Changing Diets

Nuffield Farming Scholarships Trust

Alan and Anne Beckett

Trends in Healthy Eating and the Opportunities they present for Arable Farmers

by

Edward Sweeting

Edward Sweeting N. Sch Thornton Lands Faxfleet, Howden, East Yorkshire. DN14 7YR [email protected]

In writing and studying for the Scholarship, I’m indebted to Alan and Anne Beckett for supporting the award, and for their advice and continued support. Thanks also go to the huge network of support from previous Scholars, and the indispensable advice, support, patience, and encouragement of John Stones and all at the Nuffield Farming Scholarships Trust. To all those who helped directly and indirectly on the content of my report, many thanks for your knowledge, expertise, and your willingness to share ideas. I hope that I can one day return the overwhelming generosity and number of favours that have been called on. To my family, friends, customers and colleagues, many thanks for your willingness and ability to keep the business going in my absence. I was strangely pleased to find that I wasn’t indispensable, and life carried on in my absence. Edward Sweeting N.Sch

Contents

Introduction..........................................................................................................4 Executive Summary.............................................................................................5 A brief overview of the UK food market................................................................7 Countries Visited..................................................................................................9 Spain...........................................................................................................9 China.........................................................................................................11 Austria.......................................................................................................14 USA...........................................................................................................16 Back in the UK...................................................................................................18 Trends................................................................................................................18 Future options....................................................................................................24 Recommendations.............................................................................................28 Personal future..................................................................................................30

Changing diets, changing businesses Introduction

I have a food business called Fruitface that supplies snacks and ingredients made from seeds (mainly linseed) and dried fruits. From our first trials at the local farmer’s market, our products are now sold direct to the consumer through farmers markets, web sales/mail order; and into a variety of outlets including farm shops, independent delicatessens, department stores, multiple retailers, health food stores and sandwich shops. One of the key selling points for the food business is that the linseed used is grown and processed on the family farm. My family are arable farmers in East Yorkshire, growing around 2500 acres of conventional arable crops - wheat, potatoes, vining peas, and oilseeds. I graduated from Newcastle University after studying Agri-Business Management and Marketing. After working in marketing for 7 years in the financial technology industry I was approaching my thirties, and not relishing a future in the corporate world. So I decided to return to the North and to be as involved in farming as possible. After looking at the resources available in the Howdenshire area – which did not include a great farm location or a sophisticated local market – I established a linked business, which has been successful on a small scale. A combination of factors have helped establish and grow the business, with the deluge of promotion from TV diet doctors for seeds and healthy eating playing a large part. With this in mind I wanted to investigate the market further. The opportunities for arable farmers caused by changes in diet and eating trends are the subject of this Nuffield report, kindly sponsored by Alan and Anne Beckett. Are food fashions relevant, an opportunity, or irrelevant for arable farmers? Should I continue with the same approach that has worked for farmer's markets and smaller retailers? Hopefully there may also be worthwhile information for other farm businesses.

Email: [email protected]

Executive summary

With the introduction of decoupled support, and a range of incentives available to process crops on farm, many arable growers are looking at their business model and wondering where the future is. Even with recent rises in the price of commodities, the centuries long trend towards lower farm employment and increased mechanisation and unit size will continue. One option for farmers is to move along the food chain and develop on farm processing. Or should growers stick to their current business of commodity production and grow by moving into non food businesses?

Objectives There were two areas that I wanted to look at in more detail. 1. Healthy eating is the biggest long term trend across the food industry in the developed world. How food producing farmers respond to changing eating trends is key to their future. What are future trends and will they involve products that UK arable producers can supply? 2. There are many examples of dairy and livestock farms that sell products direct and add value by being farm based, vertically integrated businesses. I wanted to find out if arable farms could and should do the same, and move away from commodity production to capture value. The study has been an amazing experience, with numerous highs. I’d recommend a similar Nuffield study to anyone.

Conclusions −

Moving along the food chain and adding value by processing and selling a food product direct requires a huge change in business model and skill set for the average arable farm.

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The UK retail food market is as concentrated as any in the world. It is dominated by the 4 multiple retailers, and anyone considering creating a food product must be aware of their business methods and the market share that they have.

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In spite of the above, there are significant channels open to farm businesses through ‘non supermarket’ outlets – farm shops, leisure outlets, food service outlets (including restaurants and cafés), and direct sales.

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Despite the variety of foods available here and the power of the multiple retailers, there is a small (but growing) food culture in the UK relative to other countries. When you combine this with other trends – globalisation, immigration, easy travel, mass communication – there is a strong desire and the ability among consumers to discover and rediscover products and eating trends.

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Fad diets may provide entertainment for the media and consumers, but for food producers they usually provide a brief but uncertain boost to sales. For producers the risk is that by

the time production has adjusted, the fad has moved on. For agricultural producers, the long time lag before a crop can be harvested means a high level of risk in targeting a fast moving market. −

Consumer tastes change quickly, but some underlying trends remain. The market for healthy eating is growing rapidly. As the market is changing rapidly, there are many financial opportunities arising for businesses. Agricultural businesses can take these opportunities or someone else in the food chain will take them.

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The public perception of agriculture is generally favourable. Farm produce is regarded by consumers as authentic, natural, and ‘healthy’. This can give farm-based businesses a unique competitive edge.

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There are barriers to entry for farmers entering the food sector, ranging from technical barriers of a lack of production capacity, plant, and capital; to barriers caused by deficiencies in human capital such as lack of market knowledge and marketing ability.

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The value from positive PR and image enhancement that can be gained by supplying healthy products is crucial for an agricultural sector that is too often seen as production focussed and out of touch.

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It is very difficult for current farming organisations to court those who influence demand. UK farming in general allocates too few resources to promotion and marketing, and the traditional farming lobby groups struggle to effectively promote a diverse fee paying group to such a competitive and increasingly diverse market.

