similar situations in the various sectors –feed, pig, poultry and aquaculture- in which I have worked. The added value got in the millions per year each time.

Food fights are good, but they work only by picking the right partners in the market. As a producer, you need to have customers and make the right choice to achieve this goal. As a consumer, you need to find a producer that listens to you and meet your expectation. They will be disagreements along the way, but in the end both parties can benefit, but it will not just fall on your lap. Fights are a part of life. On the first day of my last year in the Agricultural University, the head teacher had a short presentation. He said that life is about:

  • Learning
  • Creating

Those two points were very well received by the students. Of course, it fits quite nicely with a crowd of intellectuals. The third point was received by the chilliest silence I can remember. The third point was…

  • Fighting!

Yes fighting is an integral part of life. We all fight all the time. We fight with competitors, with other drivers, with customer service representatives, with sales people, with the tax man, with retailers, waiters. You name it and it you will find an example of fighting. So no more food fights? Forget it, it won’t happen. In my experience, the only reason why anyone asks for a fight to stop is when they are losing. In this case, if they are losing, it is more because of their refusal to listen to where the market is going than because of those bad irrational consumers. The smart food producers, big or small, have all made moves in the direction of consumers’s demands because they know that is where the growth and the future are.

Copyright 2016 – Christophe Pelletier – The Happy Future Group Consulting Ltd.


Nature will reshape food value chains

October 15, 2015

The recent climatic events, in particular droughts, have attracted more attention on future challenges for food production, and rightly so. Unfortunately, the mainstream media cannot help presenting the as all gloom and doom. Certainly, there are very serious reasons for concerns, but solutions can be found. I wish the media would present more examples of positive actions to face and overcome the challenges.

It is not easy to deal with a changing environment, especially when it is impossible to predict accurately what the change will be. Predictions about temperature increases are useful but they are quite insufficient. An increase of 2 degrees on average will be different if the standard deviation is 1 degree or if it is 20 degrees. Other factors such as hours of sunlight and precipitations (including their nature, frequency and intensity) will impact agriculture at least as much as average temperatures. Changing climatic conditions will not only affect plant growth and development, but they will change the ecology of weeds and pests as well and that needs to be factored in future forecasts and models

Nature will reshape food value chainsA special attention on water is necessary. Without water, there is no life. Unfortunately, over the past few decades, wasting natural resources has been a bit of a way of life. The issue of food waste has finally received the attention it deserves, but the waste is not just about food. It is about all the inputs such as water, energy, money, time, and fertilizers. Water is still wasted in large quantities. Just compare how many liters a human being needs to drink compared by the amount of water that is flushed in bathrooms every day. Before the housing crash of 2008 a study in the US had estimated that lawn watering used three times as much water as the entire national corn production. But the issue of water is not just about waste. It is also about preserving water reserves. The late example of the drought in California illustrate what water scarcity may mean for food value chains. California is not only a major agriculture power house, but it exports a large part of the production outside of the state’s borders. The issue of water scarcity and the dwindling level of the Colorado River are not new for Californian agriculture. It has been known for a couple of decades that problems were coming. California produces a lot of water-rich fresh produce by means of irrigation. It actually has been exporting its water in the form of lettuce, spinach, melons, strawberries and citrus far away to places from where the water will never return to California. The water loop has been broken wide open and that is why, among other reasons, the system is not sustainable. If California can no longer supply its current markets, it will have to rethink its target markets. At the same time, other regions, that may not be competitive with California today, because externalities are never included in the cost of production, will eventually take over and replace the Golden State as suppliers for some productions. Unfortunately for the future, California is not the only region with a water problem. Saudi Arabia changed its food security policy a couple of years ago as the country leaders realized that trying to produce all its food would lead to a severe depletion of its available drinking water reserves. Instead of pursuing food self-sufficiency at all costs, the country chose to find other supply sources through international trade and through the purchase of farmland in foreign countries. The examples of California and Saudi Arabia demonstrate how natural –and demographic- conditions shape food value chains. The issue of water is not just about produce. Animal productions require usually more water than vegetal ones. In the future, water availability will surely affect where which kind of animal products are produced. New regions will arise and old traditional ones may review their strategies from volume-driven to higher margin specialty animal products market opportunities because of environmental constraints.

Climate change and water scarcity show how international trade can actually contribute to food security when done responsibly and with long-term vision. The prevailing model of producing where it is cheapest to produce without taking into account negative environmental externalities is facing its own contradiction and demise. The next model will be to produce not only where it is the cheapest to produce but where it is sustainable to do so. When water runs out, it is no longer possible to ignore the externalities of a production. When water becomes scarce, it gets more expensive. The law of supply and demand commands. When inputs get more expensive, several things happen. The economic model shifts. Priorities and externalities change, too. At first, producers try to find ways to increase efficiency and eliminate waste. The benefits outweigh the additional costs. Uncertainty stimulates innovation. New systems, or sometimes old ones that found a second youth, replace the current ones. If that does not work well enough, then producers start considering producing something else to ensure the continuity of their operation and find new business.

