UK | Chapter 6: Higher-Value Produce for Domestic and Export Markets

Paul Joseph  (CC BY 2.0)

After more than 15 years living and working in Eastern Europe, the former USSR and the Middle East. Stuart Meikle returned westwards. A sabbatical followed to re-orientate himself back to North West European agriculture, food and policy issues. After the Brexit referendum, the possibilities of a UK-only policy was too interesting to pass on. A period of convalescence then allowed him the time to bring his ideas together and to write them up, thus this UK agri-food policy paper. It is an attempt to address the many relevant but complex issues at the same time. The paper was written before his soils-first policy paper published in ARC2020 (pdf) and it is best considered within the context of evolutionary thinking that is seeking to find definitive policy solutions.

Here we present number 6 of 12 policy objectives for the UK by Stuart Meikle.

Aiming Higher-Value Produce at Domestic and Export Markets (Key Objective 6)

The expression ‘high-quality food’ is open to wide interpretation as it can relate to food as a safe-to-consume source of nutrients, food produced within pre-specified constraints or food created to offer a luxury experience. Each consumer will have her or his own perception of what is high-quality food. In this case, high-quality food refers to a position within the food-market’s quality spectrum, and it is about where the British farming industry needs to position its produce within the market post-Brexit.

This policy paper is written with the expectation that Brexit will lead to easier access to British markets for international food producers from outside the EU, many of whom will have a far greater production scale than British farmers. The British farming industry needs to plan its future strategy accordingly.

British food standards as per ‘food as a safe-to-consume source of nutrients’ must not be lowered as a consequence of leaving the EU. There will, nevertheless, be pressure placed upon them within the context of negotiating trade deals with countries whose governments hold a different opinion of what constitutes safe-to-consume foods. If trade deals lead to compromise, it is imperative that food labels fully inform British consumers so that they retain the freedom to choose what they buy and consume.

British farmers with their relatively smaller scale and high land and labour costs are at a disadvantage. It is unlikely that post-Brexit deregulation plus yet still higher yields will permit them to compete with global producers. Accepting this must be a pre-requisite to preparing post-Brexit farming strategy. To compete in the domestic and international market, British farmers and food processors (who wish to source their ingredients from Britain) must target the quality-differentiated, food-market segments.

Consensus seems to be emerging in the broader environmental and nutritional communities around the message ‘eat less meat but better quality.’ In time, it may extend to most eating habits as society addresses a broad spectrum of nutritionally linked illnesses. This message must be embraced by the British farming industry and its immediate supply chain partners as it offers opportunities to add value to the produce of British farms. It is a message that will be reflected in future consumer expectations, and it is imperative that British producers see this as opportunity to combat international competition.

With food products, quality goes beyond taste alone. Increasingly, where and how a food is produced imparts qualities. In fact, food products are now, invariably, multi-characteristic and multi-functional.  To succeed with a market-positioning strategy, the multiple qualities of products must be effectively communicated to the consumer in an all-inclusive and transparent fashion. This may be, as mentioned in Section G6, by creating designated-origin schemes [protected designation of origin (PDO), protected geographical indication (PGI), and traditional specialities guaranteed (TSG)]. These can also be used to enhance existing farm assurance schemes. They will, however, required British farmers to produce food within pre-specified constraints and, when required, adapt their farming to meet scheme and, hence, consumer demands.

F1. OPERATING IN A FREE TRADE SITUATION FOR FOOD COMMODITIES

F1.1 Government to work on the principle that free trade should function for commodities

As Britain is a net food importer, it is difficult to justify barriers to trade. Food security may be cited as a reason but, at present, there are not major threats to international trade routes. The greater threat will probably come from a fall in food availability worldwide due to both soil degradation and climate change. This might bring about a time when access to food from international sources may become difficult. Notwithstanding that possibility, into the foreseeable future, free trade and global markets should operate for those non-perishable products that have been traditionally traded as commodities.

F1.2 Government to realistically assess UK producers as free market commodity producers

Any strategy prepared for the British food and farming sector must be based upon a sound evaluation of what the country’s farmers and growers can economically produce. This will be more critical if, after Brexit, direct farming support payments cease. No sector strategy should be created without a clear understanding of the capabilities of the sector’s foundations; in this case, farmers and growers. If the UK’s primary producers cannot, on cost, be globally competitive, a different strategy must be found.

F1.3 Government to avoid protectionism and only insist upon equivalence to UK standards

Post-Brexit, a protectionist approach must be avoided and, politically, it is unlikely to occur. That said, it is important for the future of domestic producers that imports are produced to standards equivalent to those being demanded of British producers. There are many environmental, GHG-emissions, soil-degradation, biodiversity and animal-welfare issues that have to be addressed within the British food production system and efforts must not be undermined by sub-standard imports. These issues are also global ones, and the efforts of others must not be undermined by the UK importing foods that are produced at lesser standards. Simply, UK standards must apply to all foods, regardless of their origin.

