Food Project - Roles
Food and Agriculture as a System – What is the trajectory of the current system and what are the drivers? What are the levers that could shift the system to sustainability?
In this project we will divide you all into roles. It is one thing to think in an abstract way about this issue. It is another to se the issue through the eyes of those that are directly affected.
Your roles will be:
Farmers
You are an average potato grower. You bought you father’s farm from him 30 years ago. It was then a hundred acre mixed farm. You have since specialized in potatoes and have expanded the scale and capital investment of the old family farm which has been in the family for over 100 years. Your cousin did the same with your uncle’s farm but he chose to specialize in dairy. You now own a 450 acre potato farm, growing 150 acres of potatoes on a three year rotation. The land is valued by the bank at $900,000. You have spent at least $450,000 on warehousing and grading. You have at least two tractors that cost you in total about $200,000. You have a harvester that cost about $65,000 and you have a barn full of other equipment such as a sprayer, trucks, a planter, a set cutter and so on. On top of carrying these capital costs, each year you buy inputs such as sprays, fertilizer and seed. ($1,700 a potato acre or $255,000 a year before packing and storage costs ). Most of what you grow is under contract to a processor. You have been averaging about $7 a cwt. on the contract and you hope to sell some table stock for more than this in the spot market through a broker. You grow on average about 250 cwt. of potatoes an acre. In Idaho the yield is between 600-900cwt an acre. You average an income of about $260,000 – $350,000 a year on this type of operation. You are on a three year rotation but your cash flow is under such pressure that you may have to go to a two year rotation.
You are an organic dairy farmer. You have a herd of 50 and you are growing all your forage crops without using chemicals. The main source of fertilizer is composted manure of which you make about 600-800 tons a year. Your fields are on an eight year rotation – three years cereal and five years forage. You own your quota and you sell all your milk to the coop in an undifferentiated way – there is no premium for organic and no separate storage. You started as an organic farmer because your financial position 18 years ago would not allow you to go down the more conventional route. So, for you, going organic was initially an economic issue. Today you are solidly profitable. The Milk system provides you with a predictable price and you have stabilized your costs by going organic and have a relatively small exposure to external cost factors outside your control.
You are an organic grower of 25 acres of vegetables. You have come from Germany where organic food is now mainstream. Organic meals are offered as a matter of routine on the railway system and on flights. You are able to make this small holding support you and your family – you have not needed another source of income. You focus on high end vegetables. You use a four year rotation and you use “green manure” or annual ryegrass and crimson clover followed by a heavy feeder such as broccoli or early potatoes. In the third year you grow greens, onions or carrots and in year four you grow beans and peas. If there is time before and after the cash crop you plant cover crops You sell directly to a number of restaurants and to a supermarket. You have noticed that the demand for organic has gone up, your restaurant trade values your product. Good restaurants have trouble finding quality supply in the traditional system. Your direct prices are competitive. You spend a great deal of time on your relationships with your customers. You also connect closely with other producers such as your self and have links to the larger organic movement. You have started to teach others some of your techniques. You have however experienced a challenge with the supermarket who sells your product at a very high premium but only pays a small margin over the non-organic price to you. You have seen the space available to organics increase substantially on the supermarket shelves but the produce is very expensive. You have been able to be competitive with your direct customers by not having a middle man.
