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.


Transparency is a market-driven exercise

March 2, 2016

Among all the trends in food markets, transparency is a tough demand to meet. As such, it is only natural that consumers have questions about what they buy and want to be sure that they buy something they feel comfortable with. In times when the food economy was local with everyone knowing each other in small communities, the food supply chain seemed transparent. With the separation of rural areas and urban centres and the increasing distance, both geographical and relational, between consumers and the different links of the chain, the distance in trust increased, too. Add to this a few scandals through the years and the result is a feeling that something is broken in the world of food.

The renewed desire for transparency is nothing than a cry for trust. Since the personal relationship with suppliers in many cases no longer exists, trust cannot be just a matter of knowing the farmer, the baker or the miller. Today’s transparency is about verifiable facts. Today’s consumers, unlike their parents or grandparents, do not want to be told a story anymore. If they don’t trust you, they won’t believe you anyway. They are used to search online for everything, with more or less success when it comes to the truth, but they nonetheless want to find out for themselves and figure out on their own what to think. Today’s concept of transparency is replacing PR, which is a one-way push communication technique. Today’s consumers want a one-way pull information platform. That is all the difference. PR is obsolete, but most food producers still have not come to this realization.

The prospect of having to collect, update and disclose all information through the chain from DNA to retail store or restaurant seems a daunting task and for many food producers, it feels like an overwhelming request. It seems and feels that way because it is. It is rather close to some Herculean task. One of the questions I often get is how much do consumers want to know and should everything be available? My answer is that in theory, consumers want to know everything and so it all should be available indeed but in practice, it is somewhat different. Consumers do not really want to know everything about how their food is produced. Well, maybe some do but they are very few. Most consumers do not even read nutritional labels, so they won’t bother spending hours or more to learn everything about the bread or the chicken they just bought unless something serious triggers it. So, what do the large majority of consumers really want? They don’t want to know everything but they want you to be able to answer them any question they have. They want the certainty that, should they have a question about their food, they will get an answer, the truth and that nothing will be hidden from them. Transparency is much more about trust and truth than it is about hard data. Yet, the way to get there is through data and open access.

TransparencyThe amount of data that can be collected is huge and so is the task to set up your transparency system. However, regardless of how much data you collect and share, your transparency performance will always depend first on making transparency one of the pillars of your organization. By that, I mean have the genuine willingness to engage in a candid and honest interaction with your customers and consumers. Genuine, candid and honest are key words when it comes to transparency. People will sense if you are so indeed. If they sense the opposite, you will not gain trust and the perception of your company will further deteriorate. Consumers will forgive honest mistakes when you admit you made one and are willing to do what is needed to correct it, both inside your organization as towards your customers. Consumers will accept that you do not necessarily have all the answers ready but that you are willing to do the research and come back diligently to them with the information. Although immediate response has become an expectation in the digital world, people understand that sometimes a bit of time is needed. Although data is important for transparency, attitude is at least just as much. By being responsive and handling difficult conversations in a mature manner will get you a long way. In a transparency approach, there is no need for defensiveness. You open the doors and you get out of the way! Of course, the mix of transparency and data brings the issue of boundaries. There is a fine line between what is useful information for customers and what is critical information about the company and information that affect competitiveness. Consumers will understand that some information is sensitive enough to not be disclosed. In this process, too, it is essential to be genuine, candid and transparent as long as it is not an attempt to hide something. Remember, transparency is a tool to increase the consumer’s trust and loyalty!

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


Adapting our thinking to the future – part 1

May 3, 2013

Everybody will agree that the coming decades are presenting many new challenges. Never before have we faced such a population growth and demand for about everything, food and water being the most essential. The difference between success and failure will reside mostly in our attitude towards change and our willingness to adapt to a different new situation. For obvious reasons, the economic model of mass consumption and resources depletion that generates a mindboggling amount of waste is coming to an end one way or another. A new system needs to come and will come. Whether it will be the easy way or the hard way really depends on us all and in particular on our leaders. I like to tell that our future will be only as bright as our leaders. It is a bit of a joke, but not quite.

The circular will look linear when approached from the right angle

What does need to change in our thinking and attitude, then? In a finite world, we must understand that always more is not sustainable. This is especially true when several billion people are thinking of having the same consumption lifestyle as developed countries have had over the past 60 years or so. The pie is not big enough to allow that kind of party (and neither is the bakery that must produce the pie). This is where we seem to be stuck in our thinking. We have learnt to think linear in the past several decades. It can go only in one direction, and it has to be up, doesn’t it? God forbid of anything going down. In the field of farming when I hear the linear argument, I like to mention two things. The first one is that if farming stats must go linear, there should not be any farm left in developed countries in the not so distant future, and the same should happen in developing countries, too, just a bit later. No farm means no food. Apparently, that does not seem acceptable. There goes a crack in the linear thinking. My second argument against thinking blindly linear is that in biology and in population dynamics, there are no linear functions. All curves are curbed in some way. There are bell curves, sigmoid curves, exponential and logarithmic curves, just to name a few. None of them are linear. If we want to plan our relation with our environment in a prosperous manner, we need to leave the linear thinking and start thinking curbed, and the curve that fits the ability to renew indefinitely our access to essential resources best is the circle. Circular thinking is the never-ending linear. That is just as much of a thinking revolution as moving away from the concept of a flat earth to embrace the idea of a spherical one, or to fathom the curbed space. Shifting from linear thinking to circular thinking simply means a shift in thinking from always more to always enough. All it means is that we need to change our ways, but it certainly does not mean the end of the world. It would only mean the end of a world. With a growing population, circular thinking actually presents a lot of business opportunities, especially considering that the alternative is going nowhere eventually. There is no doubt that those who will catch these opportunities will be the winners of tomorrow.

