Tag Archives: Policies & Politics

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

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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.

Swimming in circles – Part II: BC salmon farmers are proud!

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In Swimming in circles, I was mentioning that salmon farmers should communicate more about their people, their work and the pride of doing what they do. My article had caught their attention, as I have several contacts and retweets and other things of the same nature. I do not know if my article is the cause, or if communicating pride was in the works anyway, but over the last few days, I have seen quite a number of messages and blogs on that very theme. Of course, this made me curious and I clicked on the links. The titles were clear: they are proud of being salmon farmers, but the text comes a bit short of communicating the passion. That is too bad. I had expected better.

I do not think that the message will reach the public this way. What the salmon farmers need to do is to come over here to Vancouver and talk to people in the street. Only by having personal contact, will they have a true chance of convincing the passers-by. One of the reasons why the environmentalists are successful is exactly because they go to the people to bring their message. They ask you in the street if you have a minute to talk about whatever it is they want to talk to you. The salmon superheroes that I was mentioning in that previous article of mine understand that communication is a contact sport. They went to the offices of the salmon farming companies in Campbell River to hand over the (super?) condoms, even if that meant having to deal with the company’s security officer.

I know to ideal spots in Vancouver for such interaction with the public about salmon farming. The first one is in Kitsilano, at the corner of 4th Avenue and Vine Street. There is the Capers Community Market (now owned by USA’s Whole Foods Market). This is a store selling many organic food items, sometimes for twice the price as at the Canadian Superstore, for the very same items. Environmentally conscious Kitsilano shoppers are quite eager to pay the voluntary eco-tax (Unless in their case it is the ego-tax. Not sure). Interesting details: the David Suzuki Foundation, a strong opponent of salmon farming in open nets, has its offices in the very same block as this store. Great way of killing two birds with one stone.

The second spot is the Fishermen Wharf, near Granville Island. Fishermen sell their catches there to the same ecgo-tax volunteers. The public is welcome there with a sign telling “Friends don’t let friends eat farmed salmon” and other similar “friendly” slogans. After all, fishermen are proud, too.

Hunger is about more than just food production

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Everyone who works in agriculture and food knows that there are about one billion people on Earth suffering from hunger. The temptation to think that the cause is a lack of food production is great, but it does not reflect reality. Quite a few serious organizations and personalities claim that one Earth is not enough to feed nine billion people by 2050. Some claim that we would need two Earths. Others even go as far as mentioning the need for three, and even four, of our blue planet.

There are two possibilities with such statements.

If they are true, then humanity has a problem, because there is only one Earth, and we will not get a second one. In such a case, the only way for supply and demand to get in balance is a reduction of the world population. This could happen through famine, disease and/or wars. Since in such a scenario there is a maximum to the world population, once this number is reached, there must be a constant elimination of the couple of billion people too many, through one of the means just mentioned. This is not a particularly happy thought.

On the other hand, if such statements are erroneous, there is hope to feed the increasing world population with one Earth.

Then, is one planet enough or not? Simple math should help finding the answer. If we need two Earths to feed nine billion, one planet would only feed 4.5 billion people. Currently, the world population is around seven billion, out of which one billion is hungry. Conclusion is that we currently can feed about six billion people. We are not doing that bad. Is it possible to find ways of feeding three more billion on this Earth? From the simple math above, it is clear that those who claim that we need three Earths or more are wrong.

Out of the six billion who do not suffer hunger, it is estimated that one billion is overweight, a part of which, mostly in the USA, is obese. They clearly ingest more calories than they need. Purely theoretically, if those were to share the excess food they consume with the ones who have too little, the billion hungry people would have about enough. This means that today there is already enough food available to feed seven billion people.

Another interesting factor is waste. According to the FAO, about 40% of all the food produced is lost and wasted. In rich countries, most of the waste takes place at supermarkets, restaurants and households level. People simply throw away food. In developing countries, the waste takes place mostly post-harvest. The food does not even reach the market. The food is spoiled because of a lack of proper storage facilities and logistics. The food ends up rotting, contaminated with mould or is eaten by vermin. To fix the problem, the FAO estimates the cost to improve infrastructure at US$ 80 billion. This is less than the amount the EU just made available to bail out Ireland. What to say of the US$ 3.3 trillion that the US Federal Reserve lent to banks to alleviate the financial crisis? Of course, it will be impossible to achieve an absolute zero waste, but if we were to achieve 10%, this will feed many people. I have heard the statement that if post-harvest losses were eliminated in India, the country would be fully food secure. Per 100 tons of production, 40% wastage means that only 60 tons are available for consumers. By reducing waste from 40% down to 10%, there would be 90 tons available. This represents an increase of food available by 50%! Since we could already feed seven billion with the 40% waste, reducing wastage to 10% would allow feeding 10.5 billion people.

There are also many debates about whether we should eat meat or not. The nutritional need for protein is easily covered with 30 kg of meat per capita per year. I had shown in an earlier article that if Western consumers were consuming just what they need instead of eating superfluous volumes (very tasty and enjoyable, though), it would free meat to feed 1.4 billion people the yearly individual 30 kg. In China, the average meat consumption is already up to 50 kg per capita per year. The consumption is very unevenly distributed, but this is the average. Cutting 20 kg per capita over a population of 1.5 billion would free meat for the nutritional needs of an additional one billion people.

