Friday, December 1, 2023

Putting values into effect makes profit

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The word value means a lot to the farming sector. Farmers value their role as food producers and caretakers of the land. They value their animals and their communities. These are the principles they live by.
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But farmers also extract value – the monetary worth of the food they produce. This is a bit more literal and is increasingly dependent on how well those principles are adhered to.

A new piece of work from AgResearch has put some numbers around shifting to a value set that has sustainability at its core. Researchers say farmers can move to a carbon-neutral system and get bigger profits from their farming business. The on-farm changes include greatly reducing nitrogen use, bringing in more feed and dropping stocking rates. That’s where the carbon zero part comes from but what about the increased profit? Well, there’s quite a big if involved. The model requires consumers to pay a premium for food produced in this sustainable way. That would require a number of things to happen.

The first is that enough farmers need to move to this model to produce the volume required. A single farm can’t extract that value on its own. Second, the processor needs to market and sell the food to achieve that premium. And that brings in the final link in the chain, the consumer. Just last week a Harvard study showed people are quite willing to say they’ll pay a premium for sustainable food but that didn’t flow through to actual purchases in the supermarket. That’s demoralising for sure but it is possible to see a trend towards sustainability over time and the values of well-off consumers are moving in that direction.

Dairy is emerging from a period of valuing volume over everything else. That’s left farmers with small margins and angry countryfolk who demand a better environmental performance. This mounting evidence that there’s profit in a shift of values towards sustainable and carbon-neutral farming shows there’s reason to be optimistic. 

Bryan Gibson

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