It is not the first time that our natural environment changes. Finding successful solutions to deal with it really are about our ability to adapt and to preserve our future, as it has been the case in the past. The challenges may be of a magnitude like never before, but so are our knowledge, our technical abilities and the tools present and future.

From an agricultural point of view, adapting to a new environment is about finding the type of production that thrives under new conditions. It may mean different areas of production for some species. In North America, there is already a shift for corn. Iowa has traditionally the main grower, but the corn production area is now expanding north. Minnesota is now producing more corn than in the past and so are the Canadian Prairies. Similarly, the production area for soybean is shifting north. Minnesota is growing an increasing volume of soybean and even in the province of Manitoba in Canada, soybean production attempts have been carried out since a few years.  It is the result of better production conditions and the development of new varieties that can adapt to new less favorable climatic conditions. Because of the local supply for soybean, the development of aquaculture with local soybean products for fish feed is now considered a long-term possibility in Minnesota among others. In Europe, corn production regions also saw a shift to the north for corn during the 1970-80s thanks to the development of new varieties, which largely contributed to the growth of dairy production in these new areas through the widespread use of corn silage. For the future, there is no doubt that genetics will contribute again to ensure food security. There is currently a lot of work done to develop varieties that can withstand droughts, floods or soil salinity. The ability to know the complete genome of species, to spot genes through gene markers, to be able to create new varieties that are less sensitive to diseases help speed up the development of crops that can thrive under future conditions. The recent developments in synthetic biology are quite interesting. Research conducted at the IRRI (International Rice Research Institute) on the development of rice varieties that can have a higher photosynthesis efficiency and thus higher yields could open new perspective for a more productive and more sustainable production.

Next to the development of better and more adapted seeds and genetic material, the development of new technologies that I described in a previous article will bring a number of effective solutions as well. In particular the rise of precision agriculture is certainly quite promising. The ability to deliver to the crops exactly what they need when they need it at the right time and at the right place in the right quantity will help reduce the environmental impact of agriculture while offering the possibility of delivering higher yields. Similarly, in animal production, there still is room to improve feed efficiency. It can happen through further genetic improvement, the use of more efficient feed ingredients and feed composition and through better farm management. The latter is definitely an essential facet of a better future for food production. Better and updated skills for food producers will help being more efficient, more productive and more sustainable at the same time.

An area that is often forgotten when it comes to the future of food is the functioning of markets. If demand for certain products, and in particular animal products, increases faster than supply, price will go up and there will differential increases between the different types of products. As most consumers, unlike what marketers sometimes tend to make believe, still choose what they eat depending on the price of foods, there will be shifts. Some productions will thrive while others will struggle.

As prices still will be an essential driver of the location of the various vegetal and animal productions, markets and environmental constraints will increasingly have a joint effect. In the future, the dominant economic model of producing where it is the cheapest to produce will evolve. As the pressure on water supplies, soil conditions and pollution issues will keep increasing, the model will include an increasing share of negative externalities. They are the long-term costs that are never factored in the production costs but that will affect future production economics. Externalities are the hidden side of sustainability and they will determine the future map of agriculture, as it will no longer be possible to ignore them. Choices will have to be made between short-term financial performance and the long-term ability of various regions to be able to produce, and to keep producing, the volumes and the quality specifications that are needed by the different food markets of the future.

A friend of mine told me a couple of years ago after a trip to Asia how she could see from the plane the large plantations of palm oil trees, and how they had replaced the jungle. She described her impression as the view resembled the strategic game of Risk to her. Yes, climate change and water availability in particular, will reshape food value chains because agriculture, regardless of it scale, is a strategic activity. It is about life and death. It is about peace and war. Future strategies for both global commodities as well as for local food value chains will integrate Nature’s new deal of precious resources and conditions of productions. Together with the geography of future consumption markets, world agriculture will readjust, relocate and the Earth will look different once again.

Copyright 2015 – Christophe Pelletier – The Happy Future Group Consulting Ltd.


How can insects be a part of future food security?

July 31, 2015

Since the FAO published a report in May 2013 presenting insects as a possible source of food to meet future protein demand, the topic has become quite popular in the mainstream media. I wrote an article about this (Insects on the menu) in May 2010, in which I was giving some of my thoughts. I still think along the same lines.