Such a change in thinking also results in rethinking the meaning of growth. Currently, growth, and the GDP as its favorite indicator, means mostly volume and consumption. Actually consumption is probably not the correct world to describe our societies. Buying is a more correct one. Producers want consumers to buy. Consuming in this process is really optional. What counts is the act of purchasing over and over again. We think of growth as quantitative growth. Future growth will have to be a qualitative growth. With so many new people who will need employment in the decades to come, it will be crucial that future growth will have to fill a positive social role. Similarly, to have a livable planet, the future will have to contribute positively to maintaining a healthy environment. Social and environmental responsibility will become the standard. There is no escaping this. Well, that is with the angle of building a prosperous future. If not, chaos is always a possibility.

One of the most visible consequences of a growth model based essentially on quantity and mass purchasing is waste. As consumption goods became cheaper credit became easier and disposable income increased, consuming has become about buying and throwing away. The mountains of garbage in landfills around the world should be a reminder, although we seem to have located them far away from the eyes of the wealthy and in the backyard of the poor. Quite convenient. This way, consumers could forget about the consequences of their actions… and keep on buying and throwing away. Although this happens for all consumer goods, this is especially immoral when it comes to food in a world where about a billion people do not have enough to eat. It is immoral, simply because food means the difference between life and death, and wasting food is indirectly contributing to the death of others. It is also immoral because food waste is also the waste of all the inputs used for the production of food, be it water, energy or money. Waste is an indicator of the level of efficiency. Highly efficient systems generate little or no waste. Inefficient systems generate a lot of it. I will let you judge how efficient you think we are. Waste is also an indicator of our attitude. It is not just about morals, but also about discipline. Our societies waste a lot, because we still are much too lenient with ourselves, and also because in many cases the financial incentives to do the right thing are sadly lacking. We choose the path of least resistance.

As life became easier in a number of countries, people have started to lose some essential reflexes for survival. It is not necessary to go all that much back in time to see the change. My parents, grandparents and ancestors grew up in times that were not of plenty, simply because there was no consumption society, and incidentally there was the occasional war. People would not waste anything not so much out of morals, but because they simply could not afford it. Yes, mass wasting is the fruit of luxury. My elders would not waste and they were very skilled at circular thinking. They knew that nothing is created or lost, but that everything is transformed. As resources were not plenty, the right answer was to show plenty of resourcefulness. This is how things were by then.

To take the example of food waste, they would make sure that leftovers would be on the table the next day. They would most certainly not end up in the garbage. They would feed the pigs with what they could not eat themselves. Actually, they were turning low value products such as potato peels in high value protein in the form of pork. When I was in the agricultural university, my animal nutrition teacher once told a joke that I have never forgotten, especially considering that I have spent a substantial part of my professional life in animal production. He told us that modern animal husbandry was the art of turning high value protein into cheap fat. Not quite untrue, and so much the contrast with the pork made out of table scraps. This contrast is very much present in the ongoing debate about meat production systems.

We can find many answers for the future by looking at the past. In our current times of science-based facts obsession, many seem to look down at words such as experience, wisdom and philosophy. This is not wise. Our elders might not have known all the scientific background of what they were doing, but they knew what was best for them to survive. They knew how to manage a finite world of finite resources to sustain themselves. Passing on that knowledge, experience and wisdom was an essential part of survival. There was no conflict between modernity and that knowledge, experience and wisdom. They integrated the new and the old to build a better world. Although, there is still a lot of work to eradicate poverty, let’s not forget that the result has been the emergence of prosperous societies in which a record number of people are living now.

(Part 2 of this topic will be published soon)

Copyright 2013 – The Happy Future Group Consulting Ltd.


What a waste!

April 12, 2011

Nobody can have missed it. The hot topic of the past month was the so-called global food crisis. If you believe the media, the conventional ones as well as the social media, we are facing food shortages. For those who follow my articles, it will be no surprise that I am inclined to challenge such statements.

When 40% of all the food produced is wasted and lost, it is not possible to talk about food shortages. As I had explained in “Hunger is about more than just food production”, there is plenty of potential to increase food availability. Currently, and with this extremely sloppy 40% food waste, the world agriculture feeds quite reasonably six billion people. Unfortunately, this is not the case for one billion hungry people. By eliminating the waste, we could supply enough food to feed nine billion people. Not in 2050, but today already! That is not ideology or political agenda. It is simple math. Interestingly enough, the amount of the 40% food waste corresponds with the 70% more food the FAO says we should produce to feed nine billion. The more food we will save, the less we will need to push production up.

