Farmers and the food and drink industry are strongly interdependent.
The industry relies on the supply of safe and competitively priced agricultural raw materials, with the quantity and quality needed to produce sufficient and varied food for European consumers and for its export market. Securing the long-term sustainability of our industry inherently means taking care of the long-term economic, environmental and social sustainability of farming.
The EU is one of the world’s most suited regions for agricultural production given its favourable agronomic and climatic conditions but also the wider political and economic context (e.g. stable political environment, infrastructure, etc.). Moreover, agriculture in the EU complies with high standards in the fields of food safety, plant health, animal health and welfare and the environment. This is why food and drink companies want to secure their supply of agricultural products in the EU.
The European food and drink industry is composed of 99% Small and Medium-sized companies the majority of which are located in rural areas sourcing locally close to the place of farming. There are also many supply chains established in specific geographic areas, such as mountainous regions where production of local specialities would disappear should local agricultural production stop. Moreover the perishable nature of many agricultural raw materials means that factories can only buy from farmers nearby and farmers can only sell to factories nearby.
The EU farming community also depends on the EU food and drink industry which buys some 70% of all EU agricultural raw materials. With their processing capacity and innovation activities, the industry provides EU farmers with a steady market. Strong ties between farmers and industry are not new but there is a renewed urgency to strengthen these ties even more. Trade liberalisation has opened up new market opportunities in third countries for the industry and for farmers, but it has also brought increased international competition. Climate change impacts on agricultural production with more frequent weather vagaries and animal and plant diseases, leading to increasingly volatile supplies and volatile prices for farmers and for food and drink manufacturers. Addressing climate change, changing consumer preferences and social challenges demands continued efforts and innovation starting at field level.
There are many examples of good cooperation between the food industry and the farming community. Political debates tend to focus on issues that divide rather than on issues that unite these two groups of operators. Furthermore, these debates often take a narrow approach, limited to a specific level of the food chain, instead of a comprehensive food-chain approach. With this in mind, we aim to give a glimpse at some voluntary initiatives that have contributed to generate trust and benefits for both farmers and the industry, and ultimately for consumers. We invite policy-makers to build on these initiatives to achieve policy objectives and to facilitate the sharing of good practices.
Selection of company examples
The Brewers of Europe
Bavaria’s “Farmer Beer Water” Initiative
Breweries are continuously reducing water use on-site by adopting water management practices and investing in water-efficient technology. As a result, the sector is achieving measurable water reduction (-4.5% between 2008 and 2010) and cost savings.
Breweries also tackle water use and pollution beyond their operations. Bavaria’s “Boer Bier Water” (“Farmer Beer Water”) initiative in the Netherlands aims at ensuring availability and sustainable management of water and sanitation for all by 2030. In this initiative, Bavaria collaborates with local farmers and other stakeholders to preserve soil and water resources.
Recent milestones include the commissioning of new equipment in the sub irrigation system, the start of restoring purified wastewater through the Wilhelmina canal and the award of an Interreg Europe subsidy for a project on preventing agricultural drought.
(Large company, beer, The Netherlands)
Cargill and McDonald’s partner with French poultry farmers
A recent three-year agreement between McDonald’s, Cargill Foods and the French poultry farmers aims to strengthen supplies of nationally sourced chicken for the production of McDonald’s France’s Chicken McNuggets. The agreement was possible thanks to a long-standing, solid relationship with the French poultry sector.
By establishing a fixed purchase price for the chicken each year, the agreement will preserve prices from market fluctuations and provide supply chain participants with visibility, allowing them to better plan production and investments.
This contracting approach, which includes stringent specification such as 17 criteria for breeding, detailed requirements on animal welfare and good environmental practices, also enables a fairer distribution of value and guarantees quality to consumers.
(Multinational company, poultry, France)
Cargill boosts quality of life in rural Polish communities with training programmes
Nearly ten years ago Cargill developed the first of three training programmes for Polish farmers.
The programmes offer education on business skills, employee motivation, effective management and sales skills, as well as technical skills, including best practices in crop and animal production. These trainings can reach farmers of all farm sizes, thus facilitating their access to a rapidly evolving market, enabling them to react to changes in clients’ needs, and to improve their profitability.
Besides boosting rural families’ income and living standards, Cargill contributes to improving the quality of local agriculture and developing infrastructure and operating facilities that strengthen the local economic base. It also builds deeper connections within the local communities.