You are the Executive Director of the Potato Board on PEI. The industry is at a turning point. Will it continue to be splintered or will it find better ways of working together? You are in the hot seat either way. You are accountable to the board and to the potato growing community at large. Your task is to represent their interests. “Herding cats” would be an easier job than trying to do the right thing for a diverse and independent minded group of growers. You work between the growers and the market, including the processors, and government. Many times you feel that you are doing the splits as you do your best to find the best pathway between these different areas of interest. The complexity of your role is increased by the fact that there are a wide range of opinions in the industry itself ranging from progressive types who see the need to change practice and to cooperate to die-hards who feel that they own their own land and no one will tell them what to do. Quality is an issue that you have pressed for. You know that if PEI loses its reputation for quality, that the entire industry will suffer. Again some growers agree but others just keep doing or not doing things that damage quality. Attempts to put in testing and quality control for the industry have been hotly debated. Holding the line on price is another issue. You have tried to get agreement form the industry not to sell itself short. The brokerage system for table stock makes it easy for growers who have to realize cash to break price and weaken the entire value of the PEI offering. Encouragingly, there is a movement to bring growers together from all over North America to make improvements in the processing contracts which include more than 60% of the crop. There has been a recent meeting with representatives from Canada and the US and the major processors. The point of the meeting was to recognize that the growers were not getting an economic return on the processing contracts. The processors agreed but made the point that they too were under pressure from the end buyers such as McDonalds and Wendys. It seems that some type of collective action is being contemplated. It is not clear where this is going yet but it is a milestone of cooperation and mutual understanding that has not been seen before. Recently disease has been at the top of the agenda. Rapidly increased acreage and a focus on processing are factors that have contributed to a rise in virus which has affected seed quality. Hotter summers have lead to more Colorado Potato Beetle predation which in turn has required more applications of insecticide. While this has kept the beetle under control, the beneficial insects have been reduced in numbers opening the way for aphids which carry the virus. 20 years ago, nearly all PEI production was of seed quality. Now there is insufficient seed to restock the system. The one good thing that is coming out of all this is the changing attitude of the growers. They are beginning to take collective ownership of their problems and are looking increasingly to their own actions to find solutions.
Agri-Business Supplier and Potato Processor - You are a major supplier of agri-business chemicals. You run an integrated operation and supply fertilizer and pesticides and herbicides. You also are a major potato processor. You try your best to optimize your business by linking all aspects of what you do with your customer/suppliers. As a service to your customers you run a crop scouting operation that has in effect replaced the more traditional government extension service. The crop scouting business and your contract potato buying provides you with the most comprehensive and accurate pool of information of what is really going on with specific farmers and the potato industry. You supply major fry consumers such as McDonalds and Wendy’s. These global contracts are very competitive. You have to meet strict quality and price conditions. These contracts are globally tendered requiring you to push back on your costs and to reach for the largest economies of scale possible. Only two varieties really work in your system, the Russet Burbank and the Shepody. The Russet has an exceptionally long growing season exposing the potato to the maximum disease and pest risk and hence to the maximum requirement to protect the crop from pests and disease. The requirement to harvest all the crop at the end of October also exposes the grower to weather risk. The crop has to come out. This requirement drives a heavy capital expenditure in equipment. Your contract with the growers is designed to drive frying quality. The full price of the contract is only available to growers who meet size and quality specifications. The grower will only get the full price if everything goes right for him. Because PEI growers can only average 250-350 cwt per care, you are starting to look at other areas, such as Manitoba, where there is more yield to draw from. Your corporate headquarters are in Atlantic Canada but you have processing operations all over the world. You have a global perspective.
Agri-equipment supplier - You are the main local dealer for a global farm equipment dealer. Yours is the world’s leading brand and is the standard for excellence. Farmers are proud to own your equipment. Many of your tractors cost over $200,000. In spite of a series of difficult market years for potatoes, sales have been good because it is increasingly important for growers to have the power and scale of equipment that will put the crop in and dig it out in ever shorter weather windows. The relative cost of your equipment has outpaced the relative value of the crop by a multiple over the last 20 years. Only leasing and innovative financing has enabled farmers to continue to invest in your equipment. You rely a great deal on re selling lease backs to the US where second hand prices are higher.
