NUFFIELD FARMING SCHOLARSHIPS TRUST

I would like to thank the Nuffield Farming Scholarships Trust and the Studley College Trust for giving me this opportunity to study Reconnecting the Supply Chain a subject that I have come to feel passionately about.

Having a Nuffield Scholarship has been both a tremendous privilege and a great responsibility. As I now fully appreciate, that situation is and will continue to be ongoing.

I would particularly like to thank my wife Jill and our 2 children, Sam and Emily, for their unstinted support during both the period of my study tour and also subsequently when I have been so busy pursuing the leads that it threw up that I have not given them the time that I should. My parents and friends supported this wonderful adventure and learning experience. The team at Farmeco Ltd continued to manage and run the farming enterprise while also welcoming and allowing many overseas Scholars to visit and stay. The Board and fellow members at Farmshop Home Delivery allowed me the time to travel and carry out my study through very difficult times within a start up business. Margaret Herbert NSch and Dr George Jackson OBE, trustees of the Studley Trust, gave me valuable help and guidance.

Among the many UK Nuffield Scholars and farmers who guided and encouraged me I would particularly like to mention Martin Robinson, Tony Strawson, Roger Mercer and Jill Willows.

Not only was I awarded a Nuffield Scholarship, I was also accorded the privilege of joining Belinda Clarke (UK Scholar) and four Australian Scholars on a group study tour of Asia, Indonesia and California, allowing me a greater understanding of world agriculture and an introduction to so many fantastic people. A complete list of contacts visited in my travels is given on the final page of this report.

Disclaimer The opinions expressed in this report are my own and not necessarily those of the Nuffield Farming Scholarships Trust, my sponsor the Studley College Trust, or of any other organisation with which I am connected. Please also note that the infomration contained within this report may only be reproduced with the prior consent of the author.

CHAPTER 3 : PERSONAL BACKGROUND

I am the third generation of my family to farm at Screveton and took over the running of the family business in the early 1980s following a serious accident to my father. At that time the farm was 250 acres and over the next decade was increased to 650. Even so, by the mid 1990s I could see that, to create a sustainable business, the operation would need to expand. As I did not want to purchase more land I looked for other partners with whom to share machinery and labour.

Two other farmers joined the scheme and Farmeco UK Ltd was established. A fourth member joined the team in 2002 and now Farmeco farms 5,500 acres with one set of machinery and labour. This gives bargaining power for joint purchases, and shares information, problems and opportunities. Each unit can keep its individuality and the owner can diversify and gain outside income while remaining in mainstream agriculture.

My workload is now split. 5% of my time is spent as a director of Farmeco, 5% on my own farm unit and the remaining 90% on running a start-up business Farmshop Home Delivery. This co-ordinates a wide range of regional produce sourced in Nottinghamshire and Leicestershire from some 40 different producers. A range of fresh meat, vegetables, bakery, dairy and other produce is boxed up and delivered to customers’ homes. In the 18 months since it was established, Farmshop Home Delivery has accumulated nearly 1,200 customers and proved that there is a demand for such a service in the local area.

I also run Farmshop Specials, a meal solutions business producing convenient meal solutions made from healthy, farm fresh, responsibly produced food. Farmshop Specials are sold and delivered via Farmshop Home Delivery to food service outlets and selected retail outlets as well as to schools in Nottinghamshire, Lincolnshire and Leicestershire and there is, additionally, a small national delivery. (For further information see www.farmshop.net)

CHAPTER 4 :INTRODUCTION

When my grandfather first came to Screveton in 1933 he milked a small Friesian herd and delivered milk around the local villages. The local butcher and baker had similar rounds. My grandmother picked blackberries and apples and sold them under her own name through Nottingham market. Such arrangements were common practice in the UK.

The consumer knew, or knew of, the farm where his/her purchases originated.

The housewife cooked and provided meals from basic raw materials.

The supply chain was CONNECTED.

Today that scenario has been turned on its head.

The majority of food is purchased by the consumer through huge supermarket chains.

Most of it is labelled, at best, solely with the country of origin.

Research shows that on average only 15-25 minutes is devoted to the preparation of a family’s main meal.

Increasingly such meals comprise, partly or in total, of pre-prepared, ready to serve, often pre-cooked, ingredients.

The supply chain is DISCONNECTED.

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This report therefore addresses the following issues:

Why does farming need to be RECONNECTED to its local communities both rural and urban?

What are the barriers to developing this reconnection?

How can these barriers be overcome?

CHAPTER 5 : EXECUTIVE SUMMARY

1) In the 1930s primary food production was sold locally and the source was often personally known to the buyer. The housewife prepared meals from basic ingredients. The customer and the farmer were mutually appreciative.

2) This connection has gradually become lost. Farmers have become commodity-market producers.

3) About three quarters of all retail food purchases are now made via supermarkets. Food comes from all over the world. It travels too far. Food labelling is mostly confined, at best, to country of origin. Pre-prepared items are increasingly being chosen at the expense of the basic ingredient.

4) British farming is in crisis largely because it cannot produce to world prices while hampered by the strictest regulation on the planet. However, because of this regulation, the product is on average the safest hygienically and the most acceptable in terms of the environment and animal welfare.

5) The solution must lie in marketing the plus points of the British product and improving customer perception of the British producer, thereby creating an informed demand for British-produced food.

6) The farming industry must change from being commodity driven to being consumer focused. It must sell to the customer either direct or via farmer-controlled distribution/processing centers. Farmers must cooperate and fight for these new markets.

7) Broadly the fight must be conducted on 3 fronts:
a) PR and education of the customer about the advantages of British-produced food
b) centralizing the representation of the industry on matters of policy, research, standards, funding
c) creating regional/local distribution/processing/marketing centers.

8) Food service is a real commercial opportunity for regional food, giving a great platform to reconnect the whole of the industry and to create links with education, tourism and the countryside in general. A network of pubs owned, or partly owned, by those who supply regional food and drink is a feasible target

9) There is more funding available than generally acknowledged. Government initiatives must be assessed with open minds, not met with blanket negativism.

10) Over 300 different organisations claim to represent the farming industry. These must be drastically reduced. Ideally one body should emerge to speak for the industry. This should be a cross-industry support/control panel comprising of farmers and agricultural corporations that monitor the performance of research organizations and linking all the levy boards.

11) Different assurance schemes need drawing together and represented by one logo (the Little Red Tractor?)

12) Standards for organic and fair trade must be stripped of all anomaly. Terms like home-grown, home-reared processed in UK etc. must be cleared of all ambiguity.

13) Schools and children are a huge area for attention a) to ensure correct education and knowledge of food production, cooking and usage b) to ensure knowledge of environmental and welfare issues c) school meals is a market where farmer-controlled distributive/processing units could hope to dominate.

14) Much the same could be said of hospitals and the whole NHS and Health scenario.

15) The internet provides a huge new medium for PR, information and marketing.

16) New, farmer-controlled supply chains need to be created. Essential pre-requisites for these are:
a) choosing a brand name consumers will trust
b) creating a chain: primary producers/produce groups/processors and abattoirs/labeling, sorting and packing depots/warehouse storage and distribution
c) ensuring continuity of supply.

17) Listen to the customer! and give him the best of service.

CHAPTER 6 : THE STUDY TOUR

To understand how UK farmers might look to reconnect the supply chain, and to assess what benefits might be gained by so doing, I wanted to understand what lifestyle and consumer trends were taking place around the globe. In this I was doubly fortunate for not only did I have my own personal study tour, I was also invited to be one of the two UK Scholars to join in with the Asian Tour arranged specifically for Australian and New Zealand Scholars.

I visited:
Indonesia, The Philippines, Singapore - the Asian Tour
Australia , USA, Canada, France, Republic of Ireland and also travelled around the UK - my personal Study Tour

It soon became clear that similar problems were facing producers the world over. Wherever I travelled I discovered similar trends. The prime concerns when consumers made a food purchase were:

price
health
convenience

in that sequence.

Another key factor when people bought food was trust as represented by a brand name they felt they could trust, a brand that indicated to them that the product would be safe and wholesome and which showed the origins of where and how it was produced.

Details of my findings from the various countries visited are as follows:

6.1 Indonesia
Wet markets were found in the centre of every town, selling a wide range of fresh produce. In Indonesia almost all the produce sold is fresh in fact so fresh that some is still alive! The majority of producers have no refrigeration or chillers and their produce is kept cool on slate beds and ice.