The other area of potential is Africa. The FAO estimates that the area of arable land that is not exploited is about 700 million hectares. This is about the size of Australia. To simplify and get an idea of the potential, we can calculate what it means in wheat equivalent. With the assumption that wheat yields would be the same as the current African average, a low 1.5 tons per hectare, this adds up to 1.05 billion tons of wheat. Since a person needs about one million calories per year, and there are about 3,000 calories in a kg of wheat, one ton of wheat can feed three people, the 1.05 billion tons of wheat can feed more than 3 billion people. Normally, there would a crop rotation of at least two harvests per hectare. With proper investment and financing, farms should be able to reach easily the US average of 3 tons of wheat per hectare. Clearly, this performance could be achieved with traditional techniques and good quality seeds. This is not even about high-tech or GMOs. This tremendous potential of Africa is why China, India and Arab countries are very active developing farming there. They did the math. This scenario also shows that Africa can easily become a strong net exporter of food. In this case, the world map of food looks very different. Without Africa being able to produce large amount of foods, the prospects for food security in Asia and the Middle East are a bit bleak. They can depend only on Western Europe, Russia, Ukraine, Kazakhstan, North and South America, and with Australia to a lesser extent. With Africa as a net food exporter, the world map looks a lot more balanced, East-West as well as North-South. Sea routes from Africa with the Arabic Peninsula, the Persian Gulf, and farther away with India and China create a much safer feeling of food security for the countries in those regions. For Africa itself, it may change the relations between Sub-Saharan country and the Maghreb countries. This in turns changes the type of relationship that the Maghreb may have with Europe, by creating more economic activities to the South. Africa’s success –or failure- will affect the whole world.

With the above, everyone can develop further assumptions, but these calculations show that this one Earth can produce enough food to cover the needs of between 12 and 15 billion people. It almost sounds impossible to believe, yet these numbers are not even ambitious. I have not even taken into account that in 2009, 25% of the corn produced in the USA was destined to feed cars, not people, via ethanol production, and that number is expected to grow to about one-third for 2010. The potential is even higher when one considers that a large part of the US corn goes into soft drinks, while it could be used to produce tortillas, with a side glass of water, a much healthier alternative.

That said, if the potential for food production supply looks adequate, actually producing it may not be as easy. The human factor, especially through politics and leadership, will be crucial to succeed.

One would ask why there is hunger if we can produce so much food. The answer is simple. Hunger is not just about food production, it is about poverty. People are hungry because they do not have money to buy food. They do not have money because they do not earn enough, as they have low paying jobs or simply no jobs at all. By developing the economy in these regions, people would get better wages. They could afford more food. The demand would drive the development of food production. Agricultural development would then be a normal and natural activity. Trying to develop agriculture if the locals cannot buy the food cannot work. Recently the FAO estimated that two-thirds of the world’s malnourished live in only seven countries: China, India, Pakistan, Bangladesh, Indonesia, Ethiopia and Congo. These are countries where most of the population is poor, and most of which lives in rural areas. The other proof that hunger is not only a consequence of low food self-sufficiency can be found in two agricultural exports behemoths: Brazil and the USA. In the latter, a recent survey carried out by Hormel Foods, the deli producer, shows that 28% of Americans struggle to get enough money to buy food, or they know someone who struggles. Last year, the USDA had estimated at 14.6% the percentage of US households that do not have enough food on the table. Food will find the money and vice-versa. If Bill Gates decided to move to the poorest and most food insecure place in the world, and would fancy a lobster, I am sure that someone would manage to find him one and deliver it within reasonable short notice.

My book, Future Harvests, investigates the possible scenarios to increase food supply and meet the demand at the horizon 2050.

Copyright 2010 – The Happy Future Group Consulting Ltd.

The locavore’s dilemma

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There is a growing trend, or at least a growing noise in favour of eating locally produced food. The “locavores” as they are called, claim that 100-mile food is the way to a more sustainable agriculture and consumption. Is this approach realistic and could it be the model for the future?

This movement is rather popular here in Vancouver, British Columbia. The laid-back residents who support the local food paradigm certainly love their cup of coffee and their beer. Wait a minute! There is no coffee plantation anywhere around here. There is not much barley produced around Vancouver, either. Life should be possible without these two beverages, should not it? The disappearance of coffee –and tea- from our households will make the lack of sugar beets less painful. This is good because sugar beets are not produced in the region. At least, there is no shortage of water.