Banker - You are the Atlantic region VP for a major Canadian bank. Over the last twenty years the number of farming clients has been reduced considerably but the overall size of the loan portfolio has increased. Your clients are larger and are more sophisticated. 20 years ago you mainly financed capital equipment and land. Occasionally you would finance operating requirements. However in the last 10 years all your customers have had insufficient cash flow to finance their operating requirements. Recently you have begun to notice that a growing number cannot pay off their annual operating line. You and they have been waiting for that cyclical great year that will clear these lines. You have been a strong advocate of contract growing with the processors. You would rather see the contract as collateral than to speculate with the grower on the seed or spot market. As a result, over the last 10 years, the bulk of large growers have become dependent on contract growing and the overall potato acreage has increased substantially. Seed and table production has declined. There has been a focus on two main varieties the Russet and Shepody. Fortunate for you, while total debt and debt per farm has increased so has your underlying security, land values. On the surface your portfolio therefore looks sound. But there are worrying signs. While some of your customers are still profitable an increasing number are not. You would know that in a good year a good farmer may make a return on capital of 3%. If you were to step back and reflect, you would know that this is insufficient over the medium term. Something has to give. In the interim you have to ask for more cash flow. With no more land available, growers can only deliver the cash flow by shortening rotation and by squeezing their primary capital, the land. With the portfolio to protect you feel that you have no choice but to push.
Major food broker - You are one of the leading Canadian food brokers and are based in Toronto. Potatoes are a large piece of your portfolio. In essence all producers on the Island sell most of their table production to you or another broker. Few growers have the scale to sell direct to a major end buyer. You make your money on volume. Most of your end buyers use the brokerage system to drive down the price of the potato which is often used as a loss leader in the stores. The result is that the consumer sees an undifferentiated product with uncertain quality on the store shelves. The paradox is that the potato is at the heart of most meals in Canada but is treated with little respect by the industry. In Europe, potatoes are clearly identified like wine as to their cooking characteristics, varieties and there is a range of pricing based on quality. The customer group who seem to see the potato most as a commodity are Islanders who cannot bring themselves to stop looking for a potato bargain.
Major food retailer - You are the strategist for a major Canadian supermarket chain. You and your next competitor have 55% of the Canadian market. Canada is the most concentrated food market in the world. In spite of your commanding position you are concerned that Wal Mart and companies like Costco are a major threat. You have responded by dramatically increasing the scale and entertainment value of your local sites. Your anchor PEI site is 84,000 square feet. You offer not only cheap prices, Canadian food is amongst the cheapest in the world, but you offer entertainment. You are recreating the feeling of a traditional market. But while the food and stuff is piled high, you actually don’t offer much choice. Because you have control over so much of the market you only allow a limited number of suppliers access to shelf space. Most have to pay a fee to have space. You are trending to only stocking the 2 leading brands and your own 2 house brands, the premium and the no name brand. While this strategy of scale has been successful so far, you are concerned. Can you continue to expand scale? Will shoppers balk at 160,000 square feet? You can see that there is a trend to organic and “natural” and you are now opening up more space to this market. You are aware of trends of concern about food safety. In England the Supermarkets have reacted and are labeling. Another trend that is clear in Europe that you have not addressed yet is selling food on the internet. Perhaps because of the compact structure of the UK market, this trend has passed the experiment threshold and will become a very large part of the business model. Home Meal Replacement and Fresh Pack meals are also a new trend. This has become the bulk of the market in England and is trending this direction in Canada. You have a culture and style based on your power. You can’t help your self but push hard at your suppliers
Environmental Groups
You are a long-time, long-term, committed environmental activist. You believe that big business is destroying the world. You sense that this is a war and that the future of the planet is at stake. For many years you have been a lonely voice in the wilderness but now more and more people support your point of view. Chemicals must be banned and so must GMO’s. You know that the corporate world will not listen to you and that it has to be destroyed. You have just returned from Seattle where you have found that from being on the fringe that you now have power and you will use it.
