Making sustainable food the new standard

Farmers are the food chain weakest link. There is a deep sense of discontent about this. “The industry pays just enough to ensure we deliver again the next year. We receive subsidies to ensure we continue doing this. Supermarkets are not allowed to sell under the cost price, but apparently they can.” In our country there is a competition between supermarkets looking for the value conscious consumer. This increases the price pressure that falls on the producers at the beginning of the chain particularly. The hype around sustainable entrepreneurship makes supermarkets aware of the general problem. They make efforts, such as offering local products or with a new purchase concept disengaging from the focus on the lowest price, however rewarding prices for farmers remains a difficult subject. The initiatives are not extended towards the mainstream range in the supermarket. The question on how to move towards sustainability standards for food production inspired Gert Engelen and Saartje Boutsen of Vredeseilanden to create the book ‘#SaveTheFoodture’.

The food and agricultural sector have never faced such great challenges as they have today but, simultaneously, the viability of the agricultural sector has never been under such heavy pressure. But despite the huge problems confronting us, at Vredeseilanden, we are convinced we have everything we need in our country to find a solution for the future. Although the NGO’s campaigns focus on a reliable income for farmers’ families in the South, Vredeseilanden does not turn a blind eye to our farmers’ problems. For instance, there was all this work concerning sustainable catering following the idea that meals consumed outside could be a potential tool to influence the eating habits of the Belgian consumers. And now a book has been published that draws up the current situation of the efforts made in the Belgian retail and in the food industry around sustainable food, with special attention to their relationship with farmers.

Size matters

The authors, Gert Engelen and Saartje Boutsen , engaged in a discussion with the supermarkets, food industry and producers last year. They invited a number of experts to reflect along with them on how to move towards sustainability standards for food production. Bio, fairtrade producers and the short chain, they all have their earnings, but the biggest sustainability profit can only be made in the customary channel. Philippe Toussaint, responsible for sustainable procurement at Colruyt supermarket, comments that: “Bio and fair trade producers together accounted to only three percent in revenues. You cannot make a major change there. A small change within 97 percent of the other products may have a greater effect.”

Large companies can get things moving by making choices. Cooperation intensifies the effect. In the book ‘#SaveTheFoodture’ the supermarkets play a particularly strong role as regards the move towards sustainable food systems. They have a significant impact on the production methods of food and on the purchase behavior of the consumers. This is due to their unique position between producers and consumers, but equally due to their high market share. To see how high it is becomes clear once we hear from Filip Fontaine that BelOrta, the largest cooperative auction in Belgium, makes 82 percent of its turnover in vegetables and fruit via the retail. In the Auctioneer’s view, it is not a problem when supermarkets take a high margin, but it becomes one when their purchase price is too low. Fontain is concerned about the competition between supermarkets. “There are discounts everywhere on vegetables at prices that are lower than the cost price of the farmer. This should be prohibited by law. Nobody wonders if the producer can live with it.”

Fierce price battle

The competition between supermarkets is so fierce that the industry federation Comeos informed it might lead to unhealthy margin pressure. Prices are lower, but the costs are not falling. In order to maintain their earnings, retailers increase pressure on suppliers by delivering their goods at more competitive prices. The price pressure is tangible in the entire food chain and it often falls on the weakest link, the farmer. The testimonies of some of the farmers speak for themselves. “For the past five years, the price we were paid for our pigs was so low it made us operate at a loss. In the meantime my savings are completely gone”, says the pig farmer Luc Van Dommelen. “Nobody wants to harm the farmers, but we are the ones who get affected the most. If you approach the situation, you can see that in the contracts with the industry, the risk lies with us all the time”, says the arable farmer Jan Van Humbeeck. “I want to be paid for what I do, but with producing you don’t earn anything, really”, considers Paul Saelens. This is why the cattle farmer chose not to sell to supermarkets anymore and to open a farm butcher’s shop. Other farmers put their hopes on the government, “which should be more efficient at maintaining measures to prohibit selling under the cost price”.

“To make the sector more attractive, we need a fair price for a fair product”, says Peter Van Bossuyt, president of the Farmer’s Union. “This means a transparent and economically viable pricing of inputs and outputs. For the future of the Belgian agriculture Van Bossuyt notes it is also important that the industry and retailing keep buying from Belgian farmers. There is no guarantee in that. Whereas a fair price for the producer there are periodically discussions about it in the chain deliberation. Within the chain deliberation you find a code of conduct, which states that, sellers and buyers act as partners striving for the sustainable development of the chain. In addition, there should be attention to economic viability to ensure the continuity of the links in the chain. However, the code cannot be enforced like the British example appointing an Ombudsman, who can deal with complaints and make a judgment. The Framers General Syndicate is the main advocate. The Farmers’ Union considers an independent supervisor is rather a means of precaution when the discussion is unhelpful.