In the last few weeks, I bumped into the insect story several times, purely by coincidence. I believe insects can play a role but I am getting a bit frustrated by the lack of specifics in all the talk about insects and worms.

Apparently insects would present many performance advantages compared with traditional meat productions. Aaron Dossey did a presentation at the IFT15 symposium organized by the Institute of Food Technologists. Here are the advantages of insects he mentioned as reported in the article from Science Daily of July 14 2015:

  1. Efficiency. They use less land, water, feed, energy and other resources than livestock.
  2. Environmentally friendly/clean. Insects create fewer greenhouse gases and are not contaminated with pesticides. They also do not have any hormones in their bodies.
  3. Prolific. They reproduce quickly so they can replace depleted resources.
  4. Biodiverse. There are millions of insect species, so it is easy to find a match to a location’s need.
  5. Nutritious. They have protein and Omega 3s, a class of essential fatty acids that help lower cholesterol.

All of this is nice but…

  1. How efficient? How much less land, water, feed and energy and other resources?
  2. Environmentally friendly as long as they do not massively invade it. How many fewer greenhouse gases? No hormones at all, really? Of course insects contain hormones. They are necessary for their physiology and development. So which hormones was he referring to?
  3. Yes they are prolific, which raises the issue of what would happen if insects escape from farms in large numbers. They are prolific but they are tiny, so it takes huge numbers to match the weight of a cow or pig or even a chicken. The real question to answer is how many tonnes of insect protein can a farm produce compared with other animal productions? What should be the size of an insect farm and how many farms should there be to meet future demand. Also what feed will the bugs eat to grow?
  4. Biodiversity may be nice, but what species would be production worthy when it comes to the mass production of volumes that would be comparable with other productions?
  5. They are not the only food sources of omega-3

Unless someone can quantify the above, the story remains rhetoric. If insects are to become a large-scale production along the lines of other animal proteins, it is necessary to single out the species that will be the most efficient, technically and economically. It is also necessary to sketch the design and the magnitude of farms. There are a number of companies that have been venturing in the insect business but most of them are tiny, in the grand scheme of world food security. Aaron Dossey’s company produces 25,000 lbs of insect powder per year. That is 12 tonnes, and he does not sell them to the hungry of Asia and Africa. Compared with the world average meat consumption per capita per year, 12 tonnes of meat represents the yearly consumption of 250 to 300 people. If insects represented 1% of the world average meat consumption per person, his production would feed only 25,000 to 30,000 people, or less than 0.0005%! Clearly, even to cover 1% of the average animal protein need as it is on average per today, the magnitude of the challenge to set up a significant production is huge. The other challenge to overcome is to make insect production economically competitive, be it for human consumption of for animal feed purposes. Most businesses offering insect products today are operating in a small niche, just because there is little industrial production. The dominant part of the insects and worms consumed are picked in nature by those who eat them, as those animals are usually consumed when there is a seasonal shortage of other protein sources. The niche businesses sell their insect products at prices that even many people in wealthy country could not afford on a frequent basis. The insect products are offered to consumers at prices reaching several hundreds of dollars per pound.  Presenting such foods as helping the world feeding itself, which means mostly helping the world’s poorest to be able to afford nutritious food is at best delusional if not even plain cynical. Insects and worms can be contributors to future food security only if they are affordable and competitive against the other meat sorts. That cannot happen if they are limited to the treat sector.

Another aspect of insects as food is their attractiveness, or lack of it. Insects and worms are much more common in Asia and Africa, where the largest part of the world population is and will be in the future. In Western countries, insects and worms are perceived as repugnant by most people. In terms of marketing, it would make more sense to focus on the Asian and African markets instead of trying to convince Westerners to eat lots of insects, just because of the respective levels of acceptance.

However, there is communication to do and lessons to learn from the past. I would name two. First, escargots, which are so popular under their French name, are an expensive item on menus. Escargots are never sold as “snails” because that sounds gross for most people. Everything sounds tastier in French. Try presenting insects under a French names and the Anglo-Saxon population might be more tempted. Snails used to be, just like insects and worms in Africa and Asia today, food that the French were going to pick on walls after a rain in times of food shortages. My second example is lobster. Lobster used to be considered a bottom feeder that was only for the poor, and so it was. Clearly, the image of lobster has changed a lot. The other lesson about lobster, and I would add shrimp, langoustine and many other ugly crustaceans, is that there are expensive delicacies that actually look a lot like insects, and they are actually rather close to insects in their body structures.

