Embed Size (px)
Citation preview
What can the dairy industry learn from other livestock industries?
Krijn J. Poppe, Wageningen Economic Research September 2016 IFCN, Wageningen
Krijn J. Poppe
Economist Research Manager at
Wageningen Economic Research
Member of the Council for the Environment and Infrastructure (foto: Fred Ernst) Member Advisory Committee Province of South-Holland on the
quality of the Living Environment Board member of SKAL – Dutch organic certification body Former Secretary General of the EAAE, now involved in managing
its publications (ERAE, EuroChoices) Former Chief Science Officer Ministry of Agriculture
3
Content of the presentation
Structural change: will it speed up in dairy to mimic pigs and poultry?
Optimal location: pigs moving east, dairy moving north? Chain organisation: will chains in dairy become more
integrated like in pigs and poultry ? Public relations: can dairy do better than pigs and
poultry? Take home messages
Cochrane’s TreadmillFarmers
don’t exit but try to
reduce cost prices
Input suppliers
and public research
provide new technologies
Adopters have a
temporary advantage
Their lower cost price leads to
lower market prices
.. Is good for the economyFarmers
don’t exit but try to
reduce cost prices
Input suppliers
and public research
provide new technologies
Adopters have a
temporary advantage
Their lower cost price leads to
lower market prices
Leads to lower food prices
Next generation leaves, trained for a job in the city: lowers labour cost in the economy
Innovation helps the competitive
positionFarms have to enlarge, keeps
land prices up (+ for banks, exiters)
2013:10.8 mln.
Source: Eurostat FSS
And the average farm size increases (NL):
And it accelerates in pig meat (NL data)....
.... and in chicken meat (NL)
How many livestock farmers do we need?
Svend Rasmussen on Denmark (2011) Optimal farm size, according to FADN data (and DEA):
●2000: 174 cows; 712 sows●2007: 229 cows (on 258 ha); 1022 sows
Eurostat 2013● 23.6 mln cows on 878,215 farms (27 cows/farm)
Assume optimal size in 2020: 300 cows Then we need
• 80.000 dairy farms (= 9% of today)• and 3.000 new entrants per year
This economic system works well ....
Source: Eurostat
...but with a ‘crisis’ in livestock farming
Dairy●The quota system has partly frozen structural
change for 30 years, now production flows to the European Milk Belt (from Ireland to Estonia)
●At the time of pressure on demand (Russia, China, Middle East) and high supply US, New Zealand
Pigs●Strong structural change (role of ICT ?)●A structural problem: we created the industry
around the ports of Western Europe based on trade protection and with high environmental costs and animal welfare discussions in the cities nearby
The Milk Belt (source: MTT, Finland)
Relocating pig production?
LabourFeed Meat
?Future location
Chain organisation changes (©Gereffi et al., 2005)
inpu
ts
E
nd p
rodu
ct
PRICE
Shops
Complete Integration
Lead company
Leadcompany
Turnkey supplier
Relationalsupplier
Market Modular Relational Captive Hierarchy
Low Degree of explicit coordination and power asymmetry High
Leadcompany
Farmers
Chain contracts replace open markets?
Genetics and conditioning of the production environment makes planning possible (see vegetables)
Contracts with exchange of data (and compliance audits) for labels, sustainability brands, regional food (see egg production)
Genetics makes specialties and prescriptive farming possible (see IPR on hybrids in genetics in chicken)
ICT moves some decisions from the farm to the input industry or the food processing.
These developments are stronger in pigs, poultry, veal And will increase in Dutch pig farming to renew business
models Will it happen in (cooperative) dairy farming??
Strong ICT trends: less farm labour needed or making farming attractive ?
17
2 Scenarios, with significant impacts ?
1. Scenario CAPTIVE PRODUCT CHAINS: ● Farmer becomes part of one integrated supply chain as a
franchiser/contractor with limited freedom ● one platform for breeder, machinery company, feed company,
farmers and milk processor.● Weak integration with service providers, government ?2. Scenario OPEN NETWORK COLLABORATION:
• Market for services, apps and data• Common, open platform(s) are needed• Higher upfront, common investment ??• Business model of such a platform more difficult?• More empowerment of farmers and cooperatives?