But this is not all. There is no cocoa plantation around here, and believe me, there are many people who are addicted to chocolate. British Columbia does not produce citrus or other warm climate fruit. If we are to become locavores, we must say goodbye to orange juice, to lemons, to bananas. Even the so popular sushi must disappear because of the lack of rice. There are no rice fields in this area, and neither are there wheat fields. The Asian population certainly would have a hard time eliminating rice from their diet. The lack of wheat means no flour; and no flour means no bread, no pastries, and no cookies. The carbohydrate supply is going to be tough. If we must consume local, our lifestyle is going to change dramatically. Potatoes and cabbage is the way of the future. But before going all local food, the local locavores must realize that British Columbia produces only 48% of all the food its inhabitants consume. One out of two locavores would have to starve. Going exclusively local would also affect deeply the source of animal protein. Most of the animal feed is made of ingredients that come for much farther than 100 miles. The chickens and eggs would become less available. Farmed salmon, BC’s largest agricultural export could not use the type of feed they currently use, as fishmeal and fish oil come from Peru and vegetal oil comes from farms located far away. There would go many jobs with very little alternatives. If we look beyond food, other agricultural products such as cotton and wool would not be an option anymore. Cars would disappear, because the main component of tires, rubber, is not produced under this climate. The 100-mile rule will solve traffic problems. If local consumption is the rule for food, should not it be the rule for everything as well? China would probably have different views about this. Not only would their manufacturing collapse, but also if they have to produce food within 100 miles of the consumer, they would have to give up importing agricultural commodities. For them, a true locavore system would mean famine. The same would be true here in British Columbia. When people are hungry, they are not so picky about the distance from the producing farm.

The problem with concepts such as local consumption is that the basic idea has some value, but the idea quickly evolves into an ideology, and ideologies tend to make their followers stop thinking pragmatically. Today, the idea of eating locally in a place like Vancouver is possible because supply easily meets demand, thanks to the 3,000-mile foods. This is ironical. If the distance to market has to be within 100 miles, farmers in low population density areas, such as many regions of North America, South America and Central Europe, would have a different type of problem. They would produce an abundance of food, but because there are not enough people to consume it locally, the law of supply and demand tells us that the price of agricultural commodities would plummet, food would stay in storage and farmers would go out of business, while people in China, and in British Columbia, would suffer hunger. Clearly, the 100-mile diet needs some amendments.

Intuitively, it sounds logical that locally produced food has a lower carbon footprint than food that comes from 2,000 to 10,000 miles away. However, this is only partly true. The mean of transportation affects the carbon footprint. The environmental impact of transport is much higher for road transport than it is for rail transport, which is also higher than water transport. The type of transport also depends on the type of commodity brought to market. Perishables need to reach consumers as quickly as possible for shelf life reasons, while dry goods, such as for instance grains and oilseeds do not face the same kind of deadline. The quality of the logistics is also crucial to reduce the carbon footprint. A fully loaded truck is much more efficient than a local truck dropping small quantities in many places, thus driving around most of the time with empty space in the trailer.

The emphasis should not be so much on local as it should be about the search for efficient and low environmental impact. More than the distance from the farm to the consumer, it would be more useful to provide consumers with information about the actual carbon footprint of the products they buy. They would have the possibility to make the right choices. Retailers, too, would be able to make decisions about their sourcing strategies. Clean products and clean producers need to be rewarded for doing a good job. Here in Vancouver, local food products are more expensive than similar offerings from California, Mexico, Ecuador or Chile. How do you convince families with a tight budget to spend more for local products that look pretty much the same? This problem needs to be addressed. Currently, farmers markets are much about marketing. They sell the experience as much as their production methods. Only a wealthy minority can afford to buy on these markets. The prices are not based on production costs plus farmers income. They are as high as possible, because the farmers can ask these prices. The wealthy city dwellers are willing to pay a substantial premium above what they can buy from the local supermarket. In this relation farmer-consumer, the price bargaining does not take place. If these farmers were to try to sell to a grocery retail chain, they would never get the prices they get from the consumers who will not haggle about the price. This is why more farmers try to sell directly to consumers: they make more money that way. However, this might change in the future. A number of retailers are working towards offering “farmers market” products into their store. This already makes market farmers nervous.

Is local production for local markets the way of the future? My answer is that it partly will be and it partly will not. I do expect a shift of the location of production for perishables. Consumer habits will change, too. In the West, consumers have been spoiled. They can eat anything from anywhere at any time of the year. This luxury probably will not be affordable for long anymore. The superfluous will naturally be eliminated.

As the economics of energy, and therefore of food, will change, producers will increasingly locate their operations closer to cities; and even inside cities. Urban farming is a growing activity. Although it started mostly in poor neighbourhoods as a way of having a small patch of land for personal consumption, more sophisticated and efficient systems are being developed. My expectation is that production, and consumption, of vegetables and fragile fruit (for instance strawberries) will gradually become more integrated in the urban landscape than they are now. I also think that we will see animal productions, such as fresh dairy, poultry meat and eggs relocate closer to consumer markets. An interesting development is aquaponics, the combination of greenhouse produce with fish production in tanks. The production of non-perishables will not relocate. It does not have to. What will probably change is the transportation infrastructure in many areas where these commodities are produced.  This is good news for coffee drinkers and chocolate addicts. After all, transport of commodities over long distance is not just the result of cheap oil. The Silk Road and the spice trade by the Dutch took place before mankind even knew about oil. Trade has always been a force of progress for humanity. It helps an increasing number of people to have access to goods that make their lives better. The rules of trade may not always be fair, but like all human activities, it is a work in progress. Limiting our food supply to 100 miles would be a regression. Subsistence agriculture has not demonstrated that it could feed the world. Most of the people suffering of hunger live in subsistence agriculture areas.