(Multinational company, animal feed, Poland)
European Dairy Association
Risk management at Glanbia Ireland
Glanbia, the largest dairy processor in Ireland, has developed a unique approach to addressing milk price volatility at farm, processor and dairy ingredient buyer level: the Glanbia Price Volatility Schemes. The schemes, which extend over one, three and five year periods and include a defined pricing model, offer price predictability for all participants.
In addition the Glanbia MilkFlex Fund, an international first, delivers flexible, competitively priced loans to Glanbia dairy farmers with loan repayments which can vary according to seasonality and movements in milk price.
Finally, Glanbia Advance Payment is a voluntary scheme that offers interest-free cash flow support to member farmers in periods when milk and grain prices are weak. The interest-free repayments will be triggered when markets recover above specific levels. This allows farmers to protect their cash flow at the lower end of the milk and grain price cycle.
(Large company, dairy, Ireland)
Ferrero’s “Nocciola Italia” project
Hazelnuts are a product of Italian excellence and Italy is the number 1 producer in the EU and number 2 worldwide.
To cope with growing demand for hazelnuts, Ferrero has developed a strong partnership with local Italian farmers. Ferrero’s “Nocciola Italia” project aims at promoting fairness and sustainable growth across the hazelnuts chain. Valorisation of quality, centrality of farmers and transparency of relationships are the three pillars of the project. Quality encompasses nurseries, traceability and sustainability of hazelnuts, and development of Italian cultivar.
Farmers receive support on land qualifications, in cooperation with research institutes, and on their relationships with financial institutes as well as with professional training and sharing of know-how. A premium based on quality or variety and a long-term commitment by Ferrero to buy help to enhance trust between Ferrero and its farmers.
(Family-owned multinational company, chocolate, biscuit & confectionery, Italy)
Greek Food & Drink Industry Federation
Terra Creta Sustainability Programme
Terra Creta employs 31 persons and works with 1,000 farmers and a technical and scientific team. It is one of the biggest food and drink companies in its region (Chania) and the biggest olive oil producer in Crete.
Terra Creta Sustainability Programme encompasses environmentally friendly production, economic profitability and value creation, tradition and innovation.
Terra Creta supports its farmers with free equipment, collective input orders for better prices for the farmers, and a premium price for superior olive oil. An exporting company, Terra Creta also provides increased access to markets for its farmers, essential especially at the time of economic crises.
Education is key to the programme. Farmers are taught about pruning, fertilising, irrigation, plant protection, harvesting and how to improve their methods to produce better olive oil.
(SME, condiments & olive oil, Greece)
Kellogg’s OriginsTM Programme
Kellogg’s Origins™ Programme starts in the field, where its ingredients are planted and grown. This Programme helps farmers focus on climate smart agriculture to improve crop performance, while optimising the use of natural resources, and improving their livelihoods.
In Spain’s Delta Del Ebro thousands of yellow iris have been planted to help protect the dykes in the flooded rice fields. As many as 70 bat boxes, which help reduce pests, were placed to protect the crop. 140 native trees were planted. Leveraging insect, wild plant and other species helps recover and protect the soil.
The Programme also provides farmers with expertise in agronomy, market access, research and financing. Trials on experimental fields, trainings and exchanges with other farmers help Italian rice farmers South West of Milan increase yields and preserve the specific environmental conditions that quality rice demands.
(Multinational company, breakfast cereals, several countries)
McCain’s good agriculture & partner
McCain collaborates with 1,700 potato growers, from whom it purchases its potatoes, mostly from family farms located close to its plants. 15% of McCain partners are young growers, which is more than the EU average.
80% of its volume is contracted, which gives security to both the farmer and McCain and ensures that the potatoes varieties match consumers’ demand.
McCain’s commitment to reduce the environmental impact of potato processing goes beyond its own manufacturing operations. All potatoes growers are certified. Enhanced agricultural techniques, technological transfer and new seed varieties contribute to reducing nitrogen and use of phytosanitary products, as well as water use per tonne of crop produced.
(Multinational company, potatoes, several countries)
Harmony, sustainable partnership with European farmers
Harmony is Mondelēz International’s sustainable wheat programme which was created in France in 2008 and is the first of its kind globally. The programme has grown from 68 partner farmers to over 2,000 across Europe. These farmers are close to Mondelēz factories and combined to sow 42,000 hectares of Harmony wheat and 1,300 hectares of wild flower cover last year.