This meant that there was only one day to sell produce before it went off, which proves that selling is not just about food production but also about how customers are educated and how they perceive markets and concepts. Most customers to whom I spoke averred that eating warm meat fresh, as long as it was cooked that day, did not create a hygiene problem, even if flies had crawled all over it! It was held that a short period between slaughter and plate would not apparently allow bacteria time to develop.

The abattoir is very close to the wet market. It is run by the government and is strictly monitored and inspected and the produce marked. Fruit and veg were brought in each day to the wet market. The picking/harvest of these commodities was governed according to the sales demand so that, at the end of each day, there was minimal waste. Indonesians buy food on a daily basis and on average only 30% of locals have fridges and freezers in their homes the percentage was higher in the urban that the rural areas. People leaving work at the end of the day would go to the market to purchase their evening meal. Any product left over was either salted or cured for processing or freezing.

As with everywhere else in the world, supermarkets are now taking a hold in towns; Asian companies are carrying out joint ventures with European companies. The French Carrefour group, Tesco and the Dutch are also now looking at the Indonesian and Asian market, with a view to introducing western supermarket logistical and distribution systems. The use of western-style packaging and marketing is enabling these supermarkets to eat into wet market sales.

Appliances fridges, freezers and cookers are becoming more widely used by Indonesians although they still fight shy of the internet. The ambience of a supermarket is certainly more inviting that the smells and sights of the wet markets. The price differential between supermarkets and the wet markets was about 30% but customers like being able to purchase a complete shopping basket in one stop and also perceive supermarket shopping as being more upper class.

Labour in Indonesia is cheap and farmers were able to grow sweet corn pesticide-free by removing bugs manually.

6.2 The Philippines
The second stage of the Asia tour took us to the International Rice Research Institute, Los Banos, Philippines (IRRI).

The week in IRRI was, I thought, going to be informative but not interesting. How wrong could I be? The cultivation of rice is, in the main, totally different from growing cereals, but the crop needs the same ingredients seed, soil, water, feed and protection from weeds and predators. The research and development being undertaken in these key areas was the same for rice it would be for cereals. To grow as much crop for as little cost as possible is still important but, as with cereals, there is a real shift of emphasis now to produce for a specific market with less inputs (i.e. chemicals and fertilisers).

GM technology is also a key method being researched to breed pest resistant crops the Philippines must be one of the few GM-friendly countries.

6.3 Singapore
Singapore is basically one huge, thriving, commercial city and has no land to speak of. Food has an important cultural significance. Most people live in high rise flats and so eat out most of the time. The average household spends 40-50% of its income on food and to cater for this situation many fast food outlets are situated underneath or very close to large tenement blocks.

I found it refreshing that industry and public alike respected the Singapore government, something I have not witnessed anywhere else worldwide.

6.4 Australia
Australian farmers have their own type of problems but at least they understand what they are. They do not have a problem of reconnecting to their local market because there isn’t one. They have instead to rely on developing trade on world markets without subsidy and they are making great inroads towards success. One major problem in rural areas was getting labour to work on farms. As the rural infrastructure breaks down ladies insist on migrating to the large cities around the coast with consequent social issues.

Consumer concerns, world-wide, seem greatest about pesticide usage. I saw an alliance of farmers in the Locker Valley in Queensland, Australia, who are trying to counter this. They are trialling an integrated pest management system growing crops without pesticides.

6.5 USA
To my surprise the USA farmers were facing the same problems as do the small farmers in Asia and the Philippines and also Europe and Australia. Farming malaise seems global and not confined to any one region or operational size. The consumer does not understand or does not want to understand the problems facing food production worldwide. The only exception to this was France.

The trend to Farmers’ Markets was big in California. Sacramento has 7 and San Francisco 5. Markets are taking place every day of every week in California. One market in Santa Monica takes $170,000/day and has nearly 100 producers taking part. I fully appreciate that farmers’ markets are only a small part of the food industry and could not hope ever to supply a major part of the population. However the concept of liaising with and creating an understanding customer via a marketable brand is one the whole of the industry should learn from.

Of all the supermarkets I visited in 4 continents, 2 stood out. Both were in western USA: Reileys in Sacramento California, and Nuggets in Davis and Seattle. They married the local feel of a farmers’ market with the convenience and professionalism of a supermarket. It was somewhat alarming to see that these supermarkets were taking the best of producer-led concepts and adopting them as their own. Supermarkets would appear to be staying ahead of the game.

In New York State an integrated pest management system is being trialled, with the aim of creating a consumer-supported agriculture. This concept allows opportunity for consumers to understand and even choose the practices by which their food is being produced, and to have a direct relationship with a farm. In California cotton farmers (admittedly, this is not a human food crop but the principle may carry over) breed natural predators and place them in crops to control pests.

The message is that, in all countries, foods produced in environmentally friendly ways are demanding a premium.

6.6 Canada
I traveled with my family up the west coast of the USA through the states of Oregon, then Washington and on to British Columbia and Alberta in the beautiful Canadian Rockies. Although the population is so low it was great to see some very good farmers’ markets and farm shops working closely with rural and urban communities.

6.7 France
France was the eye-opener on my tour. My perception of militant, uncooperative farmers was far from the reality. Not only are they working together, but their customers have a far better understanding of food and its local origins, and farmers seem to have identified a way of living that connects to life in France.

In France the concept of a chain of eating establishments owned or part owned by farmers, and serving good wholesome regional food and drink products, is a reality. An outlet that I visited provided a range of meals sourced from local produce. The consumer was able to enjoy a good food experience, leading them to want to learn more about the remaining agriculture sectors and so starting a real change in consumer perception.

6.8 Republic of Ireland
Visiting farms can be very therapeutic as I witnessed when visiting Margaret and Kevin Fingleton at Finway Farm at Spink in Co. Laois, Ireland. Finway Farm is a unique and innovative development, providing supervised programmes in self discovery, behavioural analysis/modification, psychological stabilisation and reconciliation. The service is based on a basic principle of contact with animals and nature to help rediscover environment and trust. The service is for individuals and families dealing with trauma, depression or stress-related disorders, but the Finway approach and theory works for all walks of life.

6.9 UK
Fascinating though it was to visit the above countries, it was surprising to find such similar trends everywhere in terms of the onward march of supermarket shopping, the divorce between the ultimate customer and the primary producer, and the universal concern of the consumer about overuse of pesticides.

It was in the UK, however, that I learnt far more about my subject than anywhere else. Travelling round Britain and talking with men of vision at the sharp end of any process between production and consumption was by far the most revealing aspect of my study tour.

I have therefore shown my findings about the UK in a separate chapter which follows next: The UK Supply Chain as at 2001

CHAPTER 7 : THE UK SUPPLY CHAIN as of 2001

7.1 Retail Statistics
Food retailing is the largest of all retail sectors in the UK with sales amounting to £93.2 billion in 2000. That represents 45% of all retail expenditure. Food sales have been rising at the rate of 6% a year for the past 5 years. The share of the multiples reached a total of £71.34 billion.

However, the smaller food businesses are witnessing something of a revival and in fact increased their growth in 1999 and 2000 by very slightly more than did the multiples. These smaller businesses are repositioning themselves as small neighbourhood convenience stores with a useful role to play for top-up and distress shopping.

There has been little inflation in the food sector which is the result of the fierce price competition which began before the entry of Wal-Mart into the UK market in 1999 and which has certainly not let up since then.

7.2 Supermarket Growth/Development
Superstores in the UK are typically much smaller than similar formats on the continent and in the US, although store size is increasing. As the supply of suitable sites has dried up in out-of-town and edge-of-town locations, each of the major multiples has looked at ways of developing alternative formats and alternative means of growth. Among the multiples, Tesco has been the pioneer of the new store formats. It has 5 different such formats, tailored to meet the needs of different customers in different areas. These are:

conventional superstore
hypermarket format
compact format (for smaller towns and suburban areas)
city centre concept
convenience store concept

This approach has enabled the company to continue to open new stores despite working within a tough planning permission climate.

Other multiples are also creating a number of considerably larger stores – either by building on new brown field sites or by extending existing operations.

The average store size among the multiples is only around 17,500 sq ft, but the new Asda Wal-Mart and Tesco Extra hypermarkets may be up to 100,000 sq ft each, making them ideal for offering a wide range of non-food products.

7.3 Customer Verdict on Supermarkets
Consumer research has shown that customers have a generally high level of satisfaction with organic ranges, healthy/low-calorie foods, ready meals and takeaway meals. Women were more knowledgable than men on such subjects. Those who already buy organic products tend to want more to be available. Sainsbury and Tesco customers were the most satisfied with the stores’ range of organics on offer. The majority of customers are also satisfied with the range of all products available from their local supermarkets. So the supermarkets appear to be doing a good job in satisfying their customers.