(This topic is one of the many that are presented and discussed in my second book, We Will reap What We Sow)

For more on similar topics, please visit my other website The Sensible Gourmet

Copyright 2010 – The Happy Future Group Consulting Ltd.

Helping farmers produce better

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Meeting food demand depends for a large part on the ability of farmers to produce adequate quantities of the food products of the right quality. To achieve such an objective, farmers depend on their business partners. To feed an increasing world population, helping farmers succeed is not an option; it is a necessity.

There is no argument against producing better. A market-driven and more efficient production reduces the amount of waste, and it increases the amount of food available for consumers. It reduces the impact on the environment and it actually reduces the cost of production. However, it is important to realize that actions to produce better often are investments, as the effect is not always immediate.

From a value chain point of view, efficient production starts with high-quality ingredients. If the world wants farmers to produce higher volumes, they must have access to good genetics. Seeds that have the potential to deliver high yields, or farm animals that can produce and grow fast, while using feed and water efficiently, are an absolute necessity. Genetics and agriculture must also take genetic diversity and sustainability into account, but with poor genetics, farmers will not be able to meet food demand, and they will not be financially viable for the long-term. Vision and proper strategy are the elements to deal with this dilemma.

Farming inputs, such fertilizers, pesticides, herbicides and animal feed, must help plants, and farm animals, to express as much of their genetic potential as possible. Suppliers can play a very important role in helping farmers use the proper products in the right amounts, in the right place, and at the right time. The same principle applies for food processors and distributors. It is their role to help farmers deliver what the market needs when it needs it. They must encourage this by rewarding financially the farmers who do things right. This is in the interest of all the parties involved. Farmers make more money with their products. Processors get products that are more efficient to process, thus saving on costs. Distributors gain market share because they offer the right product to their customers, thus increasing customer satisfaction, appeal and loyalty. The advantage of doing things right is that it becomes more difficult for business partners to switch to a competitor. By being the best partner in business, the need for complicated contractual and legal agreements becomes a little less relevant. It is about loyalty and mutual security.

To achieve this kind of ideal situation requires a lot of effort, commitment and communication. Market needs must be translated in clear product specifications. The knowledge on how to be able to meet the required standards needs the proper channels to be transferred to farmers. Access to information has become much easier with the development of communication tools such as Internet and cell phones. Smart phones are helping further, and now farmers, anywhere in the world, have much faster access to market and technical information than by the past. This helps them make faster and better decisions. However, better technologies and better communication tools are not enough. Extension services are crucial. In my book, Future Harvests, several examples show how positive this is for food production. One is the policy of the Ugandan government that resulted in a boom in rice production, making the country a net exporter of rice. The second example is about the extension services of a food corporation, McCain Foods, in India, that helped farmers produce a better quality of potatoes, meeting market requirements, and earning substantially more this way. Another illustration of the positive effect of knowledge transfer is about the farming leader in Burkina Faso who helped increase food production with simple techniques, and stopped the exodus of population. Proper education and on-going training is part of the food production of the future. The human factor in knowledge transfer is as important as ever. Only people can know what the specific situation of a farmer is. Knowing the farmer is the best way to help them set up plans and strategies to improve their technical and financial performance. A farmer being independent business owners, their main concern is to generate enough revenue to stay in business, and to offer a decent standard of living and a secure future for their families. Helping them in these objectives is the way to get their attention and loyalty. Extension services need to offer the most effective solutions by taking into account the level of skills of the farmers, as well as their financial situation. Some farmers can afford and use high-tech solutions easily. Others may have money, but lack the skills to use certain techniques or technologies. Others may be technically savvy, but may lack the money. Extension service people are the ones who can help farmers make the best choices. They also must assist farmers to get the proper financing if this is the limiting factor, for as long as the money would used to deliver the proper return.

As Cicero stated, “The sinews of war are… endless money”. This tends to be overlooked by many who talk about increasing food production. If farmers do not have access to enough money to be able to produce the food the world needs, they simply will not. Developing agriculture requires serious investments, either from individuals or from governments. Asian and Arab countries know this and this is why they spent massive amounts of money in African and Asian countries, and even in Brazil and Argentina. If farmers cannot buy the basics to produce efficiently, they will have poor harvests. If farmers cannot be profitable, they will stop farming. This is important to realize that being a farmer must be attractive financially, too, if we want to motivate the next generation to be in agriculture. Money is important, but just for food production, more is not necessarily better. To get good results, we must ensure to have the right amount of money at the right time at the right place for the right purpose. The money must be aimed at producing for the market. Financing agriculture is about meeting food demand, not to produce blindly. Just like there is a need for efficient market-driven precision agriculture, the future of agriculture financing must evolve to efficient food-market-driven precision financing.

Copyright 2010 – The Happy Future Group Consulting Ltd.

Follow the water!

