Global Trust in Sustainable Agriculture is the Next big opportunity – Rabobank
The biggest value creation opportunity for those in the agricultural sector is to be seen as a globally trusted source of sustainably produced products, says a new Rabobank report on the sector ie Sustainable Agriculture.
The Sustainable Returns: Finding the value in Environmental Sustainability the report says improved environmental practices can deliver an immediate monetary benefit, through price premiums, and long-term strategic advantages.
Report author Blake Holgate said many consumers now consider buying food products with sustainability credentials as a precondition rather than a value-add feature.
“In high-value international markets, where the vast majority of these products are purchased, consumers are unlikely to pay a premium for products just because farmers are undertaking sustainable farming actions.
To get a premium, food producers had to go beyond compliance to telling a story about the product: where it came from, how it was produced, and what it stands for, Holgate said.
Sustainability is only one element as consumers are also seeking an authentic story and want high quality, consistency, safety, and ethical production.
The four main areas in which sustainable farming can provide long-term strategic value for the sector are: future proofing, customer intimacy, shared value supply chain relationships, and social intimacy, the report said.
Supply of sustainable food products was growing as regulators in an increasing number of countries introduce measures to improve environmental performance.
Whilst some countries have a perception of being “clean and green”, it was “imperative that the actual environmental performance lives up to the perception”, Holgate said.
Developing supplier relationships based on shared values was another way farmers could gain long-term strategic value, with many major food corporates investing heavily in ensuring transparency and accountability in their supply chain. In order to do that, they have to guarantee the raw materials they source have been produced through acceptable farming practices, the report said.
With 90 percent of the country’s population now urban and disconnected from the farming sector, the public no longer simply accepts farmers have a license to operate as they see fit and industry controls and guidelines have given way to government regulations and controls, Holgate said.
“Just as consumers need to be told a story about where food comes from and how it’s produced, so, too, must the public, to ensure there is an informed consensus as to what environmental and ethical standards are appropriate for farming”
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