Unfortunately, the food waste issue receives little attention in the media. This is surprising because there would be some sensational articles to write about it. A little bit of guilt here, a little bit of horror there. That should sell some newspaper or get people watching TV. If this does not happen, it is probably because the food situation is not dire. From time to time, I receive requests from journalists. Sadly, the stories that interest them have to be scary, such as doomsday scenarios including food shortages and the imminence of food riots everywhere, to be followed of course by World War III. I do not do that. Other type of topics that journalists love is science fiction stuff, such as meat artificially grown in labs and anything related with high-tech, or freaky stuff like eating insects and worms.

The food crisis was not so about shortages. If it had been the case, we would have seen pictures of people fighting for food. It did not happen. Actually, it is a price crisis. The price increase of commodities futures results from the depreciation of the dollar (as I was predicting in “The danger of a weakening US dollar”), and the strategy of what the financial media likes to call hedging against inflation. The later is really smart stuff, as investors rush into buying commodities to hedge against potential future inflation. The high demand for commodities results in price increase. That is the best guarantee to get inflation. Brilliant!

The media attention has been interesting to follow, though. Every newspaper wanted to have a piece about the subject. And they really published a lot. Everyone became a food security expert, from restaurant critics, to balcony gardeners and other economy reporters. Depending on the sources they wanted to use, the sponsors, and of course their paying audience, everybody could find about anything and everything about the subject. Some made a bit of sense, but many reports were sadly erroneous.

For some pundit, we are just one bad harvest away from a global food crisis. That was true 10,000 years ago, that was true just before the Irish famine, and it will be true as long as farmers do not control the weather. Is that worth receiving coverage? For many, it has been an opportunity to push their respective agendas. For some, the only way is high-tech big agriculture. Hmm is that so? For others, only small-scale organic farming will save us. Hmm again. For others, eating meat is responsible for all the problems. Did I say hmmm already?

In this frenzy of food apocalypse reporting,  I simply have not seen one article dedicated to food waste, just like I have not seen any sensible research about how the price of commodities is set, either. When the total market for financial derivatives is US$ 600 trillion, while the world GDP is only US$ 60 trillion, something is a little out of balance, would not you think? The daily trading volumes of commodities largely exceeds the actual physical daily consumption of these commodities. Are all the traders only adding costs in the food chain?

However, let’s come back to the waste part. What the math I presented at the beginning of this article shows, is that the future is not so much about producing more, but about producing better and smarter, consuming better and smarter, and organizing the supply chain more effectively to ensure that food indeed reaches consumers.

The waste issue is rather simple to sum up. In rich countries, and also increasingly among the wealthier in emerging countries, the food waste occurs at the consumer end of the chain. In developing countries, the waste occurs at the post-harvest level. Food rots before it had a chance to reach consumers. In these countries, food losses are the result of an insufficient infrastructure. Another area of major food waste is fisheries. Because of (ironically) highly efficient trawlers, many fish species, as well as large quantities of edible fish are lost as they are crushed in fishing nets

Retailers are working on improving their part. For instance, Wal-Mart has initiated a large program to offer food to food banks, as part of their zero-waste strategy. European retailers did something similar several years ago. Consumers must do their part, too. Throwing food away is inexcusable for people who have refrigerators at home. People need to get some basics of household management. When I was a kid, there were classes about this at school, but it disappeared somewhere in the 1960s. Throwing away food is bad economics. Although nobody would think of throwing away coins and bank notes in the garbage, throwing away food is exactly that. That money could be used for better purposes.  Throwing food in the garbage, or as I have recently read in a local paper here in Vancouver throwing it in the toilet pot, is pretty much an immoral act, especially when so many lack food. Of course, not throwing away food in North America will not solve hunger in Africa, but there are other consequences to think about. Producing food requires a lot of energy (for production of fertilizers, for transport, for agriculture machines, packing plants etc..) and water. Wasting food means that the water and energy have been used for nothing! It is pure waste. Some may think that this is not relevant in Europe or North America. Do not be so sure, because for instance California is struggling with water scarcity, while exporting its water to other regions in the form of produce and other perishables. The gas emissions created for the wasted food will have been for nothing. Not wasting food actually reduces the environmental impact of agriculture, and this particular impact is the consumers’ responsibility. They need to know about this, because their behaviour influences the quality of the environment.

In rich countries, there is no food shortage, but we could use more leadership in informing and educating consumers to do the right thing. This is not only a matter for retailers or food service, but for all levels of the society. Rising awareness about the cost of wasting food should be on the agenda of all community leaders. Schools, parents, religious and political leaders should all address this topic in their respective circles. Food waste is where economics meet morals.