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Without water, there is no agriculture, there is no food, and there is no life. It is obvious, and yet the water question is too often neglected. The quantity and the quality of water available are absolutely crucial for the future production of food. It will influence where and what type of food we can produce. It will define food security and world politics. Since 70% of fresh water use is for agricultural purposes, it is clear that water will soon be power.

The need to preserve water and use it efficiently is going to be one of the main challenges to overcome for the decades to come. This will stimulate innovation and the development of new technologies and new techniques.

Field sensors that measure the level of humidity in the air and in the soil connected with “crop per drop” irrigation systems can allow the distribution of the right amount of water at the right time, thus saving waste through evaporation and drainage. The selection of plant varieties will focus more and more on water efficiency. Drought-resistant plants that can thrive in arid conditions are in the works. For instance, a trial on wheat in Australia has delivered promising results, as the yield was 25% higher than non drought-resistant varieties. Researchers, through hybridization and genetic engineering, are working to develop varieties that can use less water and produce similar yields as per today. Although high tech may bring solutions, other methods deliver good results, too. Agro forestry, the production of crops under a cover of trees seems to help farmers achieve satisfying results in the Sahel region. The foliage of the trees helps reduce evaporation from the soil. Combined with proper techniques to apply organic matter and fertilizing elements, farmers can create better conditions for plants to grow.

Another field of research is the development of alternatives to traditional desalination, which is very demanding in energy. Transforming seawater into fresh water for the production of food is not simple, and it is expensive. The technology is here.  Israel has used it for decades. Currently in the United Arab Emirates, a project of floating islands covered with solar panels to provide the energy to desalinate seawater is being developed. This system has the advantage to produce both fresh water, which is precious in desert countries and clean energy at the same time. A project, called The Sahara Forest Project aiming at producing food in the desert is currently in the works. It combines solar energy, modern biomass production and a type of greenhouse, built by the Seawater Greenhouse company, that helps the humidity produce by the plants to condensate.

In many countries, the problem is not so much physical scarcity of water as it is a lack of proper infrastructure to collect, pump and irrigate efficiently. The population density contributes to the problem, because the more people, the less for each of them. In many countries, for instance in India, the equipment is old, inadequate and poorly maintained, because of a lack of finance of governments and farmers. The result is a waste of water resources, and a suboptimal production. Another area that has potential for improvement is the collection and the storage of rainwater. A large quantity of water runs off and is not available for food production because there are not enough containers, if any. Developing and improving storage infrastructure will definitely help farmers to produce more food.

If the availability of water is important, so is its quality. In China, the situation is a lack of both, because of the heavy pollution of many streams and rivers. In many areas, the water is there, but it cannot be used, as it is fit neither for human consumption nor for agricultural production.

The respective situation of countries about water availability will determine their ability to feed their own people or not. In Arab countries, irrigation has led to a high level of salinity and it has depleted drinking water reserves. Saudi Arabia, for instance, has now abandoned its policy of increasing food production to become be self-sufficient. Saudis are actively purchasing land in African and Asian countries to meet their food needs. China and India, that represent about 40% of the world population, are following a similar approach and invest heavily to help develop land in Africa. In countries where drinking water is scarce, there are discussions about the need of not exporting, as export of food is actually water export as well.

If a number of countries face a water shortage, others have a different situation. This is the case for large areas of North America and South America. Especially Brazil disposes of large water reserves. Together with a favourable climate, Brazil has many advantages to produce food, especially animal protein. According to Osler Desouzart of OD Consulting, the production of 1 kg of beef requires 16,000 litres of water, while it takes 6,000 litres for 1 kg of pork and only 2,800 litres for a kg of chicken. This shows why Brazil has been gaining market share in beef and poultry. It indicates that intensive animal production will be more challenging in countries where water is not as abundant. This also tends to show that poultry will be the most successful type of land animal production. The US and Canada have large water reserves, although there are also clear regional differences. The South West of the US becoming increasingly arid, and one can wonder if California, that currently produces most of the fruit and vegetables for the North American continent, will be able to keep its production levels. It is likely that fresh produce will be gradually produced closer, even inside, the large urban centers in the northeast as well. Considering the emphasis on water preservation, it is also interesting to note that before the housing crisis in the US, the most irrigated type of plant production were lawns, using three times as much water as US corn. Food recalls are another source of water waste, especially meat and eggs recalls. From the numbers presented above, it is easy to see how much water is lost when dozens of tons of animal products must be destroyed, not to mention the huge food waste that this represents.

When it comes to food and water, aquaculture offers interesting possibilities for the efficient production of protein. Fish produced in the ocean do not consume freshwater. This saves large amounts that can be used for other purposes. However, one of the challenges for the fast-growing aquaculture industry will be to be able to source feed ingredients that do not directly compete with other farm animals and direct human consumption. Land-based aquaculture is developing the very interesting concept of aquaponics, which is a combination of fish production in tanks combined with the production of vegetables indoors. The system recycles the water used for the fish tank, and helps fertilize the plants with fish waste. This is a very water–efficient system that can help produce large amounts of food on a small area, making it fit for urban farming units.

Copyright 2010 – The Happy Future Group Consulting Ltd.