F
F
Development of farm systems
Net value / ha
Time
Agricul-tural
Family Firms (sme)Family
farming
Lati-fundia
socialist state farms
Subsis-tence
farming
Ag. policy
AKIS.gov
Food supply networks
3rd gen. uni
Market integration
Supply chain integration
Urban farming
Residen-tial
farming
Metropolitan agriculture
Sustainability, Reputation, Public relations
Governments have not always been effective in looking after public values, like the environment / sutainability
Part of the public has trusted this task to NGO’s; some of them see the reputation of the large companies (retail, food processors) as a better target than the parliament
One of the reasons (in addition to self-interest) why companies start to manage sustainability, first in their own business, now also downstream to suppliers (farms)
In the NL there is now much concern that dairy will become an ‘intensive livestock industry’ like pigs+poultry
Given the scale increase, zero-grazing, manure problem Need to monitor and communicate sustainability
Larger farms will bring the cows in...(good for the environment, bad for cows?)
Incentivise farmers on sustainability (PPP)
0
20
40
60
80
100
Cost priceper 100
kg milk
Income perFamily
Labour unit
solvability (%)
Energy use per euro output
Water use per euro output
-Pesticide use
per hectare
numberof days
Cows in Meadow
-Education
Surplus of Phosphate per
hectare
Surplus ofNitrogen per
hectare
PEOPLE
PROFIT
<< PLANET >>
Annual monitoring
23
Elements:• Transparent reporting by
independent partner
• Interpreting performance to evaluate goals and effectiveness of measures
• Support in developing monitoring (indicators – targets – methods – data)
• Annual: ongoing process
Greenhouse gases
Dairy chain emissions
Mtonnes CO2 Eq.
Energy efficiency
Dairy chain primary fuel consumption
m3 NGE per 1000 kg milk
Sustainable energy production
Production of sustainable energy
% of consumption
AntibioticsNumber of farms under the SDa action value
%
Cow lifetime Age of dairy cows at culling Years
Animal welfare To be determined Development of monitoring system (by 2017)
Pasture grazing
Total number of farms with grazing %
Responsible soy
Share of responsible soy %
Minerals Phosphate excretion of dairy cattle m kg
Ammonia emissions of dairy cattle m kg
Biodiversity To be determined Development of monitoring system (by 2017)
0 5 10 15 20
Goal 2020Current 2014
Benchmark 2011
0 10 20 30 40 50 60 70 80 90
Goal 2020Current 2014
Benchmark 2005
0 5 10 15 20
Goal 2020Current 2014
Benchmark 2012
0 20 40 60 80 100
Goal 2020Current 2014
Benchmark 2012
0 1 2 3 4 5 6 7
Goal 2020Current 2014
Benchmark 2011
0 20 40 60 80 100
Goal 2020Current 2014
Benchmark 2011
0 20 40 60 80 100
Goal 2020Current 2014
Benchmark 2011
0 10 20 30 40 50 60 70 80 90
Goal 2020Current 2014
Benchmark 2011
0 10 20 30 40 50 60
Goal 2020Current 2014
Benchmark 2011
Management of Change
24
Elements:• Support in developing
sustainability programs• Workshops with all
stakeholders• Reflection on developments• Research to gain Insights in
perceptions and motivations• Data analysis• Annual: ongoing process
DSF: International standard for sustainable dairy
Klik op het pictogram als u een afbeelding wilt toevoegen
From a global framework, supported by the international dairy sector
To a regional approach and standardization
On-farm sustainability data
Demonstrate the feasibility (and usefulness) of collecting Farm Level Indicators on New policy Topics (= data on sustainability) in different administrative environments
On 1000 farms in 9 member states Linked with indicator schemes like SAFA, SAI, TSC. Including 170 dairy farms (NL, F, Finl, Poland, Ireland,
Spain) Data gathering proved feasible (in connection to FADN). Proposals for permanent data collection under
development Chance for dairy industry to go for large scale monitoring
of sustainability in Europe.
Agriplace – compliance in food safety etc. made easy
Data exchange becomes platform-based
Donate to (citizen) research
RICHFIELDS: manage your food, lifestyle, health data and donate data to research infrastructure
audit
FMIS
Take home messages for dairy There is a clear process of structural change Slow compared to pigs and poultry: this will speed up. Including relocation of production to the Milk Belt More integration in the food chain due to genetics, ict
and sustainability management (CO2 !) is likely At least in the form of contracts and data exchange These trends are a challenge for public relations –
favourable attitude to dairy could become more hostile Measure and manage sustainability and report in a
transparent way to the public !●Bring the NL system to the EU level?
Create open ICT systems to support this !
Thanks for your attention
www.wur.nl
Thanks to:Joan Reijs (Sustainability Monitoring), Hans Vrolijk (FADN, FLINT), Sjaak Wolfert (ICT)