The post-harvest losses in developing countries are also both about economy and morals. The moral part is about their populations who already have so many difficulties to afford enough food, while almost half of it rots because of poor storage and infrastructure. The economic part is about the waste beyond the food losses. In many developing countries, water is scarce and most of them use large amounts of this water to irrigate food crops. Many developing countries already struggle to have clean drinking water, yet almost half the water used for irrigation is wasted together with the food. This is not acceptable, morally and economically. Moreover, some governments subsidise water for farmers to irrigate. Yet half of these subsidies are wasted with the food. Some governments also need to subsidize food for low-income families and to counter food inflation, simply to allow their people to buy food. If food availability were about to almost double by fixing the infrastructure, this would have some very positive consequences. Today, close to half the food receives zero money for revenue, while the production costs have been made to produce all of it, the eaten food as well as the wasted food. By eliminating the post-harvests losses, the currently lost quantities would create revenue that is currently missing. Considering the volumes of food involved, the total amount of new revenue generated in all these countries would be astronomic. Everybody would win. Retailers and wholesalers would increase their sales substantially. Farmers would make more money. Storage companies would have a business. Transport companies would have more business as there would be much more food to bring to market. More food available would also mean less inflationary pressure on food prices. This new activities would create jobs. This would help more people have a better income and be able to afford food a bit more easily. Governments would not have to spend as much money to subsidize food. A population that eats better would not be as tempted into social unrest as a hungry mob. At the production level, less food waste would mean less waste of water, energy and inputs. This would alleviate water problems, and increase the efficiency of the use of energy. All of this has a positive impact on the environment. According to the FAO, the cost of fixing the post-harvest losses in developing countries is about US$81 billion. Considering the quantities of extra food involved available “almost for free” since it has already been produced, the US$81 billion sound like a bargain. Indeed, agriculture represents 5.8% of the world GDP (source: CIA Factbook), or roughly US$ 3.5 trillion! Therefore, saying that post-harvest losses must be in the neighborhood of US$ 1 trillion is probably conservative. One would expect to see the payback time for infrastructure investments to be rather short. Someone needs to crunch the numbers, to take the lead and to show to all parties involved what their advantage will be. I certainly would be happy to do that. All actors of the food chain will have to participate, private sector as well as public sector. The return will be high in all respects, financially of course, especially once the current social and environmental externalities will be eliminated as the result of an efficient supply chain.

Copyright 2011 – The Happy Future Group Consulting Ltd.


Why we will change our eating habits, one way or the other

February 8, 2011

In the discussion about producing enough food for the 9 billion people the world will have by 2050, one of the sensitive issues, especially in the overfed world, is about what to eat and how much of it. There always is resistance to change, and changing eating habits may be even among the most difficult challenges we have. Eating habits are developed unconsciously since early childhood, and switching to conscious choices is not easy to achieve. It requires will power and self-discipline.

Most of the gloomy scenarios about the challenge of feeding the world are based on the assumption that the diet model would have to be the Western diet, and in particular the American diet. This is far from certain. Actually, do not expect this to be the case.

Changing eating habits will happen in two ways. One will be voluntary and the other will be a consequence of food prices.

There is a growing awareness of the health consequences due to overconsumption of food. All the stakeholders seem to blame each over for obesity, diabetes and other heart conditions, and try to convince the public that they are not the cause of the problem. Whose fault is it? Is it meat? Is it corn syrup? Is it fast food? Is it salt? Is it lifestyle? Is it the parents’ fault? Is it the schools with their vending machines offering snacks and soft drinks? We all have read such statements. Here is a scoop: overweight is caused by consuming more calories than are burnt through physical activity. Ailments are the results of rich and unbalanced diets. Eating (and drinking) too much, and too much of the wrong things is bad for you. There is a reason why gluttony is one of the seven deadly sins! Actually, our societies should have a close look at that list, because we might be in trouble.

In Western countries, we eat too much, and that should not be a surprise to anyone. Obesity and diabetes are becoming society problems in the USA, but other countries are following the same path. Europe and China have a rising percentage of obese people, especially young people. Even in Africa, there seems to be an increase of the number of overweight people. A recent study confirmed this (click here for the interactive chart). Awareness about health problems has already generated action. There are government campaigns. Food producers are reviewing their formulas and are working toward healthier products, in particular by lowering the content of salt and sugar of their foods. More and more consumers are also adjusting their eating habits, mostly by changing what they buy and where they buy it. The trend towards healthier and more natural food is growing and it will not stop. Only biotech companies seem to ignore this fact. This food trend is not just in Western countries but in China, too, the demand for natural and organic foods is increasing. After all, nobody really feels happy with being fat or unhealthy. If some people are taking action to improve their diets and its impact on the environment, this voluntary choice is still about a minority of the population, today. One of the reasons for this is that healthy diets seem more expensive than the junk fattening eating habits. I say seem, because those who can cook know that it is quite simple to make delicious balanced meal for less than the supersize combo deep fried so-called menu.

Money matters. That is a fact. This is why money is probably the best incentive for change. And the future will bring us plenty of incentive to change our diets. The current concerns about food prices, and the food riots of 2008, have created awareness about food supply. Although the price hike is more the result of investors, not necessarily speculators, looking for a safe haven for their US dollars through transactions in futures contract, the reality is that the commodity markets, even on paper, becomes the “official” market price. This enters the real economy and affects the price of food for households all over the world. The poorer countries are more sensitive to food price inflation, and this has the potential to cause very serious unrest.

Regardless of the current causes of food price increase, simple economics show that when demand increase, while supply has difficulties to keep up, prices increase. And this is exactly what will happen. In a previous article, I showed that the potential for meeting food demand, or I should say the demand for nutritional needs, of 9 billion was there. Quite easily. However, in this calculation, I indicated the road to success includes reducing food waste and a reduction of the quantity of meat in the diet. This means that we need to change our behaviour towards food.