When it comes to human consumption, I wonder whether people will still be tempted to eat bugs if the economic situation keeps on improving in Asia and Africa. Not that long ago, China was in situation of near famine. Anything that contained protein was food. They were roasted rats for sell. In France, during the privations of World War II, rats – and cats- were used to replace pork in many deli specialties. There is a big difference between having to and wanting to. Has rat meat consumption increased in China since the economic boom? Do the French since WWII ended have been asking their butcher for rat pâté? I may be wrong, but I really think that when people, wherever in the world, have the choice, they will go for a juicy steak or some chicken before looking for bugs.

Then, there is the possibility of using insects and worms for animal feed. The advantage of animals compared with humans is that they eat to satisfy their hunger, but there is no psychological side to what is in animal feed, at least from the animal perspective. A trial to feed live insects to chickens just started in The Netherlands. It will be interesting to see the results. What I am wondering about this trial is why use live insects instead of dead ones. When I worked in animal husbandry, one of the things farmers worked on preventing was the possible invasion of insects in the houses, in particular because of the damage to insulation material. Further, I hope they make sure the insects will not escape, and that at least, should that happen, they are not using species that could cause damage in the neighbourhood. Also, I hope that the insects chosen have been screened on the health safety in terms of passing on diseases. Especially, after all the problems caused over the past years by avian flu and contamination by migratory birds, one can never be too cautious.

So what will be a good production system for large-scale production? I do not know yet, and I cannot find much information on how insect husbandry of the future may look like. However, I remember a TV program I saw some 25-30 years ago on the Dutch channel VPRO. I am not sure about the title of the program, but here is what it was about. The documentary was presenting an old fellow living as a hermit somewhere in the wild. He was using meat offal from his farm animals to attract flies, by storing them in a large tank. The flies were colonising the offal and bones and used them to lay their eggs. Later, the maggots hatched and when he found they were large and ripe enough, the hermit harvested the maggots and boiled them in a large caldron. He used that mass of cooked maggots as feed for his pigs and so he recycled the carcasses leftovers of the previous batch of pigs to produce the next one. I found that it was a pretty smart feeding and recycling system. Perhaps, it could be a solution for the future. In his system there was no waste. Of course, it sounds a bit like a porcine version of the movie Soylent Green.

For as much as I can see potential for insects and worms, I also see a huge lack of number crunching and comparative trials to figure out which species to produce and in which productions systems to provide an abundant and affordable of safe insect and worm food for both consumers and environment worldwide. The generality talk about bugs is cheap and does not help me envision how insects would play a prominent role in feeding the future.


Robots, sensors, drones and big data are coming to the sea, too – Fishermen and aquaculturists: be prepared!

December 2, 2014

There is not a day that goes by without articles about new technologies in agriculture. I enjoy seeing the excitement because I believe it is will revolutionize how farmers produce food. When I started The Food Futurist in 2009, I saw right away that this was coming. I have to say that I am even happier to see the interest for all the drones, robots, driverless tractors and sensors as when I was telling about it in my presentations until probably just 18 months ago, the audience would look amused. They would love to hear my “Star Trek” story. That is how my topic was referred to. It was entertaining. They liked the story but they reacted as if I had a bit too much of imagination. For sure I never come short of that but to me, it was no fantasy. It was going to happen. And I do not see why it would not happen at sea just as well.

The arrival of new technologies is interesting far beyond simply the technological aspect. The possibilities are many if we decide to use them to their full potential, by linking them with each other and with the management of farms and of the environment.

Just like in agriculture, so far mechanization had been mostly about adding muscle to the operators. It was about performing physical tasks faster with less manual labor. The new technologies are of a different nature. They are about creating a nervous system. With the new technologies, the ability to monitor, collect data, analyze, make decisions will not only be faster, it has the potential to be autonomous, but under supervision of the farmer. It will provide more precise information, reduce the possibility of errors and will fix mistakes mush faster when they happen.