7.4 Organic Food Market
Organic food and drink has become the biggest growth area of the UK food retail market, moving from niche to mainstream over the last year or so. Consumer research indicated that 25% of the population buys organic fruit and vegetables as part of their main grocery shop. (Such purchases can, on average, only be small however; as the entire organic sales turnover is only around 1.5 % of the total market). Organic ranges have expanded considerably in the supermarkets over the last year and now include products in almost every grocery sector. With general food sales pretty well static, and fewer opportunities for innovation, organics have provided the multiples with a new field for achieving market leadership, namely in the development of their own organic brands and unique selling points.

The battle over organics is likely to be even fiercer than in other sectors, given the scarcity of supplies. Around 80% of organic fruit and vegetables eaten in Britain is imported. Demand is likely to increasingly outstrip supply over the next few years, with annual spending on organics predicted to reach £1 billion by the end of 2001. Sainsburys, which sells £3 million of organic food each week, has encouraged the entire island of Grenada in the Caribbean to convert to organic production, promising to buy as much food as can be produced. Tesco is also seeking to encourage more farmers to convert, and has established an organic agricultural research department at Newcastle University to advise on best farming techniques.

7.5 Chilled Convenience Food Growth
The growth of the chilled convenience food sector has been arguably the biggest success story for the major multiples in recent years, pioneered during the late 1980s by Marks & Spencer. Despite the growth of the “bargain mentality” among British consumers they are nevertheless prepared to pay over the odds for products that tempt their taste buds and which fulfil their needs in offering a quick and easy meal solution. The chilled food medium provides the vehicle to deliver convenience, innovation and quality.

Multiple food retailers, while currently accounting for the lion’s share of the market, are still developing their chilled food exposure. They perceive chilled convenience foods to be the route by which they can achieve growth. They are devoting more resources – specifically providing more space to building their chilled food presence, with the result that they continue to stimulate overall market growth.

They see the sector not only offering growth, but also a route to differentiate their product and provide premium margins. Even the smaller multiples, such as Morrisons, the Co-ops, and convenience retailers such as Budgens, have perceived this opportunity, and have a dedicated commitment to expanding their chilled food offer. The outlook for continued growth from the sector is good.

7.6 Development of New Types of Food Outlet
The UK is in an era of considerable innovation in food shopping. If you want to glimpse its future, take a close look at one of the London mainline stations – Victoria is probably the best example. “Meal solutions” are being sold – fresh, high quality, part or fully prepared meals to be eaten the same day.

Food retail is no longer exclusive to the grocery store, nor food service to the restaurant. The distinction between the two is well and truly blurred. Examples are:

Marks & Spencer with their Simply Food stores
Unilever owns Rocket which sells meal kits at stations
catering companies such as Pizza Express
a new company called Leaping Salmon

This is probably the way most food will be bought in the future.

Many believe this trend for “blurring” is driven by the retailer in an effort to capitalise on the growing food service market and the emergence of in-store dining, food courts and home meal replacements. But many branded restaurants sell a range of products (food and related merchandise) often as part of the whole entertainment package. In each case there was a latent consumer demand that someone identified and capitalised upon.

The race is on to lead this fast growing market. It is not about the lowest price although price is always a factor. It is about who is the best innovator.

7.7 E-commerce, Home Shopping and Home Delivery
Online sales of groceries have the potential to become the largest business-to-consumer sector in the country, for food, drink and household products account for the largest element of consumer retail expenditure. It is not yet possible to predict how home shopping online will ultimately develop in the UK food sector. However business does appear to be accelerating rapidly, albeit from a low base.

Almost every food retailer has experimented in some way with home shopping. Home delivery and/or e-tailing initiatives were originally much applauded in a climate in which every e-commerce venture was seen as an inevitable winner. It has now become clear that internet business is threatening to have an impact on supermarket costs. This is because of the problems/expense associated with the home delivery of orders – not least because the era of the stay-at-home housewife has long since gone.

Internet business impinges on many aspects of grocery business – the customer interface, supply-side buying exchanges and facilitation training for staff. So, after initially high hopes, supermarket home delivery via internet-placed business is taking longer to get right than had been expected. Tesco appears to be the only success story so far, but is still going through a period of trial and error, and its e-commerce activities only moved into profit during 2001. Tesco.com is now claimed to be the world’s largest e-grocer and one of the world’s top three e-tailers overall. By March 2001

Tesco.com had achieved sales of £300,000,000 through 300 stores. There are now nearly 1,000,000 registered customers of whom 600,000 use the site regularly. 70,000 orders are taken each week, averaging £85 each. Home shopping is now available to 90% of the UK population.

The range of products available online from the grocery multiples has widened enormously, to include clothing, computers, games and software, domestic appliances, furniture, jewellery, bathroom and kitchen accessories, mobile phones, music, videos and DVDs, soft furnishings, toys, TVs, hi-fi and even cars.

Unlike most other food retailers, Tesco has continued with store-based picking and packing of orders - as opposed to depot-based - in the belief that by using its existing store base it can make a wider range of items available and also improve local service levels. In contrast rival stores such as Sainsburys and Asda have concentrated on building vast warehouses to act as delivery hubs for online grocery shopping. Both have yet to make much headway in the online grocery market, and Tesco’s “world-leading” system is claimed to be at least 2 years ahead of the competition.

7.8 Labelling – and “Local” : what the consumer wants
The word “local” seems to be widely used in food marketing but a precise definition for the term is not agreed. Over half of customers, when questioned, thought it referred to the product being grown within 10 miles of the point of sale. Supermarkets, on the other hand, were prepared to consider anywhere in the UK as being “local”. 85% of customers stated, however, that they would like to purchase more locally produced food if it was available and 66% averred that they actively looked for it in supermarkets.

The qualities customers hoped to find in locally produced food were, in order of preference:

freshness
support for local economy
quality
price
taste
animal welfare issues addressed
reduced pollution

The factors most likely to encourage consumers to buy more local produce were, in order of preference:

being cheaper
making it more widely available
higher quality
more information on where to purchase
clearer identification/labelling.

A “local” label is not enough in itself to keep people coming back for more. Consumers expect such food to be at least as fresh as the standard equivalent and of high quality. “Local” branding is a promising idea but will backfire if the product is in any way inferior.

Bowland milk is an encouraging example. This is a Lancashire product, owned by Lancashire farmers, sold through Booths – a Lancashire supermarket chain. It is a high quality branded milk, at a premium price, that is smashing its sales targets.

Successful branding can be national however. Danish bacon and New Zealand butter are strong brands, with a clear identity in the minds of customers. If “British” could be developed as a brand, both at home and overseas, the rewards would be great. Customers expect branded products to be presented with flair, authority and confidence.

Branding has its anomalies. The British Meat logo is only permitted on meat that has been born, reared and slaughtered in the UK. Yet Aberdeen Angus-branded beef is renowned for quality and the perception is that it is sourced from Scotland. The reality is that the largest supplier of Aberdeen Angus meat in the UK brings it in from Argentina. In France it is now law that the country of origin must be shown on all meat sold. The UK should adopt the same policy.

Despite all the above, the bottom line remains that increasing consumer knowledge of food production and of ethical/sustainable farming is not necessarily the key to purchasing behaviour. This is far more likely to be influenced by convenience, price and quality.

To conclude on an optimistic note, the Institute of Grocery Distribution’s research indicated that 1 in 3 shoppers (representing 7,000,000 households) are really interested in food and are prepared to spend more for the right products.

CHAPTER 8 THE CASE FOR RECONNECTING FARMING WITH THE COMMUNITY

UK farming is in a crisis that is deeper than any but the oldest farmers in the community have ever experienced. Farm incomes have plunged by an unprecedented percentage – by 50% in the period 1999-2002. The price levels for commodity farming are being driven into the ground and only the most efficient farmers operating under the most favourable circumstances can hope to survive.

This crisis has come about because:

with modern transport and communications systems the food commodity market is now global
farmers and technologists have been too clever – there is now a world surplus of food available to all countries that can afford to pay for it. In real terms the basic commodity food prices have never been cheaper.
the food supply market in the UK has been largely cornered by the supermarkets.
neither they nor their customers are, by and large, concerned with where the product has been sourced. Provided it looks attractive, that continuity of supply is guaranteed, and that it will sell, the main criteria is price.
farmers have sold their produce into commodity markets and no longer either sought or developed local outlets.

