At the Oxford Farming Conference (OFC) last week, we launched a report on the role of supply chains in achieving responsible food production on farms. It is a dry read, but I’d urge anyone involved in producing or supplying food to read it, and to share it, because it calls for a reset of the UK’s food system.
The report’s author, Lesley Mitchell, described farmers as the most important ‘asset’ for food companies looking to reduce their greenhouse gas emissions (GHG), adding that farms have huge, untapped potential for the food chain. However, without more shared investment and fairness shown towards farmers, the very future of the farming sector is at risk.
Three of the report’s findings stood out to me, firstly that supply chain relationships with farmers need rethinking. Contracts can be burdensome, unjust, and not cover costs of production, let alone giving sufficient profit for further on-farm investment. Given that 90-95% of ‘scope 3’ emissions come largely from farm production, the capital outlay and systems’ change needed is significant.
Secondly, genuine cost-sharing must be achieved along the whole chain to ensure on-farm GHG emissions reduction, meeting standards and environmental compliance – the responsibility mustn’t be left at the door of just farmers and policymakers to address.
Thirdly, the sharing of the value generated from the sale of a product needs to be determined, and to reflect, the true costs of production, the environmental and social costs.
Readjustment of on-shelf food prices may have to wait until the current cost-of-living crisis has eased, but my belief is that the relationship between the price paid, and value placed on food, also needs wholesale mindset change. Current profits will not generate sufficient profit for anything but treading water – at best – let alone what’s needed to meet net-zero, social wellbeing, and environmental goals.
Sustain’s recent Unpicking Food Prices Report gave some context to the food price discussion, by highlighting the profit share on key UK food items. A farmer’s cost of production for a 350g four-pack of beefburgers, with a retail price of £3.50, is 90p, yet they receive only 0.03% of the profit. The situation is mirrored in dairying where a 480g pack of mild cheddar that sells for £2.50 costs the farmer £1.48 to produce, yet the profit is just 0.02%.
The OFC report outlines some areas where policy could drive change. Payment mechanisms and adjudication, not only for environmental gains, have potential to drive supply chain shifts that bring more fairness to trading and relationships. This could include introducing mechanisms that ensure more transparency on price paid and for what. Equally, public procurement contracts – such as supplying to hospitals – are still a missed opportunity, these could be such a force for good as pro-domestic produce, providing sufficient returns, as well as incentives for good practices – such as GHG emissions reduction.
The OFC report also touches on how policymakers handle international trading relationships, emphasising that they offer both opportunity and risks that could prove damaging by undercutting UK farmers.
The biggest ‘shout out’ from both the OFC and the Sustain reports is that changes to supply chain practices are mandatory for the UK to retain a viable farming sector. The real signs of the need – and the market response – are already upon some sectors and demonstrate that retailers can and do act when necessary. The egg sector is a case-in-point, in the last month 35% of 171 egg line prices have risen; Asda’s large, free range half dozen is up 18% since before Christmas and Iceland’s equivalent has risen by 79% to £1.79 since this time last year.
Change can happen, but only with conversations, transparency, and the will to do different.