Saturday, 10 September 2011

The Food Bill

Anyone who reads this blog knows I can be a little obsessed/pushy (pick a word)  when it comes to farmers not getting a fair share of the consumer dollar. Often when speaking (lecturing?) to people about this they'll sometimes  agree (probably to stop me going on),  but then immediately say they simply can't afford to pay any more, that the weekly food bill, especially with children,  is already way too high. 

The statistics show us that  Canadians pay a smaller percentage of their income on food than anyone else. That's small comfort to low income Canadians who struggle to pay every bill, but compared to Europeans, and certainly Asians, Canadians get a pretty good deal.

I think the disconnect between what farmers get, and how Canadians feel about their food budget, is linked to what people actually buy now at the supermarket. When I first shopped for food in the 1960's, that's what you got at the supermarket,  meat, fruit, vegetables, dairy products. It was pretty closely linked to what local farmers produced. Now you can get just about anything from drugs to BBQ's to snow shovels, and more and more of the food that's sold has little connection to local farms.  53% of vegetables sold in Canada are imported, 85% of the fruit purchased is as well. A cold climate can explain some of that, but over the last forty years red meat imports have increased by 600%.  Overall food imports have increased by 160% in the last fifteen years.

I don't expect anyone to do this, but if you were to look at the food basics in the shopping cart wherever it comes from, the things you can imagine  actually come directly from a farm, and separate that from processed food products, mouthwash, dog food,  paper towels, disposable diapers, etc, etc., then it would be a fairer assessment of  what you're paying for "food", and whether it's too much.  In the end we may be both right, that farmers aren't getting a fair price, and families just can't afford to spend any more at the supermarket. Maybe think about visiting a smaller store that sells local meat and produce, and pick up what you can't get at the supermarket. It is an extra trip, but your local community and economy will thank you. 

And another in our ongoing discussion about the benefits of Canada's supply management system when it comes to the dairy industry. There's quite a bit on that a few posts ago (there's a search box at the bottom), and today this story from the UK Guardian.

Mega-dairy factory farms are economically unsustainable

There is no denying our dairy industry is in desperate need of economic turnaround, but we must support small-scale farms

    * Deborah Meaden
    *, Friday 9 September 2011 11.29 BST
There is a sector of Britain's business that is in serious crisis. Companies are going bankrupt or simply shutting down as they find themselves unable to profit.The sector in question trades on a basic staple: a raw product that isn't in short supply. If we don't act now to preserve it, then this relatively quiet crisis will be over before most of us realise it is happening.

One day we will look out of the window and ask what happened to our countryside, where our cows went and why we only have a few hundred massive factory dairies instead of thousands of dairy farms, shaping our landscape and rural life.

Ten years ago there were around 30,000 dairy farms in the UK.

Now, every day across Britain one of our 11,000 remaining dairy farmers is turning their back on dairy farming and selling off their herds. There is no denying that our dairy industry is in desperate need of an economic turnaround.

The farming industry is looking to the mega-dairies of the US and likes what it sees.

The grass may well seem greener, but look into the actual economics behind the large-scale, intensive, indoor system and the picture is far from rosy.

Farmers are too often told to expand their herd size and with it change the way they farm, under the belief that a greater economy of scale will solve all the problems.

But as we learned the hard way with the global banking crisis, the notion of "too big to fail" is a myth.

The basic requirement of a good business model is insulation from as much unnecessary risk as possible, while still making a profit. If you have a choice of high-risk for an average position in the marketplace, would you pick that over low risk for long-term gain?

Perhaps yes if you were opening a pop-up shop, or capitalising on a commodity that will only be around for a short period of time.

But when you apply those options to the British dairy industry, the high-risk option surely loses its appeal. In the dairy economics report published on Friday by the World Society for the Protection of Animals (WSPA), the mega-dairy is found to be a high-risk option, and I agree with them.

The potential for financial ruin is enormous when a good farmer (who may not be a good businessman) switches production methods to that of a massive US-style dairy farm.

When things go wrong it affects not just the business but the animals , and too much can go wrong with a mega-dairy for me to be comfortable with it as the future of UK dairy farming. Yes, farming is ultimately a business, but it is an emotive one that doesn't pay enough for those in the industry to be in it solely for the money, so we know they care about their animals.

We must lose the idea that mega-dairies mean more milk and therefore more profit. Consider instead the profit lines from animals that live longer, with fewer health issues.

Consider that this means avoiding early culling, so maintaining longer-term profit margins becomes a sustainable reality and, above all, a more palatable approach to dairy farming.

Because what are we faced with instead if we go down the mega-dairy route?

Two years ago I invested in a woollen mill in Somerset. The textiles industry was suffering as many people had shifted production to China, but I believed in their specialist knowledge. Now, demand has shifted back to products which need those dedicated skills to produce them, but sadly most of those skills were lost when the production was exported.

This is worth remembering as our dairy farmers and herdsman face being replaced with cheap labour and machinery.

Britain – like many countries – has tried liberal economics and deregulation of the markets. It allows for an incredible financial boom, but the following bust in the 1980s and 1990s and our current situation has become more devastating each time, with today's levels of unemployment at a record high.

Perhaps it is time for a more socially responsible approach?

Economists say that the most robust marketplace is one of many small-scale buyers and sellers, none of which can individually influence price. Reducing the number of dairy farms can only take us farther from the robust marketplace.

I suggest that our dairy industry deserves the chance to try something truly economically sustainable rather than going through a financial groundhog day and wondering where all the dairy farms went, 10 years from now. Let's change this quiet crisis into a loud revolution.

We all have a part to play in this – if we don't support our small-scale dairy farmers now, tomorrow will be too late.

• Deborah Meaden is an entrepreneur and an investor on the BBC programme Dragons' Den

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