Sustainability and Profitability
David Hine (firstname.lastname@example.org)
Sun, 21 Jun 1998 22:14:15 +1000
Gee I loved seeing some discussion from other farmers on this topic.
Sustainability starts at the food retailer not with the land manager. As
long as the food retailer markets food from a price perspective,
sustainability will be more a theory than common practice.It is the major
food retailers who can achieve a lot for sustainability with marketing.
They could start by marketing food from a wider range of perspectives.
Large retailers marketing clothes for example, do not focus simply on price
but on many other attributes that make that particular piece of clothing
There will always be those that buy both clothing and food on the basis of
price. At the moment, the food retail chains here are only speaking to the
price based buyers, not to people who value flavour, or for example
sustainability in the production system.
For banana production in NSW Australia to be sustainable( the industry is
small family farms who use very few pesticides ) the price would need to be
about $1.15 /kg at wholesale level. This might mean about $1.75 at retail.
Figures show that we eat about 12 kg per person annually. Since the average
retail price over recent years is about $1.00/ kg, the cost per person for
a sustainable industry here would be in the order of 12kg x ($1.75 - $1.00)
= $9.00 annually. Even if the industry needed to address more issues such
as the sustainability of packaging in its current format, the cost of
getting the industry committed to the process works out at less than $10.00
per customer pe year. Not very much is it!
But it is in a way, for while customers may not miss the $9.00 a year if
they paid a set price for the bananas, instead of a fluctuating price based
on supply and demand, the producer most certainly does. I doubt that there
are many agricultural industries where the earnings are reliably near the
national mean wage.
When supplies are high in a food product, the wholesale price falls. With
grains, this may have some impact on buying as the grains may go to other
purposes. With fruit and vegetables though, people are unlikely to buy
more. The demand for fruit and vegetables is comparatively price
inelastic. So reducing the wholesale price means very llittle to the
consumer, but communicates a strong mesage to the producer. And the message
is that food must be produced very cheaply.
There are some positive actions being taken - direct marketing and the
like, but for the biggest impact on sustainability of the farming system,
we need to change the way most people select their food. Since they are
doing this in supermarkets, it is supermarkets who must be pushed to change.
The result of this exploitive message being sent loudly to farmers by way
of food retailers, is that many farmers must doubt that their land will
continue to be a farm when they retire. Their children will probably be
working in town ( designing web pages?), and the next owner will
probably be a hobby famer or a corporate, so they don't see a future for
the farm enterprise they have developed. In the end it is the community
telling the farmer that his/her enterprise is unsustainable because the
community will buy on price and let some distant third world producer and
that environment bear the burden.
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