If there is a sensitive topic about diet, this has to be meat. Opinions vary from one extreme to another. Some advocate a total rejection of meat and meat production, which would be the cause for most of hunger and environmental damage, even climate change. Others shout something that sounds like “don’t touch my meat!”, calling on some right that they might have to do as they please, or so they like to think. The truth, like most things in life, is in the middle. Meat is fine when consumed with moderation. Eating more than 100 kg per year will not make you healthier than if you eat only 30 kg. It might provide more pleasure for some, though. I should know. My father was a butcher and I grew up with lots of meat available. During the growth years as a teenager, I could gulp a pound of ground meat just like that. I eat a lot less nowadays. I choose quality before quantity.

The future evolution of the price of food is going to have several effects. The first one is the most direct. As food becomes more expensive, consumers look for the more affordable alternative first. If their budget is tight, they buy slightly smaller portions. People will slightly reduce their food intake. Those who were over consuming might actually benefit from a positive impact on their health. For those who already were struggling, this will be more difficult to deal with. From all the food sorts, animal protein will be the most affected by an increase of the price of food commodities. Already today, there are clear signs from the meat and poultry companies that the price of feed is seriously squeezing their margins. As usual, passing the price increase to consumers will take time, as retailers will resist. If the price of agricultural commodities is to stay high, consumers will inevitably have to accept price increases for food in general, and for meat and other animal products in particular. The price of meat is going to be affected by other factors than just feed prices. The need for more control on food safety issues, the stricter environmental regulations that will come for animal husbandry, on the land and in the sea, a change in animal husbandry practices, especially a lower use of antibiotics and farms with lower densities of animal will all contribute to an increase in costs. Energy will become more expensive, too. A whole system based on cheap commodities is about to change, simply because there will not be any cheap commodity anymore. These are all adjustments to rebalance our consumption behaviour from the unbridled overconsumption of the past decades, when consumers were not thinking about the consequences of their actions. The industry will figure out how to increase efficiency to contain some of the cost increases, but the change of farming practices will make meat significantly more expensive than it is today. The price of ad-lib cheap meat is ending. The future dynamics of food prices as presented here will be ongoing. A long as we will not have adjusted our diets to a new equilibrium, meat will keep increasing faster than other basic food staples, until meat consumption, and therefore meat production, will reset to different levels. Do not expect this to happen overnight. It will be a gradual process. There will not be any meat or fish riots. If food riots happen, they will be about the basic food staples, simply because the first ones to riot will be the poorer among us, and their diet is composed mostly from rice, wheat, corn, cassava or potatoes. Should the situation become dire, governments will intervene to ensure food for the poorest. Such price systems are already in place in many developing countries, and they are likely to be maintained, and even strengthened.

The same critical factors to keep food prices in check are very much the same as the ones that I presented in the previous article that I mentioned earlier: food waste reduction, moderate meat consumption per capita; and economic development, especially in Africa.

Copyright 2011 – The Happy Future Group Consulting Ltd.


Food, Inc. or just the description of America?

January 22, 2011

A couple of days ago, I watched the documentary Food, Inc. Although the underlying theme is that the four large US corporations that dominate food would try to keep the American consumers ignorant of their activities, I saw this documentary much more as a review of the US society over the past 60-70 years.

As usual with this kind of documentaries, there is a mix of commentaries with pictures without presenting anything specific about the relation between the text and the images. The chicken farmer from Pennsylvania is angry, but it is not clear exactly at what. She removes dead chickens, but we do not hear what the cause of death is. To me, with my experience in chicken production, it seems that her chicken house is in very poor shape, and I am not sure about her level of commitment and overall technical performance. The Tyson grower seems quite a bit happier than the lady chicken farmer who ends up being terminated by Perdue. Unfortunately, the crew cannot film inside his chicken house and we never hear to know exactly why, but the commentary tends to imply that Tyson wants to hide something. Unfortunately as well, no representative from the large food companies mentioned wished to be interviewed, and that creates the impression that they want to conceal something. The chapter about the staff policies of meat companies is quite interesting. If this seems a surprise for the journalists, it was not for me. In Europe, we knew 20 years ago how harsh contracts were for farmers and plant staff. This is the product of free job market mechanism with a slight reminder of a certain thinking about labour force in the old south. Certain things simply die hard. John Steibeck’s Grapes of Wrath had shown several decades ago how agricultural labor force could be exploited. The reminder that meat packing plant workers used to have decent wages is an indicator of two things. One is a reflection of the disappearance of the American middle class in the manufacturing sector, and the other is that meat plants would purely and simply suffer tremendous financial losses if they had to reset wages the way they used to be. There might be some concerns about their financial long-term sustainability. They are not ready to cope with production cost increases, and they can hardly reduce personnel costs much anymore.

