The Covid pandemic, which this November has turned into a nightmare in so many places, continues to have profound effects on farmers and consumers. I've been doing some writing on this and wanted to add these to the blog.
Bullies in the Food System
Of course it’s the big food retailer from the Maritimes that gets it right. We may be Canada’s poor cousins but we know when we’re being pushed around. Nova Scotia based Sobeys is the sole supermarket chain to say no to unilaterally hiking fees to suppliers. As has been widely reported Sobey’s boss Michael Medline called this move by Loblaws, Walmart, and the wholesalers for Metro “hard to believe and repugnant.”
What I found even more reprehensible was the justification by Loblaws for doing this, to help consumers during the Covid-19 crisis. “As we face pressures, one option is higher prices for customers, but we don’t want to take that approach as Canadians are facing enough financial pressures,” Loblaw Companies spokesperson Catherine Thomas told the Toronto Star. “Instead, we’re asking primarily our biggest suppliers to help us keep prices low.” Thanks for thinking about your customers (and your shareholders), but what about all the others along the food chain who aren’t big enough to pass their costs onto someone else, especially the group at the bottom: farmers.
My blood pressure always goes up when I read stories like this, but I’m also glad that the daily, grinding imbalance in economic power that permeates so much of our economy gets fully exposed. Walmart initiated this in July. Now the other big chains other than Sobeys are joining in arguing they need to invest a lot of money in “e-commerce, in-store and digital operations” and they clearly believe someone else should pay for the investment. Why didn’t farmers who need new equipment, or moving companies that need new trucks, think of this before? They didn’t, and they don’t because no one would pay, they’d simply look elsewhere.
I’ve argued many times before that governments in Canada and the U.S. have abandoned previous notions of maintaining fairness in the economy using anti-trust laws to scale back companies that get too big. Many argue it’s because consumers (the vast majority of voters now) have benefitted as large retailers like Walmart and the like offer extraordinary value to their customers and find their profits by squeezing suppliers instead. This is exactly what Loblaws, Walmart, and Metro are planning to do now, and they control enough “shelf space” to pull it off.
It’s the response to the Covid-19 pandemic that’s driving this. Thankfully not so much here on PEI, but shoppers in big cities where Covid infection rates are high like the idea of shopping for food on-line, having it delivered, or ready to pick up. Big retailers are responding and this is behind the substantial investment they say they need to make.
Then there are the food delivery services (Doordash, Uber Eats, Skip the Dishes, etc) which allow families to order from local restaurants, again from the comfort and safety of home. And don’t forget the boxed uncooked meals that get brought to the door (like HelloFresh) and include all the ingredients and recipes for a family gathering.
Obviously all of these new services have costs, companies that expect to make money. I’m still trying to understand their impact on farmers, but with more hands out along the food chain, and companies trying to find a price point that will grow their businesses, I imagine like most costs, a lot will have to be absorbed at the farm gate. I’m going to write more about this when I’ve done more research.
There’s much more Covid-19 fallout. Dalhousie University’s Agri-food Analytics Department (run by the very smart Sylvain Charlebois) has done important research on Canadians’ appetite for supporting local food production. Consumers certainly realize that the pandemic has disrupted supply chains, and they like the idea of increased food security that comes from local production, but the results also point to what’s called the ‘local food paradox’. In a country wide survey 79.5% of consumers say they’ll pay a premium for locally grown produce, but then only 25% say they actively seek out local products and consider where food is produced being important. In other words price continues to be the main driver for most food shoppers. This is completely understandable as individuals and families struggle after Covid-19 ravaged the economy, but it sends very mixed signals to farmers.
Charlebois warns food production and distribution is a high-volume, low-margin business and doesn’t easily attract the kind of capital needed to adapt to Covid-19 disruptions. This is why most of the big supermarket chains are trying to get the needed investment from their suppliers. Sobeys has issued the challenge to governments to bring in a code of conduct to prevent this kind of predatory behaviour. Will there be others who will stand up for smaller players against bullies in the food chain, like farmers? After all that’s what we do in the Maritimes.