The British farmer cannot compete financially in a global market. This is not because he is inefficient – far from it. But:

labour costs are among the highest in the world
machinery, equipment and input costs are similar
the regulatory system – hygiene, labour, environmental etc etc - is the most stringent in the world
the public perception of farmers is not particularly sympathetic

The obverse side to that coin is that:

the product is by and large the “safest” in the world (hygiene, pesticide use etc etc)
it is produced under standards of welfare and care for the environment that are similarly high
within the UK internal market demand for most commodities exceeds the home-grown supply

The above argument might sound a selfish one, presenting purely the farmer’s point of view. The appalling Foot & Mouth crisis of 2001 demonstrated with tragic clarity that the agricultural industry supports far more than those who physically till the soil. The whole raft of rural industry was brought down in the wake of burning cattle pyres. Environmental plans had to be dropped and deep hardship was felt throughout the countryside.

The Foot & Mouth outbreak demonstrated how the appearance of the countryside and the fabric of all life outside the main cities is inter-dependent on a successful and – yes – to some degree controlled, agriculture. The effect of an agriculture in terminal decline would be felt by almost every person and almost every other industry in the land. This must not be allowed to happen – for the sake not only of those who are farmers today, but also for our children, our countryside, and for the UK’s position in the world.

But there is a way forward, a way which addresses successfully all the above issues both agricultural and social.

To enable farmers to get viable returns they must capitalise on the fact that their product is the safest and best in the world. To do this the industry must reconnect with its markets at the point where the lump of profit is greatest. It must change from being commodity led to being consumer led, and fight for these new markets.

CHAPTER 9 : OPPORTUNITIES for RECONNECTION in NEW MARKETS

The industry must change from being commodity led to being consumer led, and fight for these new markets. The latter have been brought about by social changes every bit as profound as the agricultural changes of the last 70 years.

So where/what are these markets? In what sectors can they be found? Broadly, they can be identified as follows (in no particular order of importance) :-

9.1 Farmers’ Markets
Most farmers’ markets look as if they are reasonably successful. Most importantly the public has shown it wants to buy home-produced food that is fully traceable and hygienic, as well as being environmentally friendly. By bringing farmers’ markets into our towns and cities, producers can help to re-introduce consumers to the origins of the food they buy.

9.2 Farm Sales to Established Retail Outlets
The multiples are looking to source large quantities of high quality produce which can meet top standards of consistency and farm assurance. To achieve this farmers are beginning increasingly to work together to meet these demands. For example in Cornwall, Cornish King has been established as a brand associated with high quality cauliflowers and potatoes.

9.3 Food Service
The food service market (this covers both eating out and the provision of ready-to-eat meals) stands at £35 bn and is served by multiple players at both the retail and wholesale level. Of the above £35 bn, the eating out market (from fast food to gourmet, but excluding pubs) accounts for over £22 bn in retail sales. The ready meals industry – the fastest growing sector of the food service market – now achieves sales of £1.5 bn p a. Dining out in pubs (which are dealt with separately in point 9.5) is notching up sales of over £5 bn while restaurants are losing market share.

Nestle has commissioned MORI to research the eating out market. 45% of people eat out in restaurants at least once a month, with 10% claiming to do once a week. When eating out, 44% show a preference for traditional English food.

The main suppliers of ready-prepared meals in the eating out market are Brake Brothers and 3663. The market is heavily fragmented with competition at local, regional and national levels. There are opportunities, therefore, for groups of producers to collaborate at a range of levels in order to gain a foothold in this sector of the food service market. The latter is continually reinventing its offerings to address the changes in lifestyle and demands of a new generation of customers.

9.4 School Meals
School meals offer opportunity for farmers within the food service sector. A recent Soil Association report stated that school meals in the main provide poor quality food that doesn’t meet the Government’s own guidelines for children’s nutrition. Another report claimed that primary schools had to feed children on a food ingredient budget of as little as 35p per day per child. That left school caterers with little option but to provide a daily diet of cheap, unhealthy ingredients and over-processed ready-made food.

The Soil Association report said: “The Government has set targets to significantly reduce the consumption of calories, saturated fat, salt and processed sugar – as a way to combat coronary heart disease, strokes, hypertension and diabetes. Yet contracts to supply school meals are awarded to companies who charge the lowest price. Around £1,000,000,000 is spent by parents each year on school meals”.

Yet examples of the way forward can be seen in a number of projects in the UK. This includes St. Peter’s Primary School in Nottingham, which recently won a Soil Association award for providing children with organic and local food that is cooked in the school’s own kitchen. The uptake of school meals at this establishment is 75% compared with the national average of below 50%. Savings are made by sourcing directly and cutting out midddlemen to reduce the mark up paid for final products.

Another example is South Gloucestershire Unitary Authority which has 115 schools working together. It is re-opening kitchens and sourcing organic fruit when possible, and eggs, meat and vegetables via local farmers and wholesalers.

9.5 Pubs
This sector is gaining an increasing share of the food service market. Food is generating an ever-increasing share of the revenue of an increasing number of pubs (meals account for an estimated 25% of pub turnover). The division between pubs and restaurants is in fact becoming blurred. Enterprise Inns and Punch Pub Company are the largest operators in this highly concentrated sector and are an example of how operators are taking the opportunity to brand their chain of pubs as selling “farm produced food” cooked in a particular way.

There are opportunities for groups of producers to work together to supply independent restaurateurs, pubs and hoteliers with a range of locally sourced, quality produce. For example, my company Farmshop.net, working with the Heart of England Tourist Board in Leicestershire, has sought to have its range of produce used on menus in the Vale of Belvoir. There was enormous resistance to this – coming from two main issues. Firstly, catering staff lacked the skills for dealing with fresh produce and, secondly, the lack of appreciation of proprietors of the possibilities of using local produce as a selling point to consumers.

9.6 Environmental Linkage
The Curry Report backs the importance of reconnecting the food chain with a healthy and attractive countryside. It includes recommendations for, for example, a new national network of demonstration farms and re-targeting public funds to environmental and rural development instead of to subsidising production.

Rewarding farmers who manage, under contract to Government, an attractive, healthy countryside, and making environmental management a selling point (and not a sore point) for the agricultural industry is increasingly important. It embraces the principle of farmers as the providers of “public goods”.

9.7 Biofuels and Biodegradable packaging
One emerging sector is promoting UK agriculture as a potential provider of the material for environmentally sound energy and packaging. Supermarkets such as Tesco are selling bio diesel – a blend of low sulphur diesel and rapeseed oil – on their forecourts. Morrisons has been trialling bio diesel in its delivery fleet. Asda has been piloting a project recycling its own waste. All are looking to use environmental management to help consumer perception – while adding value to their business.

CHAPTER 10 : ISSUES and BARRIERS : the Industry in general

To penetrate these new markets and to successfully Reconnect the supply chain will demand huge changes in the way the industry is organised.

Some of these changes (e g the way the industry is represented, food labelling, education of the public and PR issues) are general to the whole industry and need addressing from the very top. They are discussed in this chapter.

Other changes apply to marketing and supply chains where a radical new concept needs to be embraced and developed. These will be discussed in Chapter 11.

10.1 Representation
The NFU is regarded as being the main political lobby for farming in the UK. However it must be recognised that there are many other organisations that have the ability to influence UK policy, for example the Countryside Agency.

My research indicates that the NFU is neither disciplined nor focused. Consequently it is perceived as ineffective. Paradoxically a recent Financial Times report on representative organisations showed that the NFU came very close to the top in terms of its effectiveness. The explanation can only be that the NFU is poor at information transfer back to the members. Such failures are common across all political lobbies but in today’s climate can be solved by a good website (as the NFU have started to do).

There is a wide range of bodies which are seeking to represent their industry sectors. (See Appendix 3). They have at their disposal research, technical support and information which is simply not readily available to the producer. Work needs to be done on how to get such valuable information to those on the ground.

There is a plethora of organisations representing farming, which dilutes their overall effectiveness and confuses the customer into the bargain. These organisations have different local, regional and central objectives and appear to mix a political lobbying function with commercial enterprise. Consequently often the perception given is that farming is fragmented, unfocussed and self-serving. For example, over 300 different organisations made submissions to the Curry Commission.

At the moment the NFU provides the lobbying to Government on policy development. This is not adequate. A cross-industry support/control panel needs to be set up, comprising of farmers and agricultural corporations that monitor the performance of research organisations and linking all the levy boards.

10.2 Labelling
There are dozens of different accreditation/assurance placed before consumers, vying for their sympathy vote. If all assurance schemes could be drawn together, under the British Farm Standard (BFS) “Little Red Tractor” logo for example, it could help simplify the message to the consumer. These schemes need explaining more widely so that consumers are sufficiently informed to be able to choose according to their pockets and their conscience.