The quiet revolution of food retailers

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While many debates continue in the political and “parapolitical” world about many aspects of food production systems and the impact of human activity on the environment, retailers lead a quiet revolution. Without making the headlines, they gradually change the way their suppliers will do business in the years to come.

Such an evolution is certainly welcome, especially in a time where important decisions need to be made. Political leaders seem unable to reach any agreement on environmental issues, as the world could see at the late Climate Summit of Copenhagen. In the food sector, there are many discussions going on about sustainability and genetic engineering, to name the two hottest items, but the political class does not seem to generate clear and concrete action plans.

Just like what happened in the 1990s about food safety in Europe, retailers are taking the initiative to create momentum on the current issues. The problems that plagued the food industry in Europe, such as salmonella in poultry, the mad cow disease, or the dioxin in Belgian fat for chicken feed showed a number of weaknesses that needed to be addressed. In the case of BSE, UK retailers did not wait for British or European legislation to demand meat and bone meal-free feed for farm animals. As I was working for a company supplying the UK market with chicken meat, I can testify that these were dramatic times. Tough decisions had to be made on a very short notice that had serious financial consequences. By then, a couple of reasons made the retailers took the lead. First, the inability of the government to prevent and tackle the issues was creating a bit of a vacuum on leadership. Consumer confidence in their institutions was fading, and retailers were the only ones, true or not, perceived to take the proper actions to protect the public. The second reason was the fact that many retailers had their own private labels. In this case, the problem was not the supplier’s problem anymore because the supermarket chain could have risked serious PR damage if a food safety issues would have been associated with their brand.

This time, retailers are again in the position where they can present themselves as the consumers’ champions. Legislation is slow to move and make significant decisions. The involvement of interest groups adds to the infighting and delays decision-making.

To prepare for the future, they already have come out with plans and communication on how and where they want the food they sell to be produced, and they try to offer a choice to consumers. By doing so, the most active among them are setting new standards, and forcing the whole production and supply chain to think about the things to come.

In previous blog posts, I have mentioned some of such initiatives, and in Future Harvests, I described the increasing leadership role of food retail in agricultural practices.

In particular, I mentioned the carbon footprint labelling on dairy products by Tesco, Wal-Mart’s Sustainability Index questionnaire to suppliers, and the seafood sustainability programs of many retailers. Marks & Spencer started their Plan A in 2007 with the objective of making their business more sustainable. To achieve this, they are involving their suppliers and the farmers producing for them to carry out the changes that M&S finds necessary for a better future.

More recently, new initiatives indicate that retailers are pursuing further on such initiatives. Wal-Mart came last week with their plan for sustainable agriculture. In the UK, Sainsbury let know last week that they were committing GBP40 million to invest in farming. Earlier this week, Carrefour unveiled their “Reared without GMO” program. In their stores in France, they will sell 300 food items labelled as being GMO-free, to offer consumer a choice based on transparent information. If Carrefour ventures into this, one can be sure that they do so because they already know that this will be good for their business. By gaining market share, it is very likely that their competitors will soon react by issuing similar programs. The EU Commission may be struggling to figure out how to deal with GMOs, but Carrefour says “Let the consumers tell us!” Vox populi, vox dei!

Of course, such initiatives do not please everyone. Today, I could read in a blog for a US magazine backed by the meat industry some interesting reactions about Carrefour’s new plan. Some readers were bringing up the typical arguments. Meat would be so expensive in Europe. Well, meat is quite affordable in France, even without GMOs, so think again! The other argument was about freedom of choice: people should be able to eat what they want. By labelling its food item, Carrefour does just that. French consumers are free to buy at Carrefour or somewhere else, and they have the right to choose what label they prefer. The freedom of choice is ironic coming from the US meat lobby, since American consumers do not have that freedom. Reared with GMOs is pretty much the only choice in the US. For now, that is. However, it is interesting to see on Carrefour’s press release that the pictures of fish, chicken and pork chops are exactly the same, regardless of whether they would be grown with or without GMOs.

In the 1990s, British and European consumers, and retailers, were challenging food industry practices because they were worried about their health and about the lack of transparency about food. Nowadays, in the USA, consumers are increasingly suspicious of their agribusiness, because they are worried about their health and the lack of transparency of the industry. Beef recalls because of E. coli, egg recalls because  of salmonella, spinach contaminated with manure are in the news on a (too) regular basis. They are also increasingly aware, and suspicious, of the relations between interest groups and their government agencies, and how this influences decisions on what they eat.

Retailers are now saying that they are not waiting for politicians to make decisions. They have defined their vision, they know what they want, and they are passing the message on to the suppliers. What would happen in agribusiness USA if Wal-Mart took a similar approach as Carrefour?

Copyright 2010 – The Happy Future Group Consulting Ltd.

What if agricultural subsidies were a good thing?

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Over the past decades, agricultural subsidies have received an increasingly bad publicity, especially as a major part of the WTO Doha round of negotiations is aimed at removing them.

Yet, with an increasing world population and the need for more food production, one can wonder whether agricultural subsidies really are a problem. History has shown that subsidies can be a very effective way of boosting production. For instance, subsidies have been a major element for the European Union to increase its agricultural production in the decades following WWII. To show how effectively money talks, you just need to see how financial incentives have made European vintners pull off vines, then replant them pretty much at the same place later. Subsidies have encouraged Spanish farmers to plant many more olive trees than the olive market needed. Subsidies work. When people are paid to do something, they usually do it quite willingly.