The farmers follow a Charter of good agricultural practices beneficial for biodiversity, water, soil and other resources. In 2016, 935 hectares of flower strips were planted, over 21 million bees and 27 butterfly species were observed and a 20% less pesticide use was achieved in Harmony fields.
Besides guaranteeing consumers the selection of the best wheat varieties, Harmony rewards farmers for complying with the Charter.
(Multinational company, biscuits, several countries)
Nestlé’s innovative collaboration scheme with dairy farmers
Dairy farming in Northern Spain is challenged by high production costs, low profitability and a lack of skilled, professional farmers.
Therefore Nestlé set up a voluntary programme to seek tailor-made solutions to improve the profitability of dairy farmers, while respecting Nestlé’s milk quality and environmental sustainability requirements.
The programme, run in collaboration with the University of Santiago de Compostela, provides dairy farmers with an economic performance check of each farm, advice and trainings. Farmers participating in the programme implement advanced control and monitoring systems at farm level, energy saving technologies and feed safety management to reduce aflatoxins, among others. Overall, they have been able to lower costs and increase milk production (+47%) and yields (+21%) between 2010 and 2016.
(Multinational company, dairy, Spain)
Improving crops yield and quality via smartphone technology
Working in collaboration with Cambridge University, PepsiCo developed a crop monitoring tool to help farmers measure and optimise water usage by combining weather data and underground moisture probes. Thanks to its implementation, PepsiCo achieved up to 40% water savings in water-challenged regions of the EU.
Following a decade of successful use, PepsiCo has now evolved that tool and is rolling it out across all its potato programmes in Europe. Through an iPhone App, potato farmers will be able to mark a field and enter key data that will help both the farmer and PepsiCo to better understand and monitor the performance of the crops with a view to further increase yields and quality, while optimising the inputs needed such as water and fertiliser. All insights and learnings are shared to ensure that growers and PepsiCo can benefit together and enhance agronomy protocols in the future.
A first example comes from Spain, where PepsiCo has piloted the use of an irrigation scheduling system with WhatsApp notifications based on the data captured, together with projected weather conditions and crop growth models.
(Multinational company, beverages & snacks, several countries)
The potato starch industry’s special relationship with its starch potato growers
Due to their mutual dependency, the EU potato starch industry has built its sustainability on the special relationship with its 15,000 famers.
Security of revenue and of supply across the value chain are sustained by the fact that more than 95% of the starch potato production in Europe is contractualised. In addition, the majority of the starch potato sector is run by cooperatives, which have the growers as members. Cooperatives organise the commercialisation of their various outputs and allow for pooling of resources on, for example, research and development on sustainability challenges including reduction of pesticide use.
In their multifunctional biorefineries, starch operators valorise every fraction of the potatoes they process. Every harvest is fully processed into starch and valuable co-products used in food and industrial applications, such as proteins and fibres, which are directed to animal feed. Waste is used for renewable energy generation by digestion to biogas.
(Potato starch sector, 10 countries)
Multilevel cooperation in the sugar sector between Südzucker and farmers
By partnering with farmers and research institutes, Südzucker provides beet growers with comprehensive advisory services on economic and environmental challenges.
The company conducts a wide variety of analyses and makes recommendations to the farmers based on its findings.
For example, farmers can access Südzucker’s database of well over 300,000 hectares of sugar beet fields and benchmark their fertilisation programme. Südzucker also runs soil analyses for nutrients in order to optimise fertilisation, as such improving the quality of the harvested crop and cutting fertiliser costs. Since 1980, the volume of mineral nitrogen used for sugar beet cultivation at Südzucker in Germany has decreased by over 50%. This makes sugar a popular crop when planning crop rotation.
As a result, the cooperation is beneficial for both the environment and the farmer.
(Large company, sugar, several countries)
UNESDA - Soft Drinks Europe
The European soft drinks industry: a local industry – sourcing, producing and employing people locally
The European soft drinks industry is a local industry, contributing to local economies. Ingredients are sourced from local farmers and producers and production sites employ local people and are located close to distribution and sales outlets.
The industry supports 252,377 employees on arable farms and sources ingredients from across the EU: from sugar beet, apples and pears grown in the northern and eastern markets to citrus fruits in the southern markets and berries sourced from growers right across Europe. It is estimated that 137,500 arable farms across the EU grow crops destined for soft drinks production.
(Soft drinks sector, several countries)