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Adding value and providing a food product is not a suitable aim for all producers. Most will be unable to respond or provide a unique enough proposition to attract consumers. Larger arable producers will find it hard to adapt their business model. The greatest benefits may come to smaller growers who have a different skill set to large-scale commodity producers.

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Arable farmers produce natural, nutritious foods. It's after they leave the farm gate that processing makes the products less healthy.

Recommendations - For businesses wishing to add value and sell a food product, the focus must be on value rather than production volume. The market must come first, then large scale production. −

There is a large skills gap for the majority of UK arable producers between commodity production and food production. Market knowledge and marketing skills are crucial for success in the food market, and the shortages have to be at first recognised, and then addressed both at industry and individual level.

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For value to be appropriated from the rise in ethical consumerism, there must be a more coherent approach to the marketing and production of UK products. How ‘local’ food is will not be enough. Ethical consumers are educated and informed and will demand socially responsible practice throughout the business. That means healthy products, responsible

sourcing, and an overall awareness of consumer demand. −

Efforts should continue to be made to educate consumers, media, and pressure groups that UK conventional growers are producing responsibly. Lessons must be learnt from the organic lobby – that science alone does not attract consumers; there must be an emotive reason for buying.

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The diversity and range of today’s media is a challenge to all businesses. Celebrity chefs, TV nutritionists, and journalists have a huge influence on eating habits in the UK. It’s no longer sufficient for the NFU and levy boards to know the head of the FSA and have access to Defra. It may be unfortunate, but the editors of Heat, Grazia, and Hello! magazines have just as an important a role to play in reaching consumers. If the NFU and similar organisations can’t offer credible support (due to conflicts of interest and perceived bias) there is an opportunity for them to supply at least an information bank and database of media contacts that farm based businesses can access.Producers may need to collaborate amongst themselves, but they also should look to partnerships with external pressure groups – such as the Slow Food, British and Fairtrade movements – to enhance their own knowledge and credibility.

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Those farmers that do wish to enter the food chain must be willing and able to understand the changing food market. Globalisation, mass media, immigration and other factors all influence the food market. The traditional farmhouse diet is not the diet that most UK consumers demand. Misconceptions about modern foods and eating habits have to be put aside, and a more open attitude to food is needed.

A brief overview of the UK food market

When standing on a farm in an idyllic rural location anywhere in the UK, it can be easy to forget that Britain has arguably the most sophisticated consumer economy in the world. Consumers here are highly educated, wealthy, conveniently located, and kept informed by a diverse and responsive media. At it’s heart the UK has one of the world’s great cities, where people from across the world choose to live. The proximity to such an affluent marketplace should provide an opportunity for UK farmers to sell food direct and thrive. Unfortunately though, too many producers are disconnected from the rest of society and the customer base. There are many reasons for this, and the need for food producing arable farmers to engage with and educate themselves as well as consumers if they are to be successful has been discussed before. It is still perhaps the key underlying theme for this report. It is not an easy mission though, and this societal change from both consumers and farmers will take time.

Retail food

Around 80% of food retailed in Britain is now sold through 5 supermarket groups. The rise and rise of supermarkets has had an effect across the UK economy. There are very few consumer industries that have not had to change to cope with their buying power and the effects of globalisation to bring consumers and low prices together. The food sector has been the most affected, with mantras like ‘everyday low prices’ and ‘every little helps’ being simultaneously attractive to customers and challenging for suppliers. A market where the two biggest suppliers aim for year on year price deflation for standard products is obviously one where their suppliers will be under pressure, and this knowledge has to be at the front of any plan to enter the food sector. The particular business practices of UK supermarkets impact food producers in several ways. −

Buyer power is high in the UK. The concentration of buyer power between 5 main retail chains –Tesco, Sainsbury’s, Asda, Morrison's, and Waitrose means that suppliers’ margins are tight. In addition, consumers are sophisticated and price sensitive. - The supermarkets offer private label products, so that every successful product and brand launch is usually followed by a supermarket equivalent. This lack of product differentiation increases buyer power and competition, reducing supplier margins.

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- As mentioned, around 85% of the food retail market goes through 4 supermarkets, and regardless of dietary trends, this is unlikely to change. In fact, indications and a recent report from the investment bank Morgan Stanley, concluded that these multiple chains would take 90% of the retail food market by 2016.

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There is a rise in number and quality of farm shops, food halls, garden centres that retail food, and delicatessens, but this is still a very small section of the grocery market, although growing.

Other potential channels for food retail include direct sales both online and through box schemes, and farmers markets. These all play an important role in connecting the consumer to the producer (and the producer to the consumer) but in overall volume, are relatively small.

Food service The rise in affluence in the UK and the increasing trend towards eating out of home has meant a rise in the value of ‘food service’ spending to around £33bn in 2003. In comparison to the retail food market, here buyer power is relatively fragmented, with diverse distribution channels including the large corporate catering companies such as Sodexho, Compass, local authorities, pub and restaurant chains, down to small local bars, sandwich and takeaway outlets. This diversity means that buyers have less power, and provides certain opportunities to supply appropriate products such as muesli, cereal bars, and bread and flour. In general though, these distribution channels control the direct access to their consumers and so products supplied are unbranded and have lower profit margins; and farm produced products have many similar competitors. The usual rules of economics apply: lots of suppliers with similar products result in a competitive marketplace with pressure on prices. So what should farmers do if they want to grow a business in such a competitive marketplace? This was the question I really wanted to answer when I applied for the Nuffield study in 2005. I had a small business that I wanted to turn into a much bigger one. Would the

same approach that had worked for the farm shops and delicatessens that we'd been selling to work on a bigger scale? To answer this I wanted