Just like on the land, new devices will be available. Satellites, drones and sensors will be able to be the eyes and the senses of the operator. Data processing software and artificial intelligence will be able to monitor in real time and 24/7 any event on the fish farm and in its environment. It will be able to report and initiate relevant actions. Robots will carry tasks that used to be done by the farmers. Fish robots are being developed. Fish robot MITFor instance, the Massachusetts Institute of Technology (MIT) has created a soft body fish robot. The development of such fish robots is aimed at carrying out research on fish schools in the oceans, but there is no reason why similar robots could not be made to swim between the fish on farms, to monitor them and to record and report information about proper feeding, fish growth and fish health. From a technical point of view, nothing stops us from adding biometrics software in the fish robot that could be used for ongoing sampling to estimate the size of the fish in production, and the size distribution as well. It would replace static cameras and the need to dive in the nets. The “vision” of robot fish would probably be better than the human eye. Of course, the information collected by the robot would be sent to the computer to continuously determine technical production results and readjust feeding and harvest schedules. Sensors inside and outside the nets would allow to monitor environmental conditions such as water quality, in particular oxygen content. Biosensors could monitor levels of plankton and risks of algae blooms as well as the presence or the level of pathogens. All that information would be linked to the computer and fed to the central nervous system assisting the farmer. Satellites and aerial drones can also help monitor events inside the pens and provide further production information to complement what originates from the fish robots. They also can give a bird’s eye view of the farm environment. This would work in two directions. One is the prevention of harmful events to enter the nets. The other is the monitoring of the environmental impact of farms to prevent any pollution or take corrective action at once. Sensors at the bottom of the ocean and aquatic drones could also take continuous sample of the environment around the farm to detect any potentially harmful component for the environment. This would help making fish farms more environmentally friendly. In such a design, the farm becomes part of the nervous system. It can be managed even from a distance. After all, some people have already built a number of houses that are connected in such a way these houses can send tweets to the owner to tell them of any event inside or outside, even if someone is at the door. It is also possible to think of linking the system to the nets and have the net size adjusting automatically to the production conditions inside and the need of the proper volume based on water quality data. The farms could also move –horizontally and/or vertically if needed, depending on water quality, but also to avoid harmful interaction with wild fish, which is always a contentious issue between fish farming and commercial fisheries. Such mobile cages already exist. With all these systems, the farmer could actually follow several sites, instead of one, at the same time on interactive screens and interact with the machine and the systems.

It gets even more interesting by looking from further away and higher up. By having robots and aquatic drones roaming the oceans, it will become easier to have a full monitoring of ocean ecology, environmental conditions, sources of pollution, stocks of the different seafood species and all other life forms present. It would make fisheries’ management easier and more effective. It would address sustainability issues both for fisheries and for aquaculture. It would not only help seafood producers, but it would provide fact-based support to make policies -locally and globally- and to manage an important part of food production in better harmony.

The use of new technologies does not stop at the farm or in the ocean, though. Seafood processing, like any other food production, is also going to use robots more and more. Quality will also be monitored through new technologies and reports will be produced automatically. Robotics and data collection will ensure production and quality system that can take corrective action automatically. By connecting all the data produced along the entire production chain, traceability and transparency will be improved further. If used well big data can help improve food quality, sustainability and cooperation between the different stakeholders. It will help manage more efficiently. It also will be a tool to increase trust in the way food is produced and allow a closer connection between producers and consumers.

Here is a presentation about new technologies I did recently at a Precision Agriculture Conference. If you invite me to a Seafood conference, I will be happy to talk about the future with your audience.

Copyright 2014 – the Happy Future Group Ltd.