There is also a range of views on what “fair trade” means, and a range of company criteria interpreting this. As there is no independent standard for the “fairly traded” foods that do not have the Fairtrade Mark (see Appendix 2) companies and organisations have to set their own standards. Consumers therefore have to rely on the integrity of these suppliers, rather than on independent monitoring.

Different standards also exist for organic products. Apart from confusing the customer, the producer is not offered a level playing field. “Organic” needs clear defining/labelling.

When providing information for the general public on farming and the countryside a straightforward message is vital, and food labelling must be simple, truthful and standardised.

Labelling provides a mechanism for producers to send a signal to the market. However the potential to develop an umbrella labelling scheme is difficult because of implications for free trade.

The industry must pull together and consolidate behind a single standardised food labelling approach. The “Little Red Tractor” should be a baseline standard for all food produced in England, covering environmental and welfare standards. Current assurance schemes need to be rationalised behind the Red Tractor mark, and possibly the LEAF (Linking Environment and Farming) kite mark. These must be open to both small and large producers, giving clear indications of origins and credentials and be independently verified.

10.3 Education
There is need for better information transfer to children by giving the management of education related to farming and food production to a single specialist body. Today there are too many groups diluting their overall effectiveness and confusing the message.

Creating links with schools could lead to discussion/demonstrations on, for example:

how and what to cook an understanding of the countryside
creating a growing awareness of farmers and their benefits to society
what the future holds for farming and how to sustain the countryside
an understanding of local food networks and suppliers
reducing Health Authority costs

Topics that could be more fully integrated into the day to day teaching in schools include food production, biology, genetics and chemistry, cost and finance, product development, meal solutions, cooking, and home economics. These are currently all segmented under different topics.

10.4 Funding
Any development needs funding.

It is still very complicated to work one’s way through a network of advisors and grant schemes. These claim to be able to help businesses to move forward. In fact, for the most part, they take up more time, and cause more headaches than they solve.

With regard to environmental issues, access to grant aid for the positive management of wildlife habitats and the provision of access opportunities for the public, as under the Countryside Stewardship Scheme, can be complex and delivered through an array of advisors.

Some farm buildings that are currently unused or redundant could be converted to food processing or retailing as a farm diversification project. This would prove cheaper than a brand-new purpose built structure because the latter would attract business rates – something not applied to farm buildings at the moment. It would retain ownership in the farmer’s hands and on his balance sheet – which would not be the case were the building sold off for development. The biggest hurdle here is usually obtaining planning permission.

Government must be encouraged to break through many of the planning restrictions currently strangling diversification.

Funding for projects to develop marketing and distribution opportunities can be found from a combination of government and venture capital sources. For example, grants are available from the current DEFRA Rural Enterprise Scheme which afford opportunities to create initial funding for individual projects. Applicants need to prove there is a market demand for their idea. These grants should be used to move towards ventures which involve regional structures for the co-ordination and development of supply, demand and distribution. Such help is easier with a single point of contact, expertise and grant aid, such as the Countryside Agency has demonstrated through their Vital Villages grant programme.

The rewards of joint ventures and partnerships are that more time is available for the owners to focus on both business and their personal lifestyle requirements.

Farm business owners could invest a combination of cash, time, goodwill and their under-utilised resources to help start ventures. In time funding could also be raised from consumers who would receive shareholders’ benefits such as discounted local food purchases or free tickets for farm visits. A precedent for this exists in New York State.

Government could do more to help build links between farmers and banks. Banks should be encouraged to offer preferential loans to producers to reduce setup costs and enable business expansion. There is also a need to create links with financial services companies to set up leaseback agreements for farmers to gain financial security or to create a pension foundation.

The aim would be to create a long-term sustainable company that generated profit and was accountable to its shareholders as well as to the customers. The business would be commercially viable; it would not seek ongoing government support, or need financial assistance from the industry.

10.5 PR and the Environment
A straightforward message is vital when providing information to the public about farming and the countryside. It is essential to attract visitors to farms that are carrying out best practice. The Countrywide Stewardship Scheme, for example, provides an ideal opportunity to link environmental management with a wide consumer audience. Businesses other than farming have made strategic alliances with organisations such as Greenpeace and Friends of the Earth. Greenpeace etc, because they have obtained so much backing from the public for their cause, have persuaded supermarket chains and oil companies to “think green”. This is a good example to farmers to show how unlikely bedfellows, e.g. RSPB, are in fact more favourably disposed than often imagined – work with them.

Precision agriculture and new technology must continually be explored to feed and protect crops precisely – and the message communicated to the public. Both environmental and economic benefits can be achieved with reduced inputs as well as keeping assurance schemes happy.

One emerging sector is promoting UK agriculture as a potential provider of the material for environmentally sound energy and packaging. These, and new biodegradable plastics, must be seen as an opportunity to relaunch a fresh image for arable farming. This is a huge opportunity to replace the image of a polluting industry (oil) with the image of an industry (agriculture) able to supply bio-degradable plastics and a “green” renewable source of fuel and oil; a source that has superb carbon cycle credentials and which shows net environmental benefits. (For further information, see Martin Robinson’s Nuffield Report).

10.6 The Public’s Perception of Farming
Undoubtedly the individual farmer at grass roots level is starting to put his house in order. He is increasingly accepting the responsibility that comes with his position in the food chain and is taking more seriously the stewardship of the environment. Yet this message is not really getting through to the public.

The nightly TV images of burning cattle pyres during the Foot & Mouth epidemic, the hysterical predictions of a nvCJD epidemic and, more recently, the disgusting pictures shown on Panorama’s programme “The Chicken Run” have not exactly helped the public to appreciate that British produce is wholesome, trustworthy, innovative and caring.

Farm parks are a positive method of demonstrating good farm practice, housing, feeding and growing methods, which should reflect broad spectrum standards and conditions. The critical skill is to link the viewing of real live animals to what is eaten at the table.

10.7 Promotional Information Provided for the Customer
While the farmer’s focus has in the main been product-orientated and he has not been listening to the end consumer, supermarkets round the world have been quicker to listen and learn about the importance of selling the food the customer wants. Supermarkets are taking the best producer-led concepts and developing them – but returning very little in the way of extra value to the producer.

Information concerning the food being produced by the British farmer is not being delivered to the consumer in a way that is encouraging him/her to listen. Information is not transferring between generations, between regions, and between sectors of the agricultural industry. This is causing misperception and reduced sales opportunity.

Some countries have developed excellent national promotion and marketing, e g New Zealand, Australia, France and Denmark. Many sectors of the British farming industry promote and market themselves, for example the MLC with meat, the Dairy Council with “the white stuff”, HGCA with breakfast week and the Potato Council on its product.

But the industry seems unable to market and promote itself in its entirety in one advert with one set of costs. Representative bodies should consider working together to market and promote as one. Imagine, for example, a TV advert with a celebrity chef serving a full English breakfast, thus representing the entire farm sector.

CHAPTER 11 : MARKETING and SUPPLY CHAIN Issues

The food service market is driven by a mantra of Price, Quality and Delivery. In its entirety the sector represents a large and growing opportunity for farm producers. To seize this opportunity farmers need to work together in regional centres to create food service collaborative ventures.

These could provide food and meal solutions for the full range of food service outlets, such as pubs, restaurants, schools and hospitals.

Farmers would need to market such products to consumers, focusing for example on marketing strategies which address their products’ ability to meet lifestyle demands and the educational aspects of diet.

11.1 Marketing
The farmer (or his representative bodies) needs to really understand the consumer and develop his range of products accordingly. This requires an appreciation of the major trends that help sway consumer choice. The trends that farmers must monitor include:

population size and growth rate
household size, age and employment status
education, income levels and disposable income
shopping trends
improved knowledge of relationship between diet and health

Many farmers are still indoctrinated to believe there is only a market for cheap food and plan their businesses accordingly. In so doing, they collectively contribute to the commoditisation of their outputs. Price is, and will continue to be, an important factor, but trends surrounding health and lifestyle have opened up substantial opportunities for food producers. The opportunity is there to produce wholesome food that addresses lifestyle and health trends. Furthermore, the demand is for farmers to produce wholesome food responsibly. Farming must show consideration for the environment and animal welfare in order to give the consumer the reassurance he/she seeks.
However, success is not built on simply producing food responsibly. The product must also be properly marketed, around a strong brand to differentiate from cheaper competitors (often from overseas). The aim must be to have clear brand values such as:

trustworthy (to overcome recent health scares)
fresh
healthy
showing consideration (for both the environment and animal welfare)

The seemingly insatiable demand for cooking and food shows represents a major opportunity.