You are an environmentalist. You see yourself as a concerned citizen not as marcher. You know that our current system is wrong but you know that this is not essentially because the world is divided between evil and good people but that what used to work well no longer does. You are looking for a new set of solutions and assumptions. You recognize that time is not on our side and that the current system may well collapse. You are increasingly concerned about the quality of the food that you eat and the water that you drink. Your son has ADD and asthma. You are suspicious that his problems may have an environmental origin. You have started to buy more of your food at the farmer’s market and are plugged into an increasing body of knowledge on the Internet and in print about food and a healthier lifestyle. You are 45 and you are a woman. Your husband has been slow to pick up your concerns but you now have his attention. The fish kills were his wake up call. He is a keen fisherman and has seen he silting of the rivers first hand and has experienced the decline in fish stocks. Your children are remarkably aware. They have picked up their concerns from you and from school. The environment is to them what the bomb was to you. You want more choice in what food you buy. You are growing a small vegetable garden but it is very small. It is your token. You don’t have the time – you both have full time jobs.
Alternative food retailer - You are a woman in your late twenties. You have just purchased an Island institution, the leading health food shop. You wanted a business that would express the real you. The store has grown from being like a club serving a small group of early movers to being one of the few places where a growing number of people who wanted natural food could shop regularly. Many of your customers also shop at the market but it is only effectively open 1 day a week and is more a symbol than a real alternative. You paid a premium for the store because your market research showed you that the market for organic and natural products is the fastest growing market in North America. Surprising to you even your banker agreed with this assessment. Access to product is a major challenge for you. At the moment you have to go out to those few growers directly. Both sides are feeling their way. This process takes up a lot more of your time than you thought it would. Local restaurant owners are increasingly seeing you as a broker for natural produce. They don’t have the time to go into the field and find suppliers. On the other hand they are increasingly dissatisfied with the traditional offering from conventional suppliers. Your wholesale prices are competitive. However, you are concerned that the major supermarket is developing an organic and natural section and may become a threat. Their small space is already 3 times your own space. Their prices are lower. How will you hold onto your client base which is vulnerable because you do not yet have the relationship with them yet that the previous owner had?
Consumers
Your husband is a seasonal worker and you have a part time job. You have 4 children. There is not much room after the necessities in your family budget. You have to watch the pennies carefully and you pride yourself in how you can stretch the food dollar. You can’t afford much fresh meat. What meat you buy tends to be meat that is easy to cook such as hot dogs, the children love them and you get no fuss at the table, and frozen hamburgers – everyone can cook them and they are also popular. Sometimes you buy wings or nuggets. To keep everyone feeling full, you buy a great deal of bread and potatoes. You don’t have a lot of time and your husband does not cook. So you also buy a lot of ready to use foods such a Kraft Dinner. The children love cereals: especially the sweet ones. The children drink lots of milk and pop. Both you and your husband smoke two packs each a day. You are 35 and your husband is 36. You are both overweight and so are your children. You find all this talk about organics and natural food is something for the rich – your job is to find enough food to feed you and your family on your budget. It is a huge struggle and you often wake up at night and worry how you are going to do it. You wish your husband was more help. The price of food is very important to you. You can’t afford to have it go up.
You work at DVA and you wife is a teacher. Health is very important to both of you. You work out 3 times a week at the gym and you both bicycle. You have 2 children. You pride yourself in how well you eat as a family. You go to the farmers market every Saturday – it is like a club – and you eat a lot of fresh vegetables. You have enjoyed the choice of food available in the new supermarket and think that the supermarket has done a good job in expanding the choice and taste of food on the Island. You go out to dinner twice a month and like Italian food – it is so healthy. Neither of you smoke. Your teen daughter is a vegetarian so the family does not eat a lot of meat. But you and your son still really like it and a barbecued steak is your ideal meal. None of you eat fried food. Both you and your wife have become concerned about the inherent quality of food. The whole GMO issue has concerted you. You don’t know much about the science but you are concerned. The Milk BST thing is a concern –you are thankful that Canada banned it. You have a cousin in England and the “mad cow” thing has caused you to lose trust in government regulation. You applaud a major fry processor for banning th use of GM potatoes. You subscribe to Green Peace.
