Doing food business in the climate crisis age
Robert de Graeff, Senior Policy Advisor, European Landowners' Organization
Thursday, Oct 15, 2020
September 2020 was the hottest month ever recorded in a year that looks likely to rank among the top five warmest. Up in the Arctic, the sea ice is at the second lowest level ever seen and a chunk of ice of almost 114 square kilometers – twice the island of Manhattan – has broken off to disappear into the rising sea levels. Droughts, flooding, and extreme weather events are continually on the and show no signs of abating. For the food chain, the consequences have already been bad and are set to become much worse. Shifting weather patterns impact harvests, desertification pushes vulnerable populations into growing megacities ill-equipped to deal with the influx, and hunger is on the rise in the developing world.
There is no question as to ‘whether’ business models along the food chain will change and adapt in order to cope with the shifting reality. Should they not, the new climate reality will force them to, or they will simply cease to exist. Adapting businesses to the age of climate breakdown is an urgent challenge, not just for those who make their living in the food system, but even more for literally everyone on the planet – all are dependent on a plentiful supply of safe, nutritious food.
When discussing the issue of new business models in the age of climate breakdown, it is important to make three related points; the first is that the majority of ‘new’ models will not be wholly new – by necessity most will be adaptations of what already exists, especially where farming is concerned. Even if radical political, social, and economic changes take place, soils will take time to regenerate, harvests come in seasons, and we are still short a whole generation of young farmers. While there is always a temptation to look at startups, disruptors, and wholly new (digital) enterprises, the reality of the food chain is a basic interaction between labour, machinery, soil, weather, and time. Until and unless wholly new methods of food production are devised, farms (in one way or another) will be with us for the foreseeable future. There will be no tabula rasa from which to start anew.
Furthermore, we cannot assume that most actors in the food chain – farmer workers, supermarket managers, supply chain buyers etc. – have the education or knowledge necessary to reform the current business structures in which they operate. Certainly, there has been a marked increase in the professionalization of farming, but simply assuming that most actors are aware of the latest business or sustainability trends would be unreasonable; one should not expect a land manager to turn into an pollination expert or professional water quality monitor. Any serious, systemic change to businesses in the food system needs to involve a combination of continued education as well as simple, clear messages that can be implemented and understood by all levels.
The second is that the current state of the food system has hard brakes built in that – unless deep reforms are made and resources put in place – will not be easy to overcome. The first is the mismatch between financial realities of the food chain; many producers even in Europe earn below non-farm average incomes and the demand for investment and new production methods. While some of new land management techniques, digital applications, and other tools show promise when it comes to adaptation and reducing Co2 emissions in the sector, all these have to be paid for.
For most farmers, this is not realistic even if they are fully committed to action. Even though average farm incomes have risen in the last decade, they are not in a position to pay for the deep transitions that are often required, ranging from machinery to buildings to expansion or setting up short supply chains. If prices do not rise dramatically, either private finance will need to step in (but it will expect returns), or the state should take the kind of action not seen since the end of the Second World War when famine in Europe was barely averted.
The third is that the food system cannot “take a break” and reform itself. People will need to eat today and tomorrow, and – as described above – the food system does not have the financial resources to pause itself. Repairs to the airplane will have to occur while it is in the air. The brief spike in Covid-19 related empty shelves across Europe, mainly due to logistics issues and closed borders rather than a lack of production, shows what even brief disruptions to a fragile system can do. Should the pace of climate change and the lack of systemic global action make such disruptions systemic, it is difficult to envision how much change the system will be able to absorb while fulfilling its basic, uninterruptable, mission of keeping people fed.
Despite these obstacles; reforming existing businesses, the lack of financial resources and investment, and the need to make changes without halting – there are encouraging signs that demonstrate how food chain businesses can reform, how new ones can be created.
If we are to be serious about combatting climate change, then markets for carbon sequestration – whether in the soil or through forestry – should arise to fill this need. We are already seeing the first signs in the world of carbon offsetting in the private market where corporations and individuals pay for tree planting and soil management. Since the advent of the covid-19 crisis we have, perhaps by force, seen an increased interest in local food and short supply chains. It is to be hoped that land managers and local food businesses can permanently capture some of this renewed interest, as well as play into increased local demand due to homeworking However, it is probably not reasonable to maintain the existing consumer offer in the supermarket while switching to a fully local supply chain; greater efficiencies and better distribution of rewards in global markets will certainly need to feature as part of the solution. When it comes to industries like industrial hemp farming for the production of hemp-based CBD products, one may be unable to reliably produce the volumes of industrial hemp needed for mass-produced CBD extracts while also being sustainable.
Correctly, there is now a significant focus on the circular economy. Here too, the food system cannot just do better (food waste remains a significant problem) but reshape and rethink its business models to reduce its input recycling and use which will lower overall production costs. Establishing a secondary market for “waste” such as manure, leaves and stems, leftovers, and other byproducts of the primary production cycle could help reform the food system itself. Better care of local and international biodiversity will assist the food system as well as provide possible earning models all along the food chain – there is a widely available body of knowledge that shows the additional beneficial effects of well-functioning ecosystems; from clean water to pollinators and beetle banks.
However, we cannot expect such markets to develop of their own accord in the time we have set for ourselves to halt global warming. Currently, the development of such private markets is too small and haphazard if we are to keep below 1.5 degrees global warming. State influence, whether through European instruments such as the Farm to Fork Strategy and the Common Agricultural Policy, or through market-making powers like cap-and-trade or the new criteria being developed under the Sustainable Finance Agenda will be vital in creating the top-level demands that can transform the food system.
Reshaping this complex, multifaceted, and financially strained system will only be possible through significant public and private investment, but that will only take place at the scale required when we move beyond voluntary initiatives and into both regulatory demands and efficient, well-structured market rewards and public subsidies. It will also require an active and much more aware citizenry that appreciates some of the challenges discussed in order to create the political will necessary that will allow systemic change for the better to take place.
Robert de Graeff
Senior Policy Advisor
European Landowners’ Organization