The internet is becoming the strongest medium for communicating and delivering information. Websites can link directly in with all other promotional activities, enabling consumers to obtain further information, remind themselves of recipes, or locate local retailers. A website can also offer an online ordering facility to support a home delivery business.

Sainsburys are running a trial project (in April 2003) allowing customers of their own-label organic fruit and vegetables to track information back to farms. Customers will be able to enter onto the website a unique 5-digit number printed on the packaging, and then view pictures and information about the farm where the product comes from. If successful, the pilot scheme will extend to other areas including meat and dairy produce.

Farmers taking part in the above project provide an overview of their operation, including information about rotation cycles and bio-diversity. This is not a new idea; farmers have been doing this for the last 5 years in a range of initiatives on the internet. If the multiples, however, with their ability to offer the viewer a full shopping basket, get in on the idea, the individual producer will find it difficult to compete.

11.2 Supply Chain Management
Traceability is of the very essence of reconnecting the food supply chain, but traceability issues still exist despite legislation and hype. Revelations concerning the movement of sheep, highlighted during the Foot & Mouth epidemic, surprised and shocked the majority of the farming community itself. Food travels too far – within the UK, let alone when exported – and the practice needs to be improved. This can be done if sustainable markets are identified and if supply and demand is managed within a regional framework.

At the moment central co-ordination and monitoring of supply, demand and distribution, are not in place even at a regional level. Until they are, farmers will be competing with each other travelling down the same road trying to supply the same market, and achieving nothing in the way of price improvement.

Regional framework needs support and nurture. Regional units should be reconnected with consumers, emphasising the origin of the food produced. A central team of co-ordinators is needed to service such regional units and share with the group their experiences of success and failure.

11.3 Building a Supply Chain
Building a structure to reconnect consumers and producers is a complex task.

One traditional approach has been to spend money on research and on subsidising the different non-profit government-led organisations.

Unfortunately what happens is that the different organisations pull in different directions, diluting the effort and confusing the market. The failure of the East Midlands’ Regional Food Group (Middle England Fine Foods) is a case in point.

The aim of reconnection is to add value to the individual producer’s product. Marketing is one angle but the main barrier to success is farmers failing to co-operate and band together to ensure continuity of supply to the chosen customer.

Where a producer-owned and producer-led regional commercial food chain has been formed there are many examples of success. ASDA was started in a very small way by a group of dairy farmers. The Milk Marketing Board set up Dairy Crest as a “buyer of last resort”. Now both companies have strong brand names and a substantial financial base. The success in each case was the result of being focused on the customer and driven by clear objectives. It can be repeated in the case of Reconnecting the Food Chain because consumer demand is clear; he/she wants regional, responsibly produced, healthy, traceable and clearly labelled food.

Many regional units are already working hard at creating a quality branded range of products. The most successful are Cornwall, Wales and Heart of England. Such operations need to sell on an open market, with regular quality, quantity and purity assurances, preferably direct to the consumer – where the last lump of profit is the biggest. In this way farmers will take back control of their destiny, their pricing and their public image.

To build the proposed new (reconnected) producer-retailer supply chains will necessitate the following action:

Choosing a brand name consumers will trust: e.g. “Trust Farm Foods”, “Wholesome Food Company”, “Quality Food Retailers”, “Plough to Plate Food Chain”
Creating a preliminary outline of the chain initiating the new marketing scheme: e.g. primary producers including meat, milk, grain, horticulture and other primary produce groups processors/abattoirs labelling/sorting/packing depots warehouse/storage/distribution
Involving the following: existing procurement groups and existing farm producers on farm/own factory processing own abattoirs, contractors, small butchers on farm or contract sorters/ and packers contract/rented/purchased transport
For distribution and sales: use some of the existing co-operatives to achieve countrywide co-operation of distribution and marketing.

CHAPTER 12 : SPECIFIC “RECONNECTION” MARKETS : Issues

Food represents 45% of all customer retail expenditure, yet a very small amount of that consumer expenditure returns to the producer. Producer businesses that are successful are those who are selling with viable amounts of product through large stores and smaller speciality shops.

12.1 Problems of Supplying the Multiples
All major multiples are now running local sourcing initiatives and these are profitable for the farmer participants. But such farmers still need to be of a certain size and lie within an acceptable defined geographical area to participate. A small producer does not have the resources to offer – in particular – the continuity of supply the multiples are looking for. Farm retail representative bodies are needed to unite such smaller producers with supply and distribution networks. Suppliers should be coming together to make best use of funding, support, ideas and understanding of grant schemes. Collaboration is also needed on distribution and marketing for continuity of supply. The producer selling to the supermarkets can only ever achieve a decent margin by branding.

12.2 Farmers Markets
These have provided a great opportunity for producers to get a foot on the retail ladder. Unfortunately, for some potential customers, farmers’ markets tend to be expensive, and the opening hours infrequent and not sufficiently convenient for the many food buyers who are out at work all day.

Farmers’ markets will come under extreme scrutiny as hygiene meat processing and cutting licences take hold. Market stalls will cost more, which will increase the pressures on small producers.

Farmers’ markets in the UK should look to the lead set by California and New York State in the USA, and to France and Italy within Europe. These farmers’ markets are very well presented and set out to attract the customer who purchases on ethics.

12.3 Farmshop Retail
Direct farm retail is a very difficult area for a farmer to succeed in. The barriers to entry are many and risky. Products must be of the highest quality.

Successful farm shop businesses service their customers in a consistent and continuous fashion. They offer payment methods and point-of-sale presentation and guarantees that the public has become used to. They take great pride in customer service. This in turn requires consistent supply of product with quality, quantity and traceability assurances with convenient outlets. Supply is direct to the consumer, where the last slice of profit is the greatest, and then returns directly into the farmers’ pocket. Farmers who are able to achieve this can take control of their destiny, their pricing and their public image.

I recommend that such businesses who are successful, act as leaders and champions of the farming industry.

The keys to farm retail are continuity of supply and the creation of unique selling points over competitors. Regional groups could link the supply chain on behalf of farm shops to overcome the challenges of distribution, food storage and consistent product quality. The product will then have the advantages of meeting the consumer’s demands for trustworthy produce that is both compatible with his lifestyle, and environmentally concerned.

Farm retailers also have the option to sell direct via home delivery. The home delivery service has opportunities if producers work together and develop a network of regional distribution points. At market town or village level they could work with pubs or post offices. In addition there are opportunities to establish stores where gaps in the market exist such as in small towns or large villages. Farm shops that have a restaurant or cafe seem to do far better than those without but many that I have seen are not linking what they sell in the shop to what they serve on the table. This is a marketing opportunity lost. Farm shops are often weak in their marketing direct to their customers. By working together a group of shops and producers could reduce their marketing costs.

12.4 Food Tourism
Let me illustrate what is meant by the above term. Ludlow in Shropshire has a beautiful castle and surrounding scenery. Yet when visitors were asked why they had come to Ludlow an increasing number have replied that they came for the Michelin restaurants, the delicatessens and good food shops.

A recent TV series “Food Heroes” has followed Rick Stein on a culinary journey around Britain. The series highlighted some of the best regional producers around the British Isles. Local food producers were delighted with the response from the publicity and were surprised at the number of people who had travelled to stay and visit the featured area in order to try the food sourced and cooked on the programme. This illustrates what the media can do for local food producers.

Many landlords and farmers consider that the thousands of people who use the network of public footpaths each year are an intrusion. In truth, if this was researched and exploited, a perceived problem could be turned into an opportunity. Organised walks could take place each month starting at a farm shop/café, visitor centre or local pub. Walkers could meet up for a hearty English breakfast before taking a circular walk. This would be a good opportunity to link the consumer to good farming practice seen along the walk, before returning to base for further refreshments.

Similar links should be explored with the RSPB, Friends of the Earth etc. Good farming practice is increasingly creating a growth in wild birds, hedgerows and a whole range of wildlife. This fact does not appear to be getting through to the general public.

In summary, although some of the above is already happening, much wider and more frequent partnerships should be considered with many different organisations. It would help to turn around the public’s perception that agriculture is not good for the environment. Likewise those organisations which many farmers perceive to be coming from different ends of the spectrum (e g Friends of the Earth, or RSPB) could actually turn out to be very good partners.