You are 80 years old , a widow and live in an apartment downtown in Charlottetown. Preserving your independence is very important to you. Your daughter lives in Toronto and your grandchildren are all over Canada. You have an older sister still living in a manor and you have a rich network of friends and cousins. You are always out and about visiting in the summer. The key independence issue for you is doing your own shopping and cooking. You are not allowed to drive any more and the downtown Coop is your independence lifeline. If you had to take a taxi to the mall, you would not be able to afford it. Even in winter, you can get out to the Coop. You are frightened about what would happen without it. You have started to shop at the Root Cellar as well. That new young girl is so nice. Maybe this would be the alternative? You live on a fixed income. You shop very carefully. You focus on fresh vegetables and a little fresh meat. You bake for friends. You love to cook even for your self. Caring for your self in this way keeps you going. Food is but you have found that by buying quality produce and spending the time on cooking, that you eat well and within your means. You have always somehow known that eating well was the key to a long and active life.
Agriculture Canada - You are the director of the local Ag Canada Research Station. The traditional mission has been to support the conventional growing of cash or commodity crops. The underlying focus of much of Ag Canada’s work has been to support the export of commodities and to support the industrial approach to Agriculture. You are beginning to have some doubts about this type of direction. While the word “sustainable” has entered widespread use, you are not sure that only developing some new techniques will be enough. You are beginning to consider that a completely new perspective is required. But science and government policy is conservative and change is challenging. Many of your scientists have great knowledge but traditionally work in their own distinct fields of study. Collaborative work has not been the pathway to scientific recognition in the past. You recall that it was a revolution in agriculture in the 18th century that set the stage for the Industrial revolution in the 19th century. Might not such a new way of approaching food growing be available now. You wonder if we now know enough about how nature works to stop working against it and start working with it. Such a path would truly be a revolution. You suspect that really looking for a new model would be the right thing to do but know that this might offend the status quo. How could you obtain support to investigate looking in a new way?
The Provincial Department of Agriculture - You are the minister. You live in the heart of the potato growing area of the Island. While your background is teaching, you can’t live where you do and not have a good feel for what is going on. You have been listening for years to the main debate about agriculture. Most of the government talk has been about supporting the current system. Each province seeks more support for their farmers from the Feds. Each country accuses the other of unfairly supporting their farmers. Most of your budget is allocated to supporting the traditional system in one way or another. You are having doubts about the wisdom of this focus. There is no doubt in your mind that the industry is in trouble and that farmers need to be supported right now. But where is the new system that does not have to be supported? It is becoming clear to you that farming, as it is practiced now, is not only not sustainable from a natural resource point of view but is no longer financially viable. The risks for the province are relatively greater than for many other because of the relative importance of agriculture and the dependency in particular on growing processing potatoes at scale. A major failure in the potato could affect PEI’s society like the failure of the cod fishery on Newfoundland. You understand that the focus on processing is one of the problems. This has pushed the trend of overcapitalization, increased acreage, monoculture and the use of chemicals. The problems of the seed industry are directly related to the increased acreage and the rise in the population of aphids which is in turn connected to spraying for beetle which kills off the beneficials that feeds on the aphid. PEI once had an unparalleled quality seed industry and now no longer is self sufficient. You are aware that PEI has also lost its position as the quality table stock producer. More reports of fish kills will begin to affect tourism and damage the idea of PEI being an idyllic pastoral landscape – its primary tourism image. The risks are huge and the time is short. How will you act to encourage a new alternative model? If PEI can find one, it will not only help the Island but also be a model for the world. So the upside is huge as well! You sense that the right approach is to encourage the building of a parallel track alongside the traditional system so that those who are embedded in the current system can step off safely onto the new. You sense that the battle is not just to be won in the field but in the system of how food is distributed and sold. You estimate that islanders spend about $150,000,000 a year on food. You sense that most of this leaves the Island. How could we divert a good proportion of this to Island producers so that it stuck here? You know that there is a huge momentum behind organic and quality food. How could the Island tap into this? You know that most of your growers are trapped in the old system and have large debt loads, how can you help them find a way out of their trap? Most people think that the 2 big issues for Government to solve are healthcare and education. How can you show them that if we don’t get the food issue right that we will not have the resources to deal with health and education?
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