F2. CONCENTRATING BRITISH PRODUCTS ON HIGHER-VALUE MARKETS

F2.1 Government to encourage British producers to focus on high value instead of volume

Unless a very strong case can be made for doing otherwise, as a strategic approach, British producers must be encouraged to focus upon producing higher-value products instead of generic commodities. In the aftermath of the Referendum, discussion revolved around the benefits of free trade for British farmers and the export opportunities it offered. Others focused upon the threats that would emanate from being forced to compete with major global exporters like Brazil. Scale is not an advantage British farmers have and this will ultimately, even with new technologies, make competing head-on difficult.

F2.2 Government to encourage farmers and producers to prioritise the consumer’s wishes

To create barriers-to-entry for others into their markets, British producers will have to meet the wishes of their customers. There will be no scope for lecturing the consumer about, for example, trusting the science on subjects like glyphosate use or genetically-modified organisms. Consumers have a way of deciding for themselves what they want, and their suppliers must accept their primacy. True, lobby groups influence consumers, but lobbying is all a part of modern life. It is also probable that for the British food producer, explicitly meeting the demands of British consumer-taxpayers is, strategically, the best approach to follow in what are likely to be difficult trading times after the UK leaves the EU.

F2.3 Government to encourage farmers to work with issues-aware consumers and Greens

In a similar context to the statement above, there is probably now a more heightened awareness of the issues surrounding food and how it is produced than ever before. Social media will have certainly played its part in this. This can be seen by the food producer as a nuisance or an advantage. It must be seen as the latter. Post-Brexit, British farmers and food producers must engage positively with the issues-aware consumer-taxpayer and most, if not all, of the interested lobby groups. A major reason for doing so is that, by so doing, they should also be able to develop the markets for their products.

F2.4 Government to encourage innovation to be focused upon creating premium products

Innovation is often mentioned in farming circles. Innovation will bring in new technologies to increase production and reduce costs. It may also reduce the GHG emissions per unit of production. In the food industry, innovation means new processed products. It is rarely spoken of as required to create new food products by adapting farming methods or by using artisan skills from within a rural community. Arguably, the latter are the products that consumers will, increasingly, be looking for. Less processed, even retro, they may be, but they will be innovative and warrant support under the innovation banner.

F3. CREATING VISIBLE STANDARDS WHICH EXCEED THOSE OF IMPORTS

F3.1 Government to support the use of baseline farm-assurance schemes for all products

It is imperative that in a post-Brexit, free trade world, UK producers differentiate their products from those produced by others. It will be their only means of protection in a potentially difficult market. As a baseline, farm-assurance schemes should continue to be expanded. To be effective, they may, however need to be innovative and to highlight production practices that have consumer appeal. As an example of such, is the development of ‘free range dairy’. It is an example of what can be achieved if producers are aware of what concerns UK consumers have, even if they are distant from the farm.

F3.2 Government to help British producers differentiate produce with verifiable standards

The Government must support British producers to differentiate themselves from their competition. This must include helping producer groups to develop their products within the constraints of a set of verifiable standards. It is what French and Italian producers have been doing well for many years. They have created regulatory frameworks for the production of their premium products and these provide the verifiable standards around which consumer trust has been built. Although the UK is leaving the EU, British producers can still adopt some of their Continental-counterparts best marketing practices.

F4. DEFINING QUALITY AND ORIGIN TO PROVIDE MARKET PROTECTION

F4.1 Government to promote the concept that quality-assurance offers market protection

As a central part of their post-Brexit food, farming and rural strategy, the Government must promote the idea that developing quality-assurance schemes is an important way for British farmers, growers and food producers to differentiate themselves within the domestic and international food markets.

F4.2 Government to encourage the use of quality-and-origin schemes for British products

In a free-trade environment, market protection for British products should come from them being well differentiated from imports into the UK and from competitors abroad. Whereas farm-assurance offers a baseline standard, when widely used across the UK and abroad, they can only confer a limited price-linked benefit to primary producers. Whilst it is important that British farm-assured products are the consumers’ first choice, if producers wish to receive a higher price for their products they have to sell products that have a more complex characteristics; thus, giving them far stronger consumer appeal. To achieve this, products must be encapsulated within the framework of a quality and origin scheme.

F4.3 Government to back people who create multi-functional, designated-origin products

It is important that the Government categorically supports producer groups who endeavour to create and develop premium products that meet the many demands of the modern consumer and to bring them to the market within the framework of a transparent and verifiable designated quality and origin scheme. It is these premium product developments that will enable British producers to occupy the upper echelons of their own local market and to compete in the equivalent market segments overseas.

F5. ESTABLISHING EQUIVALENCE OF EU DESIGNATED-ORIGIN SCHEMES

F5.1 Government to develop British designated-origin schemes equivalent to the EU ones

Leaving the European Union will mean that UK producers will no longer have access to its designated-origin certification systems. This will be seen as a retrograde step by some of those involved. Countries like France do operate their own, often complex and multi-level, designated-origin schemes and the UK must follow suit. Concurrently, it must ensure that its systems have equivalence with the EU ones.

