Building a food industry that is the gold standard

JOE GILL: Building a food industry that is the gold standard

The economics of food production often follows the tenets of efficiency.

In so doing, it can ignore broader issues of which environmental damage and animal welfare are two that are becoming key consumer and political priorities.

Like many, I was educated in my economics classes to recognise the benefits of scale and efficiency.Increasing the volume of production while minimising costs delivered products that could be sold at prices which stimulated consumption.

Growth using that formula produces cash flows, profits, and returns that justify the capital investment needed.

These principles, in theory, apply to virtually all products and in particular to commodities.

By focussing on cost while expanding volume, an individual or corporate can expect positive returns.

This school of thought applies across the global food industry presently.

At the factory level, managers are taught to construct facilities that allow for large scale volume production at the greatest speed to provide products at competitive prices.

The farmers who are tasked with delivering the raw materials to these factories work to the same tempo: Maximise production while minimising costs.

Too often, this approach has outcomes that are, as economists say, sub-optimal for the other key agents in the food production system — the environment and animal welfare.

After years of admittedly amateur levels of exposure to farming, some hard truths have materialised in my city-educated brain.

The environment, and animals, are inextricably connected to the success or failure of the global food industry. Consider an extreme example to debate this point.

Imagine a gigantic animal feedlot where cattle are housed indoors and fed manufactured compounds from thousands of miles away.

It does not include any costs associated with the environmental damage or welfare issues involved in the enterprise.

Think about a farm in which all hedges have been removed and a single type of grass sowed to support the production of milk.

This, too, follows the basic principles of economics to optimise efficiency but not the costs associated with reducing biodiversity.

Take the farm that enhances biodiversity and animal welfare.

It includes fields bordered by hedgerows and has animals that calve in spring to provide summer nurturing.

The milk or meat from such farms is the gold standard from a marketing perspective.

If you asked any informed consumer, I suspect they would opt for this type of farming as the core source of their food.

But the laws of market economics do not operate that way at the moment.

If consumers and politicians want to see that vision of food production, they will have to use a series of sticks and carrots to achieve it.

Food produced by so-called factory farms would have to have financial penalties imposed; biodiversity measures would require explicit financial incentives; and animal welfare bonuses would be required too.

All that adds up to a bill that consumers and taxpayers would have to stomach, while farmers would have to reverse the methods they have been actively encouraged to pursue for decades.

As the new version of the Common Agricultural Policy is being designed in the EU, these choices have to be amplified if we are to future-proof a food industry that respects the environment and animals.

It’s a clarion call growing louder each year. It must be applied with the same rig our that applies to the marketplace at the moment.

Joe Gill is director of origination and corporate broking with Goodbody Stockbrokers, His views are personal.

More on this topic

Novartis firm posted sales of €112mNovartis firm posted sales of €112m

Two key appointments at e-commerce groupTwo key appointments at e-commerce group

Businesses without online presence considered 'outdated' by two-thirds of Irish consumersBusinesses without online presence considered 'outdated' by two-thirds of Irish consumers

Molex Ireland losses reached almost €8m last yearMolex Ireland losses reached almost €8m last year

More in this Section

Netflix and Nickelodeon form multi-year deal, one day after Disney+ launchNetflix and Nickelodeon form multi-year deal, one day after Disney+ launch

eir teams up with Amazon Prime to offer customers access to the service as part of TV packageeir teams up with Amazon Prime to offer customers access to the service as part of TV package

Business movers: Award-winning Katie Cunningham joins BBDO DublinBusiness movers: Award-winning Katie Cunningham joins BBDO Dublin

Non-stop flight from Heathrow to Sydney takes offNon-stop flight from Heathrow to Sydney takes off

More by this author

Red flag warnings raised over Irish broadbandRed flag warnings raised over Irish broadband

Firms can turn things around if they 'Boks' clever and learn leadership lessons from Rassie ErasmusFirms can turn things around if they 'Boks' clever and learn leadership lessons from Rassie Erasmus

Diversification is key on rocky road of investmentDiversification is key on rocky road of investment

Greening of Cork could  send it top of investor listsGreening of Cork could send it top of investor lists


Lifestyle

I’d always promised myself a day off school when Gay Bryne died.Secret diary of an Irish teacher: I’ve been thinking about my students, wondering who their ‘Gay Byrne’ will be

In an industry where women battle ageism and sexism, Meryl Streep has managed to decide her own destiny – and roles, writes Suzanne HarringtonJeepers Streepers: Hollywood royalty, all hail queen Meryl

'Ask Audrey' has been the newspaper's hysterical agony aunt “for ages, like”.Ask Audrey: Guten tag. Vot the f**k is the story with your cycle lanes?

Daphne Wright’s major new exhibition at the Crawford addresses such subjects as ageing and consumerism, writes Colette SheridanFinding inspiration in domestic situations

More From The Irish Examiner