Inspiring developments at supermarkets

Vredeseilanden discussed with some of the retailers about their motivation to implement sustainable supply chains and about their relationship with the producers. All supermarkets agree on the importance of more sustainability and good relationships with farmers. But the lowest price is so defining in this sharp competition that sustainable products and chains are not yet mainstream, nor are they prominently displayed on the shelves or in communication with the customer. That does not alter the fact that smaller and greater steps are taken in terms of sustainability and to drive improvements to include farmers in the chain.

At Colruyt these include the projects they develop with partners, such as Vredeseilanden to create sustainable chains for specific products. On the store shelves you find rice from Benin and asparagus from Peru, which are both, produced and transported sustainably, and it is guaranteed that the producer gets a fair wage. Account should be taken on the fact that to make a single chain sustainable requires a considerable investment of time, and this implies a very complex calculating for a range of 8,000 to 10,000 different food products…The emphasis of the sustainability policy of Delhaize is placed on purchasing from Belgian suppliers, who accounted 70 percent of the product rage. It is the number one chain when it comes to bio and fair trade sales. Most Delhaize stores have enlarged their offer with local products directly bought from small producers. “Quality and sustainability not at the lowest price, but at the affordable price”, this is how Delhaize summarizes its policy.

Carrefour is also entirely promoting the sourcing of local products. By offering simplified contracts to local producers, where they can fix a price together with the local manager in charge, has resulted now in 200 local products per month, which have been added in different Carrefour stores. Carrefour aims for longterm relationships with farmers and keeps personal contact participating in the agricultural fair of Libramont. Lidl is still actively working on their sustainability policy and they are going to show the face behind the products on their website and the sustainable business practices will be highlighted.

Revolutionary examples from abroad

There is nowhere else that has so many sales of bio, local and fair products as there is in Switzerland. This has been achieved by the purchase policy of Coop and Migros, the two largest supermarket chains in the country. Revolutionary indeed, because Coop has entirely switched to fair trade for a number of high selling own-label brands (Asian rice and chocolate). In Denmark the Dasnk Supermarked makes sustainable product choices for their own-label products and informs the consumers about it. Buyers are trained and aware of sustainable purchasing to increase the shares of sustainable products or to have innovative ways of working with suppliers. Sustainability is also a criterion for assessing performance of buyers.

In our northern neighbors the supermarket Marqt has established an innovative corporation in its chain. Retailers build on a personalized relationship with the producers and tell the customers that you can ‘truly’ eat with these products. ‘Truly eat’ stands for original fresh, delicious products made with respect for the environment and prepared with passion. Additionally, Marqt also has an eye for animal welfare, fair price and sustainability. For this last aspect, they examine the production, transport and income of the producers. The fresh products are bought regionally and they frequently work with seasonal products. The website allows clients to learn more about the suppliers and producers.

Leadership in the food industry

The industry federation FEVIA and Vredeseilanden conducted a survey to evaluate the sustainability policy of the Belgian food companies. Within the context of sustainable business policy, 30 respondents claimed to focus on environmental measures. A few food companies also consider the relationship with farmers. PepsiCo, a multinational which you wouldn’t expect to identify with local environment right away, works exclusively with a number of Belgian potato growers for the production of Lays chips. The sugar beet growers at Tiense Suikerraffinaderij have a tradition of cooperation with farmers; the agreements regarding quality and delivery, for example. There are also risks where sugar beet growers are not left alone. For instance, a premium shall be paid in case they have to deliver their sugar beets very early or late in the season.

La Lorraine Bakery Group buys the majority of the fruit on auctions but for certain fruit, for which they attach great importance to quality, they go a step further. With the slogan ‘from the field to the baker’ La Lorraine chooses daily fresh Belgian strawberries and potatoes directly from the growers. “We guarantee a price and an agreed volume to the growers throughout the season”, says CEO Guido Vanherpe. “We shall gain in terms of quality, freshness and logistics and we have a strong background story to back it up. For certain special types of flour we also have long term arrangements with the farmers, so we can bake bread with the ‘origin’ label. Sometimes the sense of a specific quality gets lost in the traditional chain. Within the contract period the agreement on prices, which most of the time are not related to the world market price, is guaranteed.