12.5 Pubs
Linkages between town and country can be strengthened by targeting local town, village and country pubs to help them become the hubs of rural and urban life. In particular, country pubs, restaurants and hotels can directly benefit from serving food that supports the countryside in which they operate. Yet it is strangely difficult to get the majority of caterers and hoteliers to see this as a selling point. Food service should link in to a much greater degree with the tourism sector. Bed and breakfast accommodation, hotels and self-catering holiday centres could all benefit from a regional food service network.

The pub sector is gaining share in the food service market, and food sales account for 25% of pub turnover. There is an opportunity for a supplier to created a brand outlet selling and marketing “farm produced food” cooked in a particular way and targeted at an entire pub chain.

The variety and quality of pub food on offer today is staggering. Pubs have to cater for families, vegetarians, the health-conscious, the not so health-conscious, the busy office worker with limited time, the low-budget (or high-budget) tourist, the traditional Sunday lunches and even the romantic dinner for two.

In other words, pubs must be backed to the hilt as partners in the food chain.

Pubs have long been established at the heart of rural communities. Where there is no village hall, a pub may provide the only public meeting place. They have traditionally been involved in sports and recreation. They offer employment opportunities and contribute to the local tourist industry by providing overnight accommodation and running local events.

In recent years they have come under pressure, often as a result of a combination of factors, which include declining population, changing social habits and lifestyles, increased customer expectations and increased regulatory demands. Publicans have had to find ways to increase their income beyond the supply of drinks and crisps.

Rural pubs have great potential to assume a business/community role in the future as one-stop shops for essential rural services. Farmers should encourage them to play their part in the revitalisation and preservation of rural services while, at the same time, helping them to increase their own long-term viability. Making the “pub the hub” will help to meet the daily needs of people of all ages in the communities they serve. (For more information, see “The Pub is the Hub” – a Good Practice Guide, Countryside Agency 1999).

12.6 Hospitals and Care in the Community
The importance of healthy food for hospitals needs no explanation. In addition, more and more people are being cared for at home and the need for convenient, healthy food is increasing for outpatients and the elderly. Co-ordinated food service could provide food and meals for a wider range of establishments including meals on wheels, senior citizens’ clubs and other social services.

Catering within hospitals is largely in-house by NHS. However, visitor and staff catering is a growth area with the arrival of food service malls run on a for-profit basis by contract caterers

12.7 Schools
The issue is trying to get over to the Authorities that, by paying a little more for the basic ingredients, a much healthier diet could be provided for school children. The benefits of this would be manifold as frequently stressed by the Health Service. Children would be fitter both physically and mentally. Attendance rates could be enhanced. Exam results could well be better. Such benefits would knock-on to older age groups as today’s children grew up.

In addition, the take-up rate by the children for such school meals would almost certainly increase, giving the Authorities economies of scale to help balance the books.

CHAPTER 13 : ESSENTIAL ACTION to Drive the Initiative Forward

This report argues for:

Producers to take back accountability for the representation and distribution of their products to the consumer.
Consolidation, alignment and fundamental reform of the intermediaries in the food chain into key specialist organisations that represent producers and the regional food economy.
The food service sector being used as a method of getting closer to the consumer.
The multiples’ retail sector being recognised as so focused on price cutting battles that it is likely only ever to provide farmers with a small outlet for niche products.

The report outlines opportunities for farm businesses to add value to key products within the market.

It stresses that a unified group of people will be able to deliver a clear and powerful message to the consumer that will be heard and understood.

It contradicts the common industry perception that the Government does not care about agriculture. That view sits oddly with the fact that £500,000,000 is set aside to meet recommendations brought forward by the Curry Report. Drive and direction must come from both producer and Government.

13.1 Marketing.
It is evident that farmers either have to create their own brand or join with a group who will be responsible for marketing centred on a brand identity. The identity must be strong to compete in a busy, very competitive market. A marketing strategy will be needed to position a brand in harmony with the needs of the consumer, with consideration for lifestyle trends, and demonstrating a care for the environment. Regionally or locally branded products need to be the first choice for consumers who want good tasty food and who care about what they eat.

13.2 Women
Women must be used more within food and farming. They are the primary purchaser of food for the home and are generally more conscious about health and food safety issues. Women get better results at promotional shows and events and are also better at conducting marketing research and product development.

13.3 Supply Chain Management.
Build new producer-retailer supply chains as detailed on page 28 of this report. Every employee in these chains and particularly all who have direct contact with the customer (shop assistant, van driver etc.) must be thoroughly au fait with the product.

13.4 Employees
Employees are the most important success factor in any business and there is a real need to encourage young people into the industry. The recruitment of quality, experienced people who are driven by vision is essential.

13.5 Mentors.
The energy and drive to start up a new business and business-concept usually come from younger and hungrier men. But it is very important at the same time to harness the wisdom and experience of an older generation.

13.6 Industry Promotion.
The management of regional food should transfer to a single specialist body such as Food From Britain. This organisation would need a new remit and additional funding to work with the Regional Development Agencies to set up a single Regional Food Strategy which directly involves key regional farm business.

13.7 Food From Britain
FFB should then undertake to co-ordinate the messages across the industry to avoid the sort of contention currently created by the organic sector versus the non-organic producers. This co-ordination will produce consistent messages that lessen consumer confusion and could also help to reduce the industry’s overall marketing costs.

13.8 NFU
The NFU will need to unite and lead farmer political lobbying while at the same time being supportive of food promotion efforts by, for example, FFB. The main problem at the moment is that key business people will not become involved in politics or political organisations, because they realise that they need to remain focused on their own commercial goals.

13.9 Environmental Management.
The positive rewards for good environmental management fall directly in line with LEAF (Linking Environment and Farming). LEAF is now gaining cross-industry support and farmers should look to lock into the benefits of working with environmental organisations that give a clear message to the consumer, while helping best farm practice.

13.10 PR.
When providing information for the general public on farming and the countryside, a straightforward message is vital. Attracting visitors to farms carrying out best practice is essential. The Countryside Stewardship Scheme provides an ideal opportunity to link farm environmental management to a wide consumer audience.

13.11 Education.
Government should support schools that are sourcing healthy local products for their school meals, and look at methods to link with the schools’ education syllabus.

CHAPTER 14 : CONCLUSIONS

1. Without greater understanding of the qualities of UK farming and the food being produced, the fabric and heritage of the countryside will be lost. Good quality UK food produced to very high standards will be replaced by imports of reduced freshness and accountability. Connection between rural and urban communities will fall by the wayside. The knock-on effects will be felt throughout the economy of the country.

2.The barriers to the development of more local food connections are:
a. the consumer’s misperceptions
i. on environmental/welfare issues
ii. accuracy of food source
iii. thinking that local food must be more expensive
b. lack of cooperation between farmers
c. too many representative bodies
d. set up costs

3. These barriers can be overcome by:
a. collaboration – farmers/processing/marketing
b. innovation – looking at the food chain with fresh eyes
c. customer PR
d. taking every opportunity to liaise knowledgably with the customer

4. Such changes will be driven by:
a. farmers adopting collaboration
b. industry guidance
c. reform of industry representation
d. point of sale information
e. focused leadership
f. and by the consumer him/herself.

CHAPTER 15 : RECOMMENDATIONS

A. General
1. Leaders.
Managers and concepts that are finding success now in regard to reconnection of the food chain should be recruited to educate others in how to lead and champion the industry.
2. Funding. A single point of contact, expertise and grant aid would be invaluable. There appears to be no co-ordination among the regions. In fact, there is more funding available for a wide range of innovative projects than is generally appreciated.
3. Consumer perception. Producers need to change the perception that consumers have of them. To do this consumer trends must be followed: farm produce must be fresh, healthy, and fully traceable. It must be seen to be produced with concern for the environment in mind.
4. Food service is a real commercial opportunity for regional food, giving a great platform to reconnect the whole of the industry and to create links with education, tourism and the countryside in general. A network of pubs owned , or partly owned, by those who supply regional food and drink is a feasible target.
5. A new supply chain. A new (reconnected) producer-retailer supply chain needs to be planned and built. An outline of actions involved is as follows:

Choose a brand name consumers will trust: e g “Trust Farm Foods”, “Wholesome Food Company”, “Quality Food Retailers”, “Plough to Plate Food Chain”
Create preliminary outline of chain to initiate the new marketing scheme: e g
- primary producers includingmeat, milk, grain, horticulture and other primary produce groups
- processors/abattoirs
- labelling/sorting/packing depots
- warehouse/storage/distribution
Involve the following:
- existing procurement groups and existing farm producers
- on farm/own factory processing
- own abattoirs, contractors, small butchers
- on farm or contract sorters/ and packers
- contract/rented/purchased transport
Distribution and sales:
- use some of the existing co-operatives to achieve countrywide co-operation of distribution and marketing.