The family of four that lives on a diet of fast food is also a typical example. They do not have time to cook, and that justifies eating only burgers with fries and pop. The fast food meal for four comes down to almost US$ 3.00 per person. You can make a healthy meal for that money. The luxury meal that I prepared for my spouse on Christmas Eve was hardly more expensive than this. For that family, like for many American households, money is tight and they need to do the best out of a limited budget. The filmed visit to the supermarket tends to focus too much on the broccoli at US$1.29/lb. That price would be too high. That is possible, but there is more than broccoli to choose from. Potatoes, rice, carrots, beans, cabbage or onions are much cheaper than broccoli, and by combining them, it is possible to prepare quickly a healthy nutritious diet, including some meat. The mom works long hours and has no time to prepare diner. I accept that, but the teenage girl could do that to help her mother. My parents also worked long hours, and dinner was not before 9 pm. This is why I learned how to cook. When there is a will, there is a way. Then, we learn that the parents suffer of diabetes. This is not really a surprise considering such a crazy diet, and this problem is spreading to more and more American families. When you add the medication costs to the price of the fast food meals, preparing a healthy meal as I described above is really the best deal in all respects. In the land of individualism, where people are expected to take charge of their destinies, it is a bit strong to reduce the discussion to the agribusiness having “altered” foods, thus presenting this family as victims. I disagree with this. They made a choice, which may be the most convenient, but not the wisest. The alternative certainly requires some effort, and that may be difficult to handle. The blaming game, which is even more popular than baseball in the US is not leading anywhere. Most of all, why do they have to order pop with their burgers? They can cut their calorie count by filling bottles with tap water. Making sandwiches is easy and quick, too. This is a lot cheaper and a lot healthier, and it does not require much work at all. Last year, I had written an article in which I was showing the similarities of human behaviour and how we produce food. Food, Inc. makes this comparison quite vivid.

Then, the documentary shifts to food safety and presents some footage of meat processing plants. That is certainly a very important item in the US, where the number of recalls for bacterial contamination is simply astronomical. I found this part very interesting because in my many years in the meat, poultry and fish businesses, I have spent several years in close contact and even supervised plant operations as well. What this movie from 2009 showed gave me the same impression that I got the first time I came to the US in 1998, and toured what was by then one of the largest chicken processing plants in the country, in Alabama. Americans certainly love everything big, just like the calorie count of their meals. They love huge complicated plants where the molecules (chlorine by then in that particular chicken plant that smelled more like a swimming pool than anything else, and ammonia in the case of the plant featured in the movie) are supposed to do the work. Unfortunately, with such layouts, visual control is rather difficult as it appears in the documentary. When a plant is such a thick forest of pipes, chains and rotating parts, not only is it very difficult to see what is happening, but it is the best amusement park you can imagine for bacteria. They have so many niches where they can settle and grow in peace. The more complex the layout gets, the more difficult it is to sanitize the plant. The hamburger factory has installed cameras and management claims that this helps them to control what is going on in the several plants they own over the country. My view on meat processing plant supervision is that it has to be done in an ongoing manner, online, with the supervisor being on the plant floor, not sitting in his office. I doubt that cameras will eliminate food contamination issues. Moreover, online quality control requires motivated staff, which also requires proper wages and benefits. Food safety is less a technology matter than it is a matter of management and motivation of staff. Another important element that I noticed is that the boss of the hamburger plant describes himself as a mechanic. I had expected him to see himself as a food producer who wants most of all to offer safe food to consumers. I did not hear that statement. I also would have liked to see him eat some of his ammonia-marinated burgers. I am a meat lover, but I really do not need that on my plate. When I think that, in The Netherlands, we were not even allowed to use chlorine in the slaughterhouse water… We had to work on eliminating the causes of the problem instead of applying never-ending layers of technology band-aid. And we did significantly reduce the causes!

Then, the documentary presents the “natural farmer”, Joel Salatin of Polyface Farms. He certainly is very successful, but by his own admission, he has no plans is growing much more than he currently is. If there is more demand than he can supply, that will be the customers’ problem. By looking at his chicken slaughter installation and system, I doubt that he can supply much volume, but we never got to hear how big his business is. He is a niche producer, and his customers appreciate him, since one of them claims it to be worth driving 5 hours to get to his shop. That is 10 hours drive including the way back. One can wonder if the footprint of that food is all that great when it comes into the consumer’s home. How many of such farmers are necessary to meet consumer demand? And what is the price of the food they sell? Could this feed the family of four on a very tight budget that eats from the fast food drive-through? The movie never answers these questions.

The story of Stonyfield Farm yogurt was cause for more optimism. They offer the organic alternative. According to the CEO of the company, they are the third yogurt brand in the US and the most profitable one. This is a success story. They sell to Wal-Mart and fit in the retailer strategy towards more sustainable food. It also shows that organic has long passed the stage of hippie small-scale and that is a rational modern business, which the industrial agribusiness tends to refuse to see. The one thing that was missing about this story, though, was how the farmers who supply the milk perform financially.

