Food Systems Podcast 30
In discussion with Marc Rosiers Podcast summary
Thursday, Sep 02, 2021
Strengthening farmers’ position in the food chain
In our latest podcast, we talk about how to reconcile a better living for farmers with affordable food for consumers, as well as how to include eco services in the price of farm produce. Our guest Marc Rosiers, Managing Director of MR Food and Agriculture Consulting, also discusses local supply chains, cooperatives and the potential of carbon farming. For a taster, read our short summary below, or dive into the full 30-minute Food Systems Podcast for much more.
Farmers want a good living and high prices for their products. Consumers prefer to pay less for food to protect their standard of living. Can this contradiction be resolved?
The market is growing in importance in EU policy. We are seeing price volatility and depressed agricultural prices. Price as a signal to supply and demand is not really effective, because production cycles are quite long. There is also a lack of permanent, systematic, accurate information on both supply and demand to guide farmers in their production decisions. So while demand is quite steady we see a lot of shocks in supply. Oversupply and low prices – or shortages, with high prices. As well, the price level in some European countries is depressed compared to the world market price.
What are the answers? We have to look for economies of scale and scope – more cost-efficient production and strategies like cold storage of produce.
Agriculture has tried to find a solution to these shocks in supply. Over the last seven or eight years, the Commission has been working hard to strengthen the position of agricultural producers in the food supply chain. Now, in all agricultural sectors, you can create producer organizations so that farmers get access to economies of scale or scope. Together, they can negotiate better supply conditions and prices and exchange best practices. They can invest in sustainable farming and risk management tools, common equipment, storage and other facilities. A producer organization can play a very important role in supporting viable farm income.
There’s only one important drawback – that’s governance. The larger the cooperative, the more difficult the governance.
Do you expect the movement towards cooperatives to grow in the coming 5-10 years?
Yes, because cooperatives and producer organizations receive exemptions from competition law. Normally, farmers cannot exchange information like prices and volumes with each other. But in a producer organization, they can. Another advantage is that processors or retailers are interested in developing direct relationships with farmers’ organizations – but not with individual farmers.
Could a farmers’ cooperative have its own factories or production sites? Do they still need intermediaries?
I think everybody has to remain in their own competence. I don’t see this happening yet. At the moment, I see the reverse – retailers establishing a dedicated supply so they can say to their clients “your food comes from there”. This is also part of the solution to depressed prices – it can eliminate leakages, and this will add to the net income of the farmers.
What about farmers selling directly to consumers through short supply chains, like farm shops and online business models? Do you see this growing?
Agriculture is not only one business model. Short supply chains are one model that will remain because being local is becoming very important. Shortening supply chains brings us back to dedicated supply, eliminating intermediaries, stopping leakage – and more of the income remains with the dedicated supply.
There’s been a lot of talk about a “true price model” which reflects not only production costs and margin of profit, but also environmental externalities or eco services. Is it possible to move to a true price model in agriculture?
Theoretically, it’s a marvellous concept but there are a lot of practical barriers to implementation. How will you impose this type of calculation on imported goods? Food price affordability is one of the key concepts for the Common Agricultural Policy. If you double and double prices, it may not be a big issue for the average consumer, but it is for people below the line. So you need to have accompanying measures of social redistribution.
There is a lot of urgency in the climate debate. Will things like carbon storage and biodiversity promotion be an additional source of farm income or just another cost?
For the first time there is an opportunity for farmers to be rewarded for eco services. Carbon is leading the way but there are a number of barriers. There is a lot of talk about carbon credits but before you can issue credits you need to certify all the practices of the farmer. There has to be trust in the robustness of the mechanism that verifies the farmer is delivering storage of additional CO2. This is not yet being put in place.
Once your carbon certificate is there, then you have to develop markets where you can trade it. I am optimistic because we already see more demand for carbon credits than supply.
If you could give one policy or practical idea to create a more sustainable food system, what would it be??
The Commission wants to create one sector to integrate agriculture, forestry and land use in one regulation, to reconnect what’s happening in the soil with what’s happening above the soil. I think that’s essential.
If you have found this short summary interesting, there’s lots more to hear in the full 30-minute conversation. It is available now on iTunes, Podbean or Spotify or on this website.
Marc Rosiers holds a Master of Science in Economics from the KU Leuven (1980). In 1981 he became Master...see more of Science in Economics at the London School of Economics. He can look back on 25 years of experience as internal consultant and board member in agri-food companies and professional associations such as there are Agri Investment Fund, Boerenbond, etc. Since 2016 he is managing director of MR F&A Consult which serves its clients with independent, evidence based and applicable advice on strategic management and public affairs and lobbying issues. In this capacity, he is an advisor to the ELO European Policy Group.