Realizing new values in Food production systems – dare to change, together
Dynamics in current Food production systems
Supermarkets form the gateway to large amounts of end consumers. During the last decades we have seen a shift of power in the food production chain. Supermarkets have developed strong buying power towards upstream actors herein. In many Western countries food retailers have become (value) chain captains.
Food retailing in itself has its own industry dynamics. One of the characteristics is: severe competition, debouching into low-price strategies. For good reasons public policies have always enforced players in the value chain to make food secure and accessible. As the British Secretary of State Michael Gove mentioned: “The CAP [Common Agricultural Policy] was designed, […], for another world, the post-war period when memories of food shortages were hauntingly powerful […]” .
Supermarkets are experts in driving prices down to make food accessible. Consequently, the dominant design of food value chains is efficiency-driven, to deliver Western consumers “direct benefit through better, faster and cheaper products“ .
But the flipside of this design is the never-ending search for efficiency, which results in e.g. larger farms, massive feedlots, increasing chemical usage and GHG emissions, soil erosion, loss of biodiversity, longer supply chains, inhuman conditions for small-holders and workers, food related human health issues, food wastage, more transportation and fraud.
Call for transformation
This food production system takes more from people and planet than it redelivers in values. We, Soil & More Impacts, do believe this way of producing food is not sustainable. And although academics prove the positive correlation between sustainability and financial performance, business leaders in general do not care about academic insights. They embed sustainability in their corporate strategy if it delivers comparative advantages. Please, show me the money ! Financial value motivates them most to corporate action and leadership courage.
Significant help comes from the Business & Sustainable Development Commission (BSDC). They have shown us the money!  Meeting the challenges in Food & Agriculture sustainably could unlock business opportunities worth US$2.3 trillion annually by 2030!
How? With new approaches and focusing on material levers, as:
1. Internalizing social and environmental costs;
2. Engaging with public policy;
3. Product innovation;
4. Driving sustainability through the value chain.
And of course, invested capital.
Creating food production systems, based on all costs.
The challenge is to design a production system that both feeds the world and helps us to stay within planetary boundaries. The leverage points of BSDC demonstrate how to turn the food system in a net positive system, after having summed up all true benefits and deducting all true costs. To design properly and fairly we need to take into consideration all costs after all.
We need to, citing the BSDC, “internalize currently externalized social and environmental costs”.
And we are witnessing change in this direction, e.g. 2017’s last quarter:
· A widely distributed report “The hidden costs of UK food” ;
· President Macron’s field-to-fork review that called for changes to France’s food chain ;
· Questions by Dutch parliament member De Groot about True Costs.
Excellent strategic opportunities for all players in the value chain
Long-term value creation is key for each company. “Your ability to sustain” as we rephrase it. To be able to create long-term value a company needs private and public stakeholders that show their continuing willingness to support.
Given the necessity to drive food production chains away from only efficiency-driven investments, this opens the room for more explorative, Sustainability Oriented Innovations (SOI’s).
SOI’s have a more radical and systemic nature. And perhaps most importantly: require a collaborative stakeholder integration capability, which may be the key to successfully develop and implement these SOI’s. Again, stakeholders not as opponents but as complementors.
Sensing, interacting with, learning from, changing based on stakeholders; this capability of a firm is difficult to imitate and is potentially of great competitive advantage. And top management’s commitment is a necessity.
Supported by committed, well informed financial parties
We respect the balancing acts of resources and interest which companies’ CEOs are engaged in. Financial capital providers satisfaction is herein important, but not their only goal.
Other stakeholders provide the company with other relevant forms of capital. Think for example about the dependency of natural capital in the food value chain. We welcome herein the upcoming stream of long termism e.g. in asset management .
Research shows that firms’ investments in material sustainability issues significantly outperform firms who do invest in ‘sustainability in general’, therefore the claim is valid that well picked SOI’s are shareholder value enhancing.
A thorough investigation into aspects that impact a firm’s long-term value creation is essential for all capital providers.
Soil & More Impacts‘ mission: 2S, 3F, 4M to create true net value
This article reflects our idea about the world we want to work in. That’s why we launched our new company: Soil & More Impacts.
We design sustainable strategies (2S) for Food, Farming and Finance (3F) companies. We deliberately chose this niche, as sustainable solutions are very context specific.
We strongly belief in the added value of our 4M – approach. By Managing, Measuring, Monetizing, Marketing impacts in our client base, we support their change to create true net value.
January 2018, the Soil & More Impacts Team
To improve your reading experience, we didn’t mention all academic citations. On request these can be delivered. Above article expresses the authors’ opinions
 Sporleder & Boland 2011