Future rhymes with infrastructure

March 21, 2014

In all the talk about feeding 9 billion people by 2050, the issue of infrastructure receives too little attention. In my opinion, this is a mistake. Of course, building, repairing and maintaining roads, railways, bridges, waterways or warehouses may not appear as sexy as fantasizing about robots, drones and machines that exchange information, or fancy marketing concepts, but infrastructure is really the lifeblood of future food security. For as much as I enjoy presenting a futuristic vision of food and farming and talk about market niches of the future, I also find essential to remind my clients about the practical implications of future development for their very concrete daily activities. Infrastructure is definitely one of the important topics. Considering how much attention the topic of producing more to meet future demand has received over the past couple of years, and considering the good prices for agricultural commodities of the past few years, it is only normal that production volumes have been on the rise. It may sound obvious that logistics should grow in parallel with production volumes to be able to keep moving products. Unfortunately, when it comes to the big picture, the supply chain seems to be overlooked to some extent. One of the problems is that the agricultural world is still very much production-driven, and so is all the talk about the future of farming. As I presented in Future Harvests, there are plenty of possibilities to supply the world with more food. Although there will be challenges to overcome, the potential is there to meet the demand of 9 billion, and even for the 11 billion that the UN is forecasting for 2100. However, the key is to be able to bring the food to the consumers, and that is where action is badly needed. Post-harvest losses may be the clearest example of how important infrastructure is. Worldwide, the estimate is that about 20% of all the food that is produced is lost on the fields or between the farms and the consumers because of a deficient infrastructure. In particular, the lack of proper storage results in food that rots or gets spoilt by mold or vermin. The problem is especially serious for perishables. In particular in the case of produce, which is fragile and contains a lot of water, post-harvest losses may exceed 50% of the total production, as for instance it has been observed in India and Africa. Post-harvest losses also occur with non-perishables. In China, it has been estimated that the amount of wheat loss during transport because of a poor infrastructure amounts to the quantity that Canada exports. Since Canada is the world’s second largest exporter of wheat, this shows the magnitude of the problem. Brazil, which is one of the world’s agriculture powerhouses, also suffers from infrastructure issues. Most of the transport of agricultural commodities takes place on roads that are far from being well-paved. The result is twofold. Firstly, the poor road conditions cause the loss of significant amounts of grains between production areas and export terminals. Secondly, since road transport is the main way of transporting agricultural products, the cost of transport and the resulting carbon footprint of food supply are both higher than they could and should be if there were enough railroads and waterways to bring products to markets. A couple of years ago, I read a report about the comparison of the carbon footprint of beef production between countries and one of the surprising conclusions was that Brazil scored relatively high. Although the survey needed to be taken with a critical mind, the infrastructure situation of Brazil certainly was one of the reasons for its high footprint. The good news about Brazil is that the country recently launched an ambitious plan of $200 billion to fix its infrastructure. As its economy grows, this will be essential to secure the future. Infrastructure development is not just a matter for developing countries, though. In Canada, the shortage of rail capacity for grain transport has recently become an issue, as record crop volumes have difficulties to reach their destination. Not only is this a logistical problem, but it highlights the lack of forward thinking and of communication within the entire supply chain. Over the past few years there have been more than enough conferences in which many experts insist on the necessity to increase production, in particular though yields. The high prices of agricultural commodities of the past few years have been great incentives for farmers to do exactly that. And they certainly have delivered. Did some not pay attention? Perhaps. Unfortunately, the post-harvest links of the chain have not adjusted on time. This will be true for the US agriculture, too. American farmers are working hard on increasing yields and export possibilities are good on the long-term, but they will have to keep the ability to move enough volume to the final markets. Roads, railways and waterways need not only some revamping but also need to develop further to adjust with future volumes. In spite of all the talks about improving the American infrastructure during the deepest of the economic crisis following the financial disaster of 2008, not all that much has been done, really. Transportation infrastructure, as well as the energy grid, still needs some serious refreshment. Like anywhere else in the world, a healthy infrastructure will be the basis for a sustained economic prosperity. Beside the volume implications, a well-organized infrastructure also contributes to lower costs and improves the competitiveness of the value chains that benefit from it. In my opinion, there cannot be long-term prosperity or successful economic development without an adequate infrastructure. For the future, another area that is going to require solid planning and vision is the population boom that will take place in urban centers of Asia and Africa. Many of the mega-cities that will emerge in the coming 40 to 50 years hardly exist, yet. Nonetheless, they are coming. Urban planning that will address the challenges of these megalopolises is one thing, but organizing the supply of food, water and all other essential from production centers is another. The “unfortunate” thing about infrastructure is that it is a long-term investment. It is money that needs to be spent to get the economy flowing. The return is long-term. If done well, the positive financial return lies in economic development, more and better jobs and more people having more money to pay for goods and services as well as for taxes that can be used to ensure a good maintenance of the infrastructure. One of the issues is of course who finance infrastructure. Many stakeholders benefit from a good infrastructure. As I show in We Will Reap What We Sow, the FAO estimated the annual cost of fixing post-harvest problems in developing countries at $83 billion. Doing so provides so many upsides for all stakeholders from farms, businesses and government that the return for the entire system is actually higher than the $83 billion, and my calculation is quite conservative and cautious to say the least. There is more than enough money to fix the problem. What is $83 billion compared with the amounts spent since 2008 to bail out banks, to print money as massively as it has been done and to rescue the European countries that were in serious financial trouble? It is a drop in the ocean! Yet, fixing post-harvest losses is a painfully slow process. It is a matter of taking the right decision. How long will we accept not only to waste that food, but also all the water, the energy resources, the time and the money that have been used to produce it in the first place? Among the many projects that I have carried out, I would like to present one briefly here because it illustrates the importance of infrastructure. When I came to Canada, the previous management had signed an agreement with a First Nation community of the North Coast of British Columbia for the production of farmed salmon. When I inherited the project, I took a look at the agreement and I remember sending a memo of a page and a half that was actually a list of questions that had all to do with infrastructure. In a nutshell, how to transport fresh fish and deliver customers at least twice a week on the West Coast of the US from a remote island with no road connection, only a ferry every other week and highly unpredictable sea conditions? It was mostly unpredictable in the sense that the number of days the barge of some transport company involved in the project and run by someone who would prove later to be rather unreliable would be stuck for undetermined amount of time between that island and Vancouver where the dispatch center to our customers was. By then, nobody among those who shaped the agreement had the slightest clue about what answers to give to my questions. In the end, it all worked out fine and our customers never missed a delivery of fresh salmon. What it took was for yours truly to dive in the scrum and enjoy some Wild West type of action to get it all together, to bring materials in and send products and waste southbound using a tiny barge and connect with trucks on some unpaved wilderness road through the mountain ranges. By the way, 14 years later today and the unit is still running. That project could be a textbook case of why infrastructure is so important both to bring in stuff and take product away to consumers markets. Every time I hear or read about the need for farmers to have access to markets and of post-harvest losses in developing countries, I can totally relate to the complexity of how to set it all up. Producing without having the possibility to bring to customers is not economic development. It is economic suicide. In a business, be it a farm, a store or a manufacturing plant or any other, one rule is always true. And that is that money comes only from one end of the business: from sales. To get there, the business needs customers that they can actually serve properly in order to get paid and to retain them, because in the end, the customers are the ones who must pay for all the expenses of the business. It sounds obvious and yet it is forgotten too often. I am a strong advocate of a market-driven approach. The term market-driven already implies the value of infrastructure, as to be market-driven a proper and reliable supply chain is necessary. The other major advantage of being market-driven is that selling is easier because market-driven businesses offer what the market wants. Business is easier when all one has to do is to produce what is already sold. On the other end of the spectrum, production-driven is quite the opposite. It is the best recipe to end up painfully pushing production volumes at slashed margins and being depended on others to decide of the future of your business. For having been a market-oriented person in production-driven industries, I have seen the value of the market-driven approach. It requires a different mindset. It is about stepping out of the commodity markets rats’ race, and it is about implementing the necessary changes to deliver customers what they want while asking the price that you need. For the future, developing the agriculture of the future and being able to feed the world population will be about understanding the markets, finding the right customers and having the required infrastructure to bring to them, wherever and how far or close-by they may be, what they need. In my opinion, all agricultural development projects must start from the market end and be built backwards into adequate production volumes and structures. The organizations involved in such projects must bring in the marketing and the supply chain expertise to give local farmers the highest chances of success. All the technical and knowledge support is essential, too but they have to be aimed at supporting the implementation of the sales plan.