The true problem with subsidies is to have a cost-effective system. Subsidies must help produce what is needed. They are only a means and they must not become an end. Subsidies also need to deliver the right incentive to be effective. Too often, they have adverse effects because they do not encourage the right behaviour. An example of subsidy that seemed to aim at the right action and yet did not deliver proper results is the subsidy on agricultural inputs by the Indian government. They subsidize fertilizers with the idea that, this way, fertilizers would be more affordable for farmers and therefore the farmers would be able to increase their yields. As such, this is not a bad idea, but the practice showed a different outcome. Farmers with little or no money were still not able to buy enough fertilizers, and richer farmers just bought and used more fertilizer than necessary. The result has been an over fertilization in some areas and an insufficient fertilization in other regions, as I explained in more details in my book, Future Harvests.

For subsidies, too, quality must come before quantity.

Subsidies must be a part of a comprehensive plan towards the essential goal: feeding more people. They must be part of a market-driven approach, and they should not to entertain a production-driven system. Subsidies, or should I call them government support, take many forms and many names, from straight subsidies to grants, “market support mechanisms”, “export enhancement programs” or specific tax regime for farmers, etc… There is quite a bit of semantics involved. Perhaps the stigma on subsidies comes from their being granted by governments. Aren’t private investments just another type of subsidies? After all, that money aims at encouraging more production. The main difference is about the kind of return. Private investors look for a capital return, while governments look for a societal return.

A positive example of effective money incentive linked to a comprehensive approach that involved government and private companies is the rice production boost in Uganda (which I also present in Future Harvests). This effective policy helped increase production 2.5 times and turned Uganda from an importing rice country to a net exporter within 4 years!

I believe that the main bone of contention about subsidies is the competition on markets. Every player involved on world markets, either importers or exporters wants 1) to have the best conditions to compete against others and 2) wants to make conditions for others to compete as difficult as possible. The untold story is that many countries would like others to cut their subsidies while keeping (some of) their own. Only the competitor’s subsidies are unfair. Moreover, addressing subsidies is not enough. At the same time as subsidies, all import restrictions, such as anti-dumping tariffs or import duties should be looked at, as they are blatant attempts to skew the competitive positions.

The issue is not really aimed at developing a comprehensive plan to feed the world. The Doha round started in 2001, but since then, we have had the food riots of 2008 and the spectre of further food inflation. This, too, should be taken into account.

Considering how critical financing is for farmers, and that many farmers (more than half in the USA) need a second job to make ends meet, some form of financial support is generally very useful. Also, let’s not forget that we will need farmers for the future and agriculture needs to be an attractive profession if we want to have the people that we need to produce all the food!

Copyright 2010 – The Happy Future Group Consulting Ltd.

What a game changer my book is!

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Future Harvests has been published less than two weeks ago, and it is going to change my company rather profoundly.

What started as a blog on the side of The Happy Future Group Consulting Ltd. is now about to become the very core of my business.

Not only the book sales are already higher than I would have thought, the book is creating much interest for my other activities. The book has already been shipped not only to Canada or the USA, but also as far as South America, Asia and Europe. This is truly amazing.

The reactions to the announcement of the book’s publication have been amazingly enthusiastic and they made me feel like I had just produced something that many were waiting for. This is both very rewarding and very humbling, because working on solutions for future food supply to an increasing world population is a huge task. Since the publication, people with whom I never had contact before, from all around the world, have approached me, thanking me for having engaged in this venture.

New contacts are asking me to participate in conferences and to organize workshops and seminars for them. The CBC (Canadian Broadcasting Corporation) is interested in having me on one of their programs. Of course, the concrete discussions are still to come, but I have to admit that my Food Futurist is now showing incredible potential.

The part on policy making and strategy is getting more attention, too. This activity has the potential to become a solid business that will need to involve more people in my organization. I have already started to develop a plan for this. I can see interest coming from companies, professional associations and governments, not only in Western countries, but in many emerging countries, such as in South America, Southeast Asia, India, or Russia to name a few.

The first step that results from all of the above is for me to formalize the Food Futurist further into a more structured activity than it has been so far. This has started with my defining and posting the mission on all the business pages of the website. The mission is “To help our clients challenge today’s certainties, shape the future, and manage the transition with a targeted and practical action plan for the coming 10 years and beyond”.

The following step is going to be to develop business around this mission and the principle expressed in Future Harvests.

If you are interested in this, please do not hesitate to contact me. Talking is cheap. If you know people who would be interested, please pass it on to them.

As Humphrey Bogart’s character said in the movie Casablanca, “I think this is the beginning of a beautiful friendship”.

The sockeye salmon returns with some lessons

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This could have been the third example, after canola and vines, of what I called earlier “Science being taken hostage”, but this story actually goes beyond just the tactical use of selected science.