Who Will Pay?
I believe we’re facing 2 disasters in this annus horribilis 2020: the worldwide pandemic, and the predicted impact of climate change. Both have human hands all over them. Both are affecting all of us, but especially the people growing our food.
The impact of this summer’s drought will be easier to grasp. It’s certainly not uniform across the province and some crops have come through OK but with smaller yields, especially ones that like heat: corn, grapes, soybean, grain crops that got an early start like barley. PEI’s important potato crop is taking a beating, losses estimated right now at more than $50 Million and climbing. Livestock farmers will be short of feed this winter as pastures burn up, and the usually reliable second cut of hay or silage won’t happen. Crop insurance will help cover some costs.
I should add that a CTV news story on PEI’s potato biz that got a lot of play in other publications, including potato trade newsletters, had a serious mistake. It said : “Agricultural irrigation was outlawed on Prince Edward Island in 2002. It’s the only province in the country where farmers aren’t allowed to water their crops.” Instead it was a moratorium preventing drilling for new irrigation wells that was introduced in 2002 and continues to this day. There are 35 irrigation wells already in use and 29 irrigation ponds have been constructed in the last 20 years.
The moratorium is a frustration for those farmers who have become convinced (for good reason) that all the predictions for climate change of extreme and prolonged weather patterns have come true, with weeks of drought during the growing season now the new normal.
It will require credible research (and some trust that it is credible, the hard part) to show whether there’s sufficient water for the moratorium to be lifted. It’s far past time to start.
The Covid 19 impact is harder to calculate. There are lost markets as restaurants either haven’t reopened, or have cutback on purchases because of Covid regulations and the diminished tourism season. The pandemic has also exposed the reliance on temporary foreign workers from Mexico and the Caribbean. It’s forced the rest of us to recognize the thousands of food service workers in processing plants, supermarkets, food distribution centres, truckers and so on. We call these people heroes, and essential, but now understand many are receiving bare minimum pay.
People working at the large supermarket chains did receive a $2.00 an hour increase in March, but once profit margins were hit, and the supermarkets couldn’t pass on these costs to anyone else, this increase was rolled back in June.
We need to pay attention to this. Evan Fraser is the head of the University of Guelph’s Arrell Food Institute in Ontario. He understands that to keep essential workers like the immigrant farm labourers coming to Canada, treat those working throughout the supply chain fairly, pay and benefits will have to increase, but as the Canada Research Chair in global food security he wonders who will pay these additional costs. “I actually stay up at night worrying about this one. I don’t have an answer to it”, he told the Kingston Whig Standard. Fraser knows low income families are already struggling and can’t afford to pay more. “And we already have a food insecurity problem in this country that has been massively exacerbated by COVID.”
Fraser and many others are genuinely concerned about food insecurity for so many families. It’s also an argument many business writers and economists use to attack supply management. I think these are income security issues that quite rightly have also received a lot of attention during the pandemic. A guaranteed annual income or something similar is what’s needed. Evans again, “ What we’re seeing is symptomatic of a situation that squeezes the margins at all levels and then leaves vulnerable people and vulnerable aspects (in the system) open for exploitation”.
What the roughly 60,000 temporary foreign workers now know is that their labour is critical and won’t be done by Canadians. That leverage and efforts by unions and labour activists will lead to better working conditions and pay, both direct expenses for farmers. Can these additional costs be recovered?
This really comes down to raw economic power, and farmers have learned over the last 20 years that with all the consolidation at the processing, wholesale, and retail levels that power is well beyond the farm gate.