Probably, the scariest part of Food, Inc. was the one about the lobbying and the politics. In the material country, this is no surprise. This does not make it any less scary, though. Since winning elections is about how much money candidates have in their “war chests”, the actual vote ballot is a banknote. The ones with the most bank notes have the most power. Reality is less idealistic than the idea of a “government of the people, by the people and for the people”. The system seems to have evolved to somehow reminiscent of an aristocracy structure. The US is a republic, but maybe a little less of a democracy after all. The money power is not only political, but in society where suing is a lifestyle, justice tends to favour the richer ones, simply because the poor cannot offer the fight very long. This power of money through lobby and lawmaking might not be as strong as one think, though, Last year, an oil lobby backed-Republican Senator of Arizona wanted to pass a bill to kill solar energy in the state. A Chinese company, Suntech Power, had plans to open a solar panel factory in Arizona (a Chinese company opening a manufacturing facility in the US. That is interesting is it not?) If this bill had passed, they would have lost the business. What did they do? They threatened to stop the project and kill the jobs. Do you know what happened? The Republican Senator did not proceed with his plans. Maybe China will help eliminate the negative effects of lobbies. Nonetheless, for now, lobbies are still active and powerful.

Then the conclusion of the documentary comes in a rush. Buy local, from the farmer’s markets. This is nice, but millions of households cannot afford that food. Moreover, production is not even remotely close to meeting the national food demand. You can vote three times a day to choose the food system. Americans voted a long time ago to have instant gratification, and they chose for the consumption society. Never things would have evolved to what they are if consumers had rejected it from the start. Nobody forced Americans to drive to a fast food restaurant and stay seated inside their cars to eat. Nobody forces them to drink pop, eat potato chips or candy bars, to think that the right size for a steak is 9 oz., to pour ketchup on everything, just as they did not have to spend more then they earned and dig themselves in huge debt.  I do not consume any of those items, yet my self-esteem is good, though.Freedom requires a bit of will power. Freedom of choice does not imply that one should not resist temptation. The American consumer’s behaviour has been a boon for the industry. Nothing is better than consumers who just consume without asking questions. Fortunately, this is now changing gradually. Americans realize that consumer goods producers have looked at them in a similar way as the livestock in feedlots, passive and submissive. Unlike what the makers of Food Inc. may say, all Americans are responsible of the society they have. The industry is, of course. But consumers are just as much. In order to change, consumers are going to realize what role they have played in the consumption society. They can vote, but the US is one of the countries with the lowest turnout at elections. The ones who choose not to express themselves just miss an opportunity to change things. Most Americans have lost faith in their politicians. Yet, there is a democratic force that can, and in my opinion, will restore true democracy. This force is the food retail, with Wal-Mart as the leader. They do not wait for politicians to make laws when it comes about food should be produced. They do not care much about the games played in Washington, DC. They just listen to the people and they offer the workable solutions to meet these wishes. Unlike politicians, they do not set their objectives for the next four years. Wal-Mart has already done more about sustainability of food supply than lawmakers have. Earlier, they had decided not to sell milk from cows injected with growth hormone. Yesterday, they announced their decision to make healthier food affordable to their customers. They represent such a purchasing power that they can force their suppliers to change their practices and their purchasing strategies, enforcing the change all the way back in the supply chain to the seed producers. Be assured that the food industry will do what the retail tells it to do, because without the retail, they are out of business. Their purchasing power is so much larger than the one of the people buying on farmers markets. People should cast their vote and give power of attorney to the retailers. Really, the food retail is just one step away of enforcing change on antibiotics, hormones, animal welfare and GMOs; even if the politicians have not made up their minds. Just compare the size, financially and in jobs, of Wal-Mart and Monsanto. Who is the true giant?

Altogether, I found that the movie was raising good questions, but it was not giving much hope for a quick change, either. This is a weakness, just as the lack of specifics of the pictures. They need to make a sequel in which they will show how things can change for the best, make food affordable and farming sustainable, and how they see the US making the transition. I missed that. The documentary is not as specific to the food industry as it seems. A similar movie with a similar commentary could be made on about every industrial sector of the US, from energy to electronics, telecommunications, the car industry, the banks or the pharmaceutical industry.

Copyright 2011 – The Happy Future Group Consulting Ltd.


The rise of the non-profits and how they shape food production

December 20, 2010

In the years before the current economic crisis, the non-profit sector was already creating more jobs than the for-profit sector. Last year, the total of all operating budgets of non-profit organizations passed the US$1 trillion mark. This makes non-profits the eighth economy in the world. This amazing number seems to have been rather unnoticed, yet it has quite some significance for the way economy might evolve in the future. They are a force to be reckoned with.

They are perceived as independent, although this is not necessarily the case, and this tends to give them a higher moral status, especially compared with the for-profit sector. As I had written in a previous article, nobody has the monopoly of morals, but non-profits have a PR advantage in this area. A part of their strength comes from the loss of trust in government, science, industry and politics by the general public. In the food and agriculture sector, the influence of non-profit organizations is growing, and it challenges the way food is produced.

Just like in the for-profit sector, the size of non-profits as well as the quality of their message varies. Similarly to many corporations, the integrity of some non-profits is questioned. However, in order to motivate individuals and organizations to donate money, they need to have and to keep enough credibility. Competition exists in the non-profit sector, too. Only the ones that do the best job can survive. Nonetheless, non-profits have been instrumental for many changes in food production. It is also clear that change and improvement comes only from being challenged. In this article, I just want to name a few examples of the power of non-profits and their ability to cause visible change.