Copyright 2014 – The Happy Future Group Consulting Ltd.


Tree oils can fuel economic development by integrating different agricultural activities

January 13, 2014

Over the past few years, agriculture has been a hot center of attention and rightly so. In my line of work, I am always interested in finding new and innovative ways of growing production more efficiently, more sustainably and in a way that offers viable jobs and attractive livelihoods. Recently, I got acquainted with Mr. Sreenivas Ghatty, from India, and Dr. John Wightman, from Australia. They both are involved in the production of tree oils for the production of a renewable alternative to diesel oil. Mr. Ghatty founded Tree Oils India Ltd and owns a plantation of 3,000 oil trees. Dr. Wightman is actively promoting the development of similar projects in Australia, USA, Africa and South Asia. The story of the tree oil interested me right away for several reasons. First, it reminded me of the Sahara Forest Project that I had mentioned in Future Harvests, but with this difference that the tree oils projects are already there. Secondly, and more importantly, it is a great example of a project that can generate many economic activities, while filling an environmental and social function by calling upon a collaborative approach like what I discussed in We Will Reap What We Sow. As several projects have already reached the production stage, the gentlemen have the numbers to present a case to interested investors.

Seven year old Pongamia trees at the TOIL (Tree Oils India Ltd) R&D farm

Seven year old Pongamia trees at the TOIL (Tree Oils India Ltd) R&D farm

In India and Australia, the species farmed is Pongamia. It is an indigenous tree to India that used to provide oils for various applications, of which fuel. However, with the rise of cheap fossil fuels, its use regressed to some extent but in the second half of the 20th century, the Mumbai commodity market traded one million tonnes of Pongamia oil per year. The purpose of this production is to develop land that would otherwise have no agricultural use, because of the arid climate. Some of the current projects are aimed at using waste lands around former mines, as is already the case in some parts of Queensland in Australia. It is a way of regenerating a landscape and agricultural production by fixing carbon and producing a renewable fuel that emits less greenhouse gases than fossil fuel. Pongamia is a rustic species that is well-suited in such regions. To understand what this production can create, it is important to put it in a broader context than oil alone, and that is why I find it particularly interesting.

It takes the Pongamia tree four years to start producing its oil-rich seeds and once in production, it will keep producing at a steady level for a hundred years or more. To give an idea of the production potential, a conservative yield estimate that Mr. Ghatty and Dr. Wightman gave me was of 1,000 liters per acre of Pongamia plantation. Although the harvest is not all year-round, the seeds can easily be stored and the oil production capacity can be organized evenly all through the year to optimize the oil production capacity. The oil is suitable for diesel engines without any particular further refining. The oil provides a source of fuel to run the farms and when acreage is large enough, it could cover the needs of local communities, too. The by-products from the oil production, such as the seed cake that is of good agronomic value, can be used as a fertilizer or mulch to return to the land, and thus enrich it as production goes. They can also be used as fodder for cattle, as a complement for other feed sources.

