Keeping it niche is key to global agri-food success
Food prices will continue to soar, and the big winners in farming will all be upper tier, quality producers. The bank’s book, The Future of Farming: The Rise of the Rural Entrepreneur, cites a Unilever project with small holder tea farmers in Kenya.
The Kenyan farmers’ more sustainable practices resulted not only in 5-15% greater yields, but also delivered improved tea quality, reduced input costs and higher tea prices. As a result of getting a better price for their better product, these farmers’ incomes increased by 10-15%.
The book also tells the tale of Dutch farmer Gerjan Snippe, managing director of Bio Brass, a company grows and supplies a range of organic brassicas directly to retailers and food producers. A farmer’s son turned agri-economist who then overcame his teenage desire to leave farming, Mr Snippe is now running a hugely successful business based on what he calls “commonsense farming”.
While he was studying Economics at the University of Rotterdam, Gerjan thought of organic farming as idealist, unprofessional, low quality, afflicted by woolly thinking and blighted by diseases. However, his market research showed that retailers wanted to source organic stock and were willing to pay a premium price, and so he created a business to meet the demand.
“Retailers needed good, professional organic products, which at that time were hardly available,” he said. “At the same time, I found out there were some really good organic farmers and, contrary to what I first thought, organic farming made good sense and was actually quite simple.”
To increase yields and reduce costs on additives and other inputs, Gerjan reverted to the old crop rotation methods used by his grandfather. In doing so, he was returning to a time 50 or even 70 years prior to Dutch farming going intensive.
Mr Snippe sells to mainstream retailers because he viewed the niche organic production chain as inefficient. This was most true, he said of the supply chain, which had too many links.
To ensure consumers were getting fresh goods, Bio Brass developed innovative on-field packaging, limiting the number of operations, and reducing waste in smart storage systems. The firm’s intelligent retailer ordering system gives him a week’s notice on orders.
“With our new packaging system, we could pack on the field,” said Gerjan. “We improved our storage facilities and we delivered on a daily basis so we minimised storage time as well. As a result, the shelf life of our products increased and they looked better.”
Bio Brass has set up a mini farm to teach schoolchildren about the origins of food and how crop rotation works. Gerjan Snippe believes organic and conventional farming will grow closer in the coming years, sharing ideas on sustainability and efficiency, and connecting with retailers and consumers.
Rabobank’s report also incorporates the views of poultry farmer in Australia and dairy farmers in Chile and New Zealand, among many others. The report looks at themes as diverse as succession, sustainability, balance in the supply chain and the growing use of social media in agri-food promotion.
However, the over-riding backdrop to this farmer survey-based Rabo publication is the predicted surge of global population from seven billion today to nine billion in 2050. This population explosion will place huge pressures on food producers, while at the same time serving up huge opportunities and critical choices on the markets they are targeting and the type of farming they care to choose.
In today’s world, close to 870 million people are chronically hungry and 2.5m children die of hunger every year. While natural resources like land, soil and water will come under increasing pressure, demand for food will spiral.
“Over the next 40 years, global food production must almost double,” said Piet Moerland, chairman on Rabobank’s executive board. “This increase is driven by both population and economic growth, and families will have to produce it. In contrast to the green revolution, yield growth needs to be realised with less water, fertiliser and chemicals.
“Some of the growth can be covered by land expansion, but this will be very limited. Even with the right soil and climate, enabling factors such as infrastructure, access to finance and political stability are required to use this land to its full potential.”
Mr Moerland said farmers will have a crucial role to play in future global food security, but they are not alone. They share their ‘farm to fork’ responsibilities with global consumers, retailers, producers, traders, governments, academics and banks.
Most farmers living in first tier countries are already thinking sustainably. Carbon emissions have been cut by 63% in the past 60 years through production efficiencies and nutrition management, while dairy processing uses 25% less energy.
Compared to the 1940s, today’s dairy production uses only 10% of the land, 23% of the feed and 35% of the water used per kg of milk. Similar trends are evident in most other food production systems. Compared to 1970, the carbon footprint of pork is 31% less today, while poultry is down 43%.
The Rabo report also draws a direct line between profit and sustainability. You might expect yield disparity between top and bottom tier countries; e.g. the six tonnes per hectare harvested by US cereals farmers versus the 1t/ha in Nigeria and Kazakhstan.
You’d also probably expect the threefold higher milk output achieved by the top 25% of Dutch farmers versus the global average.
More surprising, perhaps, is the 45% higher yield (i.e. about 3,000kg or about 2,913L more per cow) of the top performing 25% of Dutch farmers versus their 25% least productive Dutch colleagues.
Similarly, the top Dutch pig farmers raise over five piglets per sow per year more than their bottom tier colleagues. By this measure, it would take 40% fewer pigs globally to produce the same current worldwide pork production volume.
According to World Wildlife Fund (WWF), the world’s best performing farmers are about 100 times better than their least productive colleagues. However, the poor performers are still responsible for 50% of the global environmental impact of farming.
Today, farmers are cultivating 1.5bn hectares. Rabo estimates potential for expansion of about 15% globally.
The WWF says man’s global carbon footprint is exceeding the world’s capacity to regenerate by 50%. Sustainable farming is a term we will be hearing a lot more about in the coming years.