First, here is an example as recent as last week. The HSUS (Humane Society of the United States) came out with video footage of what they called inhumane treatment of pigs at a Smithfield Foods pig farm. For those who may be unaware of who these two organizations are, the HSUS is a non-profit organization strongly opposed to intensive animal husbandry. They want to end factory farms. Smithfield is the world’s largest pig processor. The HSUS and the US meat industry are no friends. They have opposite views on animal husbandry and meat production. They accuse each other of the usual shortcomings and lies, as is the case between industry and its opponents. What I found quite interesting in this case, though, was the communication of Smithfield about the “crisis” on Twitter. Here, I can only speak about my perception, which was that Smithfield was quite nervous about this matter. Obviously, the HSUS scares them, and not just a little bit. The pork company came with numerous tweets about the problem, and in my opinion too many messages. As long as the investigation is not completed, any communication is unnecessary, and potentially confusing. I got confused to the point that I even wondered how they actually implement the procedures about animal welfare that I believe they have. They even communicated that they would have emergency audits from authorities in the field of animal behaviour and animal handling, such as Temple Grandin and Jennifer Woods, from Alberta, Canada. The farm is in Virginia. That sounds rather drastic if all procedures are in place and followed. The end of the story, at this day, is the report of the Virginia State vet, who did not notice any violation during his visit. There is no way of knowing whether something bad actually happened. The vet’s reports also mentions that the farm will have to be monitored, which makes sense in the context. Smithfield also communicated to have fired three employees for violation of animal welfare procedures, which tends to confirm that the HSUS had put their fingers on something true. Of course, the background of the story is that the HSUS finds that Smithfield does not make the move to banning gestation crates for sows fast enough, as the company had announced a few years ago. They compare Smithfield with other US hog producers who have already implemented change of husbandry systems. Regardless of this specific case, the reaction of the world’s largest pig producer tells me that the HSUS is going to win its battle to reform substantially the US meat industry. It will not happen overnight, but it is just a matter of years.

Another example, still in the pig sector, comes from The Netherlands. The largest supermarket chain, Albert Heijn, part of Ahold, the fourth largest retailer in the world, will sell only pork produced in animal friendly conditions, according to a protocol set up together with Vion, The Netherlands’s largest pork producer and Dierenbescherming, a non-profit organization dedicated to humane animal treatment. I remember when I used to work in the pig industry in the late 1980s in The Netherlands; Dierenbescherming was considered a rather extremist organization that supposedly did not get the realities of meat production. How things can change in 20 years!

Greenpeace is one of the most active organizations that try to change how food is produced. The agriculture lobby is not too enthusiastic about their actions, but Greenpeace gets things changed. They addressed the issue of beef production in Brazil and its relation to deforestation. They achieve more than the Brazilian government by reaching agreements with beef producers in a region where the “law of the gun” tends to prevail, but also mostly with the beef producers’ customers. The main fast food companies (McDonald’s, Burger King, etc…) and retailers like Wal-Mart have pledged not to buy beef that would be produced at the expense of deforestation. Be assured that something like this has quite some leverage. A similar situation has happened about the production of palm oil in Indonesia and Malaysia. Greenpeace’s action to save the orang-utans’ natural habitat has resulted in large users such as Nestle and Unilever to purchase only sustainable palm oil products. This has more impact than government action. I had mentioned a few weeks ago, the ranking for seafood sustainability by Greenpeace of retailers. Costco, which came last, first tried to contest the results. However, within a couple of weeks they reduced their seafood assortment from 15 to only seven, sustainable, species.

Another non-profit with influence on food production is World Wildlife Fund (WWF). They created in 1997, together with Unilever, the Marine Stewardship Council, which role is to set sustainability standards and conduct certification of fisheries. In 2009, the WWF created, together with the Dutch Sustainable Trade Initiative, the Aquaculture Stewardship Council, which has a similar mandate as the MSC, but for aquaculture.

Another typical example came with the wish list of a prominent seafood industry representative for 2011. On that list, he chastises environmental organizations for their negative and critical picturing of the seafood industry. Especially Greenpeace and the WWF are on his “bad guys” list. That is not surprising, but the irony is when he expresses his wish for further development of clean energies to stop the risks of pollution by oil spills and other contaminants. When it comes to other industries than his, he sounds very much to me like a Greenpeace and WWF supporter.

These are just a few examples, but they show without any doubt that the message of non-profit organizations has an audience, and with environmental issues becoming common media material, their influence will only increase. It is also clear that, more and more, retailers, foodservice and, to a lesser extent, consumer goods manufacturers are joining them. The businesses with direct contact with the consumers (aka the public) are leading this change, as I had mentioned in “The quiet revolution of food retailers”.

The next step that I foresee to enforce more transparency is the development of WikiLeaks-like activities that will make public confidential internal memos and other information not destined to publication. This will bring deep changes in the way food is produced. Of course, where there is change, there is resistance, too. The food industry’s reaction is normal in this process. The winners of tomorrow will be the companies that understand where the business environment is heading, and that will see the opportunities to implement change faster and better than their competitors.

Copyright 2010 – The Happy Future Group Consulting Ltd.