With the choice of GMO-free Alpro, the soya specialist has started purchasing raw material in its immediate neighbors. A third of the soya comes currently from Europe and the company wants to go to 50 percent in the short term. Alpro consciously chooses not to buy soya in the free market. “We stand for long term relationships with farmers. We continue to purchase from them because we firmly want to go for GMO-free soya. We think it is important to build confidence among farmers and we feel more comfortable knowing that those farmers get a livable income”, states the Alpro employee Koen Bouckaert.

We find a similar motivation at Cargill. To face the increasing demand for chocolate, this multinational works together with the NGO Solidaridad, with farmers’ organizations and cooperatives and certification organizations. By 2016 Cargill, which has since been a market leader in certified chocolate, tries to give trainings on good agricultural practices to more than 115,000 farmers. In the same sector Mars’ commitment launched something. Mars produces ten percent of the world’s chocolate and they want their entire production certified sustainable by 2020. Cocoa farmers are poor and do not produce enough for Mars to invest in the future, because the company considers cocoa is becoming a rare commodity worldwide.

By 2020 Unilever, a multinational that brings 400 brands on the market (including Knorr, Becel and Bertolli) wants to purchase all their agricultural commodities as part of a sustainable living plan. Furthermore, Unilever promises to improve the life of 5.5 million people by supporting small-scale farmers. This procurement office comprises 1,500 staff that is trained in sustainability and in purchasing from small producers. Without detracting from the inspiring practices at some of the Belgian companies, Vredeseilanden is missing this type of leaders, who move the rest of the food industry in an accelerated speed towards more sustainable food systems.

Inroads for the future

The awareness is increasing about the need of more sustainable food systems in social, ecological and economical terms. To conclude Vredeseilanden gives a few inroads for the future on ‘#SaveTheFoodture’. The book shows one big appeal for more cooperation between the agents of the food chain. “To innovate in sustainability, to create jointly, to look for new markets, build on relationships of trust, on mutual transparency, and to equally divide joys and burdens. Such new business models can offer products and services clients would choose for not only for their price, but also for their quality and sustainability.” Transparency is a key factor for the agreements within the chain, which has to result in major changes that are necessary. More transparency allows consumers to be inspired regarding sustainability performance, and within the chain this would promote the understanding for sticking points that haven’t been resolved until now.

Given the many urgencies such as climate change and commodity shortages, but also the difficult situation of many farmers, every company should create ambitious and concrete goals for a sustainable purchase policy; starting from buyers that do not calculate the price only, but take into account the sustainability performance of the product. That could lead to ensure the sustainability of the chain. Based on Colruyt’s and Delhaize’s perspective, where they only offer sustainable fish to the consumers and limit the customer’s choice, Vredeseilanden suggests ‘choice editing’ as part of the solution. But many supermarkets and food companies think it is not their job to offer unilaterally a limited sustainable product and they rather leave the choice to the customers. Choice editing can also be done indirectly, for instance the supermarket gives a less prominent position to sustainable manufacturers on the shelves.

The pervasive own brands are another source to ensure sustainability. Making own brands sustainable can make the supermarket stand out from their competitors. Vredeseilanden considers the price increase can be limited by purchasing in large volumes. The price increase should go hand in hand with communication exploring the reasons behind. This way, the own brand can appeal the large group in Belgium, who are willing to consume consciously. If companies make an effort to ensure the sustainability in their range of products and this involves higher costs, this will provide a competitive disadvantage. This is why it is necessary to make pre-competitive arrangements about minimum sustainability standards for everybody in the chain. Companies are then able to freely choose whether they continue. Within the sector’s associations FEVIA and Comeos there should be a jointly reflection on making a sustainable purchase policy in a set of generic recommendations.

The government has guiding role in the market, for instance to create a ‘level playing field’ where the minimum standards are settled for products that are imported in the country or in a region. There is also a high demand for a mechanism to avoid farmers have to sell their products under the cost price. By far our politicians can do so much more to include sustainable food systems in their (European) policy agenda. Not to mention the exemplary role the government could play by implementing sustainability criteria in the specifications of public contracts, which are 16 to 19 percent of GDP in our country.

Both businesses and public authorities play an important role to inform citizens/consumers, and to boost a change in their behavior. As a consumer it is not easy to make the ‘right’ choices. Is one label better than the other? Can a product without a label also be sustainable? And what about the beans from Kenya, are they non-sustainable by definition, even if the farmer gets a good price? Knowing what you eat is a cliché but it is often far from reality. The issue on the world food is suddenly not a faraway problem anymore, as the effect is caused by the daily choices you make. The issues are far too big for one party to solve on their own. “If you want to run fast, run alone. If you want to run far, run together”. Vredeseilanden quotes this African proverb to indicate that every link has to make its own contribution to a sustainable food chain.

Author: Wim Fobelets, VILT