6. Employees are the most important success factor in any business and there is a real need to encourage young people into the industry. A successful team should consist of professionals from a combination of farming and non-farming backgrounds to co-ordinate, inspire and advise.
7.Agricultural shows, ploughing matches etc, provide a great platform to promote and educate consumers; the entire industry should support agricultural shows.
8. Farm buildings that are currently redundant or unused could be converted as a farm diversification project. Government must be encouraged to break through many of the planning restrictions currently strangling diversification and the creation of better links with consumers.
9. Clear and focused information is required. At the moment there is too much, directed both to producer and consumer. Producers are represented by fragmented organisations which send out mixed and therefore diluted messages. Focused leadership and industry guidance are necessary.
10. Local Education Authorities should try to ensure that all school children get the chance to visit working farms at least once, providing an enjoyable day out as well as a learning experience. Government and farming groups should explore whether, for example, a national voucher scheme is needed to enable this to happen.
11. “Virtual Farmers’ Market” – an opportunity exists for one. This would give customers an opportunity to purchase produce 24 hours a day, 7 days a week, via the internet and mail order. Such a mechanism could bring together the distribution and marketing for a group of regional or local producers. Initially this would be a small operation but, with good branding and marketing and, most importantly, the correct support, there could be a great opportunity.

B. For Industry Action

12. The industry needs a constant platform on which to perform, educate and promote. This would enable those who create and carry the message to deliver that message so that it can be understood, to the benefit of those who produce.
13. Education. The industry should create one single specialist organisation for the promotion of education within food and farming - linking food to countryside and health within the education syllabus.
14. Research Co-ordination. One organisation should be created to coordinate research and development from the different levy boards, and then to link that scientific research right through from production to the plate of the consumer. Levy boards should work alongside a specialist promotional group, sharing marketing cost and promoting a complete range of farm produce. Farmers must appreciate that the public sees “farming” as one entity – not cows and arable and vegetables all as separate industries. This principle must be applied therefore to research as well as to PR.
15. Lobby and Support. A single focused lobby and support organisation is needed, that the farming industry will get behind both morally and financially. The NFU will need to unite and lead farmer political lobbying, while at the same time being supportive of food promotion efforts by others.
16. Promotion. The management of regional food should transfer to a single specialist body such as Food From Britain. This organisation would need a new remit and additional funding to work with the Regional Development Agencies to set up a single regional food strategy which directly involves key regional farm business.
17. Trademark. The industry needs to get behind a baseline standard trademark and logo to represent all food produced in the UK.

To Sum Up: Farmers and producers must make best use of the organisations who represent and serve them, and create partnerships with those who purchase from them.

CHAPTER 16 : POST SCRIPT

Two years after being awarded my Nuffield Scholarship several more general points stand out in my mind and I would like to record them in this report.

The first and certainly one of the greatest lessons has been that I learnt to leave my family and my business for 10 weeks. This allowed me to value what was really important to my life and my business – is a lifestyle more important than a profitable operation? - and it also taught me to delegate and learn how staff and family would cope without me. I would recommend any farmer or businessman if possible to walk away from their operation for a period of time or, at the least, set out a plan to see how people would cope without them.

I was particularly fortunate in that not only was I awarded a UK Nuffield Farming Scholarship and the group training and personal study tour that went with it, but I was also invited to take up one of the two places allocated to UK Scholars on the Asian Tour organised by and for Australian and NZ new Scholars. I learnt so much more by being in a group tour along with fellow Scholars from different parts of the globe than ever I did on my solo travels. Scholars with different operations, different political regimes, different markets and different perspectives sharpened my wits, enlarged my horizons and ensured that I gained the true Nuffield experience.

This was reinforced when I participated in the Nuffield International Conference in France in 2002. Not only were there Scholars present from all the Nuffield countries but, in this case, most had first been Scholars in earlier decades. They combined the Nuffield zest with the wisdom of experience and were invaluable mentors. For that reason I shall never wittingly let any future International Conference go by without attending.

Finally, I have thought a lot about the wonderful man whose money set up the original Nuffield Farming Scholarships Scheme, and of the motives that drove him. He was passionately interested in the good health and wellbeing of his fellowmen, and especially of those who were poor or disadvantaged. I feel he would support my vision to bring back local food, produced under the best known conditions, to the British people in general, and perhaps to schools and hospitals in particular, and to reconnect and reunite customer and farmer to mutual benefit.

CHAPTER 17 : APPENDICES etc APPENDIX 1 : THE “EATING OUT” MARKET IN GENERAL. Value of “Eating Out” Market

Value of market in 2001	£23.2 billion
Fast food – main growth areas	Burgers, chicken and pizza/pasta
Restaurant/café share of total “eating out” spend	68%
Number of pub meals served	3,500,000 per day
Total number of regular pub diners	18,000,000
Number of regular Sunday lunch diners in pubs	8,000,000
Total pub food sales p a	£5 billion
Percentage of pubs serving food	90%

Pub Chains and the Customer they target

Customer type	Pub Chain
City professionals	All Bar One, Corney & Barrow, Browns
Female friendly	Slug & Lettuce, Out and Out
Grey market	Vintage Inns
Value/traditional	JD Wetherspoons
Young families	Brewster’s, Tom Cobleigh, Brewers Fayre
Families and teenagers	Harvesters, Homespreads, Toby
Cheap and cheerful	Hungry Horse, Big Steak, Two for One
Students	It’s a Scream, Varsity, Jongleurs
Destination dining	Michelin Starred Independents, Gastro Pubs
Heavily themed	Walkabout, Nobel House
All day café bars	Edwards, Merchant House

(Information courtesy of the MLC food service division) Retail Shopping: where consumers shop

Location	%age of customers buying food there
Supermarket	95
Local shop	36
Farmers’ market	13
Market stalls	17
Internet/mail order/	2

Obviously, many customers bought food from more than one type of location.
Purchases by Food Service Market

Total market	£8.5 billion
Supplied via wholesale delivery

NUFFIELD FARMING SCHOLARSHIPS TRUST

The Studley College Trust Award 2001

Reconnecting the Food Supply Chain

David Rose


1	Acknowledgments
2	Disclaimer
3	Personal Background
4	Introduction
5	Executive Summary
6	The Study Tour
		6.1	Indonesia
		6.2	The Philippines
		6.3	Singapore
		6.4	Australia
		6.5	USA
		6.6	Canada
		6.7	France
		6.8	Republic of Ireland
		6.9	UK
7	UK Supply Chain as of 2001
		7.1	Retail Statistics
		7.2	Supermarket Growth/Development
		7.3	Customer Verdict on Supermarkets
		7.4	Organic Food Market
		7.5 7.6	Chilled Convenience Food Growth Development of New Types of Food Outlet
		7.7	E-commerce, Home Shopping and Home Delivery
		7.8	Labelling and Local : what the consumer wants
8	The Case for Reconnecting Farming with the Community
9	Opportunities for Reconnection in New Markets
		9.1	Farmers’ Markets
		9.2 9.3 9.4	Farm Sales to Established Retail Outlets Food Service School Meals
		9.5	Pubs
		9.6	Environmental Linkage
		9.7	Biofuels and Biodegradable Packaging
10	Issues and Barriers: the Industry in General
		10.1	Representation
		10.2	Labelling
		10.3 10.4 10.5 10.6 10.7	Education Funding PR and the Environment The Public’s Perception of Farming Promotional Information Provided for the Customer
11	Marketing and Supply Chain Issues
		11.1 11.2 11.3	Marketing Supply Chain Management Building a Supply Chain
12	Specific Reconnection Markets: Issues
		12.1	Problems of Supplying the Multiples
		12.2	Farmers’ Markets
		12.3	Farmshop Retail
		12.4	Food Tourism
		12.5	Pubs
		12.6 12.7	Hospitals and Care in the Community School Meals
13	Essential Action to Drive the Initiative Forward
		13.1 13.2	Marketing Women
		13.2	Supply Chain Management
		13.4	Employees
		13.5	Mentors
		13.6 13.7 13.8 13.9 13.10 13.11	Industry Promotion FFB NFU Environmental Management PR Education
14	Summary of Conclusions
15	Summary of Recommendations
	A. General
	B. Industrial
16	Post Script
17	Appendices etc.
Appendix 1			The Eating Out market in general
Appendix 2			Ethical and Organic Foods
Appendix 3			Industry Representation
Bibliography
Useful Websites
A Big Thank You