F5.2 Government to establish a British Centre of Excellence for designated-origin products

To centralise its efforts and to develop a core of expertise to support its premium-foods sector, it is suggested that the Government founds a British Centre of Excellence for designated-origin products.

F6. LINKING FARM PAYMENTS TO QUALITY AND ORIGIN DESIGNATIONS

F6.1 Government to provide transition payments linked to changes and designated origin

There has been a history of providing transition payments for farmers converting to organic. It is an option that should also be considered for farmers making the transition to selling products under designated-origin schemes or selling raw materials for processing into designated-origin products. To do so can also mean a farming system change. Hence, tapered payments should be considered to support farmers to transit into a designated-origin framework. In this case, the transition would be into higher-value-product supply chains that create rural jobs and enhance the wider rural economy.

F6.2 Government to connect investment grants to quality and origin scheme membership

In the context of the above argument, investment grants should be considered for those farmers and growers who are entering into designated-origin-product supply chains. In Chapter 10, it is proposed that investment grants should be graduated. If so, being within a designated-origin scheme should attract extra ‘points’ within the investment-grant evaluation system. Likewise, for processing grants.

F7. COMMUNICATING THE BRITISH QUALITY MESSAGE TO CUSTOMERS

F7.1 Government to actively promote the British quality message to domestic consumers

Whilst supporting the principles of free trade, the Government must also help promote British food products on the basis of their quality. The message must, however, be founded on superiority claims that are grounded upon transparent quality-assurance schemes. The integrity of the scheme has to be paramount. A number of such schemes already exist and they should be supported and developed.

F7.2 Government to use the quality and origin schemes as the main promotional vehicles

Farm quality-assurance schemes can rapidly become baseline schemes whereby everyone is certified. Whilst they may then offer some smallish differential in the international market, within the domestic markets they become the expected norm. At that point, premium expectations should fall. To obtain market-derived premiums, farmers, growers and producers must recognise that production systems and processing methods have to change. Simply, integrity cannot be maintained by changing the labels alone. Hence, the focus on in-depth quality and origin schemes. It is the reason the Government must utilise the quality and origin scheme as the principal promotional vehicle for premium British products.

F7.3 Government to concentrate its export promotion work upon quality British products

The ‘grow more, sell more, export more’ concept works upon the belief that UK farmers and growers can compete internationally, by fully employing technology, on cost. It assumes that the efficacies of the technologies are not under threat or that British farmland soils do not need restoring after decades of poor soil-fertility maintenance. There are numerous reasons why Britain must adopt a quality focus for its agricultural and horticultural produce and why it must focus on premium markets. Accepting such means that the Government must focus its export promotional activity on quality products first.

F8. CONCENTRATING ON HIGH INCOME PER UNIT OF GHG EMISSIONS

F8.1 Government to evaluate the different Key Performance Indicators for GHG emissions

Within a global context, the GHG footprint of food calories is a key performance indicator. It is also a simplistic one if one considers the human’s complex nutritional needs. Hence another KPI would be the GHG cost of producing proteins. In Britain, KPIs for these broad measures need to be established and monitored. If the concept is combined with the ‘eat less but better’ message, it is important that KPIs do not over-emphasise basic nutrient production as it sends signals to chase production. If one accepts that the price of food reflects its quality, better KPIs would relate to the value generated per unit of GHG emissions. As with all KPIs, careful deliberation is needed as they can transmit the wrong signals.

F8.2 Government to emphasise income created over production per unit of GHG emissions

As in the above explanation, the Government must develop key performance indicators so the UK food and farming industries can measure their efficiency as per their GHG emissions. For farming, the KPIs must also present information relating to the net GHG emissions of its subsectors. With an overall quality emphasis within the industry, income per unit of GHG must take priority over production KPI’s. Further, thought must be given to the value of rural employment per unit of GHG emissions as a KPI.

UK | Chapter 5: Enhancing Farm Animal Welfare

UK | Chapter 4: Providing Nutritionally Valuable Food

UK | Chapter 3: Preserving and Enriching the Natural Environment

UK | Chapter 2 : Minimising Net GHG Emissions from Food Systems

UK | Chapter 1: Robust Food Production Systems

 

Stuart Meikle
About Stuart Meikle 18 Articles
Stuart Meikle is an agricultural management and policy specialist, an economist, a writer and an advisor. He was brought up with agriculture and studied at the University of London. He joined the faculty on graduating and spent several years teaching, researching and consulting. His last 25 years have seen him advising governments, the World Bank and the IFC, NGOs, universities and private businesses in places as far afield as SE and Central Asia, the Caucuses, the Levant, SE Europe and the UK. Over the years he has developed a particular focus on agricultural and food sector strategy at the national and regional levels and linking rural development initiatives with the consumer through the food supply chains. He first arrived in Romania to work on a Commission project in 1997 and he lived in Transylvania for more than a decade from 2002; a location to which he was appointed as the United Kingdom's first Honorary Consul. Nowadays he and his family live in the Republic of Ireland.