A British food-marketing expert predicts that in 15 years most prairie farmers will be growing crops within closed supply chains.
David Hughes, a professor at the Centre for Food Chain Research at Imperial College in London, said many people still think of closed supply chains as novel.
“I don’t think we have to go too far out, 2020, that we’ll be looking back with astonishment saying, ‘just imagine, we used to put things in the ground with no idea who was going to buy the damn stuff and just hope that if we stuffed it between our legs somebody would pick it up at the other end and pay us for it’,” he said in an interview at the Agricore United annual meeting.
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“I just think we’re going to see an explosion in that and it will be the making of prairie agriculture, frankly.”
But some farmers at the meeting, who already grow crops for identity preserved programs, said they aren’t paid enough of a premium to grow within those supply chains.
Norval Lee from Minnedosa, Man., grows wheat under the Warburton’s program.
After seeing a slide during the panel presentation showing a loaf of Warburton’s bread at five times the price of a discount loaf, he noted he doesn’t receive five times more money for the wheat.
“If we as producers don’t see a reward … this will fall flat on its face,” he said.
“Every time I’ve looked at identity preserved programs there just isn’t enough incentive in them to make one want to grow (the crop),” said Glen Goertzen from Stettler, Alta. “A few acres is not enough.”
John Dean, AU’s manager of market and technical development, said these programs will be viable only if they work for farmers.
Hughes said farmers who find their returns are less than they would get on the commodity market shouldn’t bother to participate.
“In fact, even consider exiting the industry because if you’re in the commodity business your margin’s going to get squeezed and squeezed,” he said.
But he also said that the closer farmers get to consumers, the more market power and bigger margins they will have.
He advised farmers to look at who in the supply chain is between them and consumers and ask how many are adding real value.
“I think we just have to strip those out, get as close as we can to the consumer, and then we’ll see our margins improve.”