Pigeonpea growing between rows of 3 yr old Pongamia trees on the TOIL farm

Pigeonpea growing between rows of 3 yr old Pongamia trees on the TOIL farm

Next to storing oil in its seed, Pongamia is a tree legume, and therefore it can fix nitrogen and help enrich the soil where it grows. It also has nematicide and fungicide qualities. Pongamia production can be the basis for a multi-level and complex agricultural activity. With its agronomic qualities, Pongamia is quite suitable for an agro-forestry production system. The combination of the shade provided by the trees with soil enrichment by nitrogen fixing and seed cake fertilizer and the moisture retention that results from these new local conditions creates a suitable environment for the production of vegetal crops for food production. For instance, on the Tree Oils India Ltd farm, they grow pigeonpea between the Pongamia rows. Further development of optimal combination and rotation of crops will be enhanced as the system will enrich itself over time. It is also possible to combine the tree plantation with extensive grazing cattle. The Pongamia plantation helps the production of grass and in return the cattle fertilize the soil with manure.

Agro-forestry can be combined with extensive cattle grazing to restore soil and agriculture potential

Agro-forestry can be combined with extensive cattle grazing to restore soil and agriculture potential

The combination of the various possible productions also offers different possibilities of cooperation. Not all activities need to be done by the same farmer. There is always the possibility to offer land for use for vegetal crops or grazing. The partners can decide of which form the cooperation can work, between ownership, renting, sharing of land or of harvest or any other form that can create a harmonious cohabitation. Such different possibilities allow the integration of local rural communities to access production potential as the plantation creates the condition and the potential for both vegetal and animal productions such as meat, milk or wool. By generating different farming activities, the Pongamia production has the potential to create several agricultural value chains for all the productions involved as well as processing, storage and marketing. It can have a snowball effect beyond simply agriculture. When the local communities develop livelihoods, they also will need access to other products and services to function. The combination of all these activities allows creating sustainable production systems, as all the products and by-products can be used locally and thus, closing the loops. However, the system does not have to be a closed one. Productions can be used locally or sent to markets elsewhere, and the same is true for inputs, but integrating all the activities allows monitoring and managing the production systems in a sustainable manner. Closing loops is a key phrase in regard to such integrated production systems. In this case, the loops cover carbon, nutrients, moisture and organic matter.

Oil press used for Pongamia oil production in India (TOIL R&D project)

Oil press used for Pongamia oil production in India (TOIL R&D project)

Like many economic development projects, a leading project is necessary to create the necessary momentum upon which other activities can connect and grow along. Pongamia production has this potential but as always for such projects, the need for investment is critical in the early stages. It must start somewhere and the return is not immediate. There is always a chance to take. Because it takes several years for the Pongamia tree to enter production, the early years do not generate revenue from oil, and only the crops generate income. However after the trees start producing, income increases substantially. Over a period of ten year after planting the trees on the plantation, the return allows farmers to have a good income. Economic development requires long-term commitment from the shareholders. As many activities and also economic benefits are the objectives, all stakeholders that can benefit in the long term should also be shareholders. Success cannot be the responsibility of the plantation investor alone. When stakeholders are shareholders, they become owners of the project as well; and owners are more determined than spectators to turn a project into a success. Many jobs can be created in farming, in different activities of oil processing, logistics, trade, and in the different activities of the different value chains that can spin off from Pongamia. It is also not just a matter for businesses only, but governments also would benefit. More economic activity means more taxes down the road, as well as less need for financial support of rural communities once they can generate a solid local economy.Every project would have to adjust to the local conditions. If the projects in India and Australia are developed on mining grounds, other regions may offer different types of land for development. The available land might decide the size of the plantations and the production volumes. From there, each project will have to list the potential other activities that can be combined with the plantations, and how many jobs in which activities may be created. By reviewing the entire production potential with the socio-economic potential, it will give clarity to the different stakeholders of what their individual return would be. Then, they can determine how big a share of the project they want or how much they can contribute to the development of such integrated activities. If, for now, tree oil projects are more advanced in India and in particular in Australia, they certainly could be quite instrumental to help develop economic development in particular in arid parts of Africa. It is possible as a number of success stories with agro-forestry have already demonstrated there. This type of integrated agriculture has good potential to recreate productive vegetal landscape in former deforestation areas like for instance in Brazil.

If you wish to know more about Pongamia oil, feel free to contact Dr. John Wightman or Mr. Sreenivas Ghatty

(Photos: courtesy of Mr. Sreenivas Ghatty and Dr. John Wightman)