The Fraser River sockeye salmon is returning in record numbers to British Columbia (BC) in Canada, the highest numbers in a century. This good news comes at a time when discussions about the disappearance of sockeye were reaching a climax. Last year, the number of returning sockeye salmon was very low and considered by some as alarming. Scientists, and pseudo-scientists, were presenting their own conclusions and they were debating about how the future looked.

Those who are not familiar with the salmon issue in BC need to know that for 20+ years, a war between environmentalists and salmon farmers have been waging. Although all the participants in this debate claim to base their statements on science, Nature is just throwing facetiously some oil on the fire. Environmentalists have accused salmon farms of being the cause for the (apparent) depletion of wild salmon stocks. Much of the accusations rested on research carried out by a local environmentalist who linked her sea lice counting and mortality of juvenile pink salmon to fish farms. Until last year, she seemed to have something of a case, as returns of pink salmons into BC rivers were low. Last year, though, the pink salmon returned in large numbers, which contradicted her theory. For years, the fish farming industry did what it had to do. It always denied any responsibility in the decreasing numbers of pink salmon, using the selected relevant science to support its case.

Ironically, when the pink salmon returned massively last year, salmon farmers were cheering the good news, but environmentalists had been rather discrete to express what should have delighted them. Maybe good news is not always good news. To make things more twisted and controversial, last year’s returns of sockeye salmon, which is a different species of Pacific salmon, were quite low. Although environmentalists never addressed any concern about salmon farms and sockeye numbers, they suddenly saw a connection. The debate became so animated that the Canadian Prime Minister himself decided to set up an inquiry about the disappearing Fraser River sockeye salmon. An inquiry commission was set up with the objective of reviewing with all parties involved the situation, and then present some conclusion. Of course, science(once again) must be the basis for the investigation. I can give you the summary of what the conclusion of the commission would have been, and still might be. “The ecology of salmon is complex and it was not possible to identify any culprit for the disappearance of sockeye salmon with certainty. The commission recommends a number of actions to be taken by all stakeholders in their respective fields of activity. The commission recommends the set up of a monitor group to report and address any new development that can lead to a better understanding and management of the sockeye population”. Something of that nature. The thing is that the life cycle of salmon is quite complex and involves a vast array of environmental conditions in the mountains, in the lakes and rivers and in the ocean. It takes 4 to up to 6 years for a sockeye to return to its birthplace and many events can take place on their route. The high return depends on how many eggs were laid, how many hatched, how many juvenile salmon survived in fresh water and later in salt water. The survival rate can depend on how much food they had available on their trip, or on the population of their natural predators. And all this may be the result of human activity, but also of natural causes. Fact is very few people really know, and can really know what happened. Yet, most of the participants claim to have the knowledge that explains a drop in the sockeye population. There just seems to be less knowledge available about why the population increased.

The whole controversy is not so much about science as it is about politics. In the highly polarized political world of BC, looking for consensus is obviously not enough fun. Fighting is where the joy is, even if it means that everyone may lose in the end. Let’s face it; it does not take a genius to figure out how to have a harmonious cohabitation of fisheries and aquaculture. Unfortunately, there is little action in that direction. Once the problem is solved, there would be nothing left to criticize. Being a critic is a remunerated job.

With the high numbers of fish coming back, a new claim appears: salmon farms are not causing any problem at all, without presenting any science-based proof of that. Of course, this conclusion is already challenged. Remember what I said about polarization. The controversy will go on, as time goes by and future returns will probably show lower levels again. Salmon farmers are not off the hook.

And this brings me to what goes beyond the discussion about science in the salmon debate. It illustrates several topics that I address in my book Future Harvests: sustainability and market orientation. With the high numbers of sockeye, the word out there is to catch as much as they can. I was talking with a fish broker last week. He told me that there is so much fishing activity in the plans that there is a shortage of ice and of totes to hold the fish in processing plants. A few weeks ago, the BC environmentalists denounced the certification of Fraser River sockeye as sustainable by the Marine Stewardship Council, claiming that the low return numbers of last year told a different story. Now, the numbers are so high that fishermen seem very eager to fish as much as possible and sustainability concerns have disappeared. It could be a good idea to take only what is possible to process and sell, and let the surplus of fish to swim back into the rivers and lay as many eggs as possible. This would help keeping high numbers for the return in 4-6 years from now. It would be rather sad to deplete the future stocks. Although fishermen have always criticized salmon farming companies for being driven by profit only, their attitude with the current situation follows pretty much that logic, though. With prices going down, I expect to hear soon some fishermen complain that there is too much sockeye. Question is who will get the blame this time?

This rush to catch that many fish illustrates the lack of market-oriented thinking. In fact, it could hardly be any more production driven. Fish brokers wonder where to sell all that fish. Simple economics tell that the price for salmon will fall. This has already started, and is likely to continue. Maybe saving more salmon to go reproduce in the rivers would have contributed to get better prices, too. In economics, this behaviour is known as the “preference of the present”. For instance, when you have a limited amount of water to cross the desert, you will choose to drink it up to satisfy your thirst, instead of rationing it and keep some for tomorrow.

Tonight, I will go for sushi!

Copyright 2010 – The Happy Future Group Consulting Ltd.