Retailers in particular (the holders of valuable “shelf space”, that crucial last link to consumers) have been very skillful at distributing some of their costs back down the food chain. Walmart Canada recently announced it would charge suppliers extra fees to cover $3.5 Billion it will spend on new infrastructure. PEI’s Mary Robinson the president of the Canadian Federation of Agriculture knows what comes next “Those suppliers, who are the ones who buy raw product from farmers, they’re getting squeezed, so you can be guaranteed that that squeeze is going to be felt down the line.”
Is This a Way Forward?
It’s not likely that the founders of McCain Foods, Wallace and Harrison, would have ever heard the words “regenerative agriculture”, or even “sustainable” farming, but the company they managed for decades says it’s committed to both. The current president Max Koeune certainly showed he understands what’s happening on farms right now “Farmers are being challenged with producing more with less while facing increasingly challenging weather patterns due to climate change and growing food in soil that is deteriorating.’’
McCain Foods will build 3 Farms of the Future, one right away in New Brunswick, and 2 more in other countries by 2025. The announcement came in the company’s first sustainability report called “Be Good. Do Good”. According to McCain the farms will “showcase how regenerative farming practices and the latest agricultural technology and innovations, can be implemented at scale….. (they) will also test the latest precision agriculture technologies, new equipment and the use of renewable energy.”
Regenerative agriculture has been the domain of the progressive/organic farming crowd for several years now. At its heart is the repudiation of many of the industrial farming practices now in use. It calls for biodiversity, long rotations, soil continually covered in plant material to capture and store carbon, prevent erosion and rebuild soil organic levels, protecting watersheds, and more, so this is a substantial shift for McCain. Some will smell more public relations than corporate epiphany, but I think the straight forward statement by the current president, especially as it relates to deteriorating soils, shows a level of sincerity in all of this. The company had already been promoting the use of diverse rotation mixes and encouraging “nutrient restoring” cover crops.
Not to be outdone, Bayer announced late last month that it wants to slow down climate change by offering farmers in Brazil and the United States carbon credits for using practices that capture carbon, again using cover crops and no-till practices.
Here’s my only complaint with all of this: a refusal to acknowledge that the deteriorating economics of growing crops for processing, potatoes for french fries, or soybeans for livestock feed, have led to the very soil destroying practices these companies now want to fix. It’s all well and good for fast food companies like McDonalds to promote itself as demanding “sustainable” farming practices from its suppliers to make its customers feel good, but then it turns around and refuses to offer any more money for french fries siting competitive pressures. This is really just corporate hypocrisy, demanding others in the supply chain do the heavy lifting with no acknowledgement of the increased costs involved. A more honest effort would see customers pay a little more for fries with the assurance that the extra would get back to farmers to allow them to improve their practices. I might even buy some french fries if that ever happens.
To its credit McCain is investing in farms to do research and demonstrate soil building practices, not just making demands of farmers from the boardroom. I hope the research also keeps track, and is honest about, the cost of regenerative practices. That will help farmers set some benchmarks about what they need to be paid if McCain and other processors are serious about farm practices improving.
The costs linked to better rotations and practices are also an important part of the Living Lab research program here on PEI. Agriculture Canada and university researchers are working on active farms, interacting with the “real world” challenges farmers face. It will be interesting to see how this relationship works and what kind of constructive information can be discovered.
Farmers have to be open to new ideas too. They have to make so many decisions every day they need a strong belief they know what they’re doing. Corporate executives, researchers and editorial writers will get paid no matter what happens so there’s always going to be suspicion they’re being pushed around by people with little skin in the game. I do see in social media many farmers bragging about cover crops they’re experimenting with, how well their cover crops are doing. This isn’t something you would have seen 4 or 5 years ago, so I know things are getting better.
McCain president Max Koeune said one more important thing that effects us all, “…. the food challenges we've experienced during COVID-19 could only get worse if we don't start taking action.''
I’m still waiting for someone to acknowledge that farmers, and the soils they work, bear the hidden costs of cheap fast food, so I’m going to hold back on full throated cheering for the moment, but this is a good start.
What’s for Supper?- Pandemic Edition
“Eating is an agricultural act”. This is a statement from exceptional farmer/philosopher Wendell Berry, and has been quoted often over the last few months as farmers and journalists try to make sense of agricultural markets during and after the pandemic. What Berry is saying is that consumer decisions are at the heart of the success and decision making of and by farmers. It was felt early on here for example as people couldn’t buy french fries at shuttered fast food joints, and started loading up on bags of fresh potatoes to survive the lockdown, and PEI farmers had to adjust. Some benefited, many didn’t. These same farmers had to wrestle with this uncertainty as costly decisions were made about planting last month. The question for so many is what happens when things get back to normal, whenever that might be.
There have been encouraging signs through the pandemic that more consumers are starting to appreciate local food production because of genuine and ongoing worries that food supply chains are breaking down. On-line purchasing and convenient delivery or pick-up has helped expand this important market. It’s still a small percentage of consumer food purchases, and only taps into a tiny portion of PEI farm production, still very dependent on national and international markets. But it’s a start.
The time of year colours this discussion too. Spring, then summer is when fresh fruit and produce is available in abundance, and Islanders would be hard pressed not to be aware of, if not purchase, new potatoes, strawberries, sweet corn and the dozens of other crops that will soon be available. On top of this the pandemic has forced families to shelter inside with plenty of time to do some home cooking. Baking bread became the first pandemic food obsession, with flour mills around North America scrambling to keep up with demand. Social media has been full of people bragging about complicated meals made. or culinary disasters.
It will be the Fall before we know if the changes we’re seeing now, more interest in local production, cooking meals from scratch, will continue when people’s lives start inching back to normal.
Let’s face it, food processors and the big retailers do an extraordinary job providing a wide variety of food products that are as easy or as challenging as anyone wants to get supper on the table. Will people who go back to work feel they now don’t have the time to peel carrots, bake bread, or make yogurt? Will family finances be so stretched by the end of this that cost will be all that matters? Will those who continue to work at home see an opportunity to keep cooking meals from scratch? Will the draw of a McDonald’s french fry and Big Mac be just too hard to resist? I suspect all of these things will happen, and every decision will have an impact on farmers. Remember “Eating is an agricultural act.”
There was some insight into this in an excellent publication on the food industry called The Counter. Reporter Karen Stabiner recently wrote about a conversation she had with Dan Barber. He owns a well-known restaurant northeast of New York City and “walks the walk” of a business person who desperately wants small and medium sized farmers to succeed. He says things have never been better for “local” production, but he thinks this boom is just an illusion, that a bust will quickly follow. “We are looking at a precarious time for the farmers we desperately need for our health, our happiness, the health of the environment. Small farmers are the ones you want to keep around” he told Stabiner.
Barber says small farm operations simply don’t have the labour necessary to both maintain increased field production and service the bigger demand for direct sales (farmer’s markets, CSAs, etc.) especially if new customers expect the convenience of delivered veggie boxes and the like. “Labor costs will be very high, a lot more work for a lot less revenue. If that weren’t true, farmers would’ve figured it out a long time ago.”
Barber says many more small scale processors and value-added businesses are needed on a regional basis to slaughter livestock, process and preserve vegetables and grains. “This is a moment for standing up and digging in for what we want, and not allowing big food to take the market back.”
I agree that weary and broke families will be looking for some comfort and convenience when this ends, and no doubt large food processors and retailers will cater to that, it’s what they do best. I also think that as stories on the pandemic pulled back the curtain on what’s behind a 99 cent hamburger (essentially huge slaughter plants in Alberta and Ontario manned by poorly managed and paid immigrant labour) that we can look around the Maritimes and appreciate what we have here. Yes we might pay a little more, have to extend food shopping beyond the big supermarkets, but as we do that our food dollars go first to people as committed to this region as we are. Remember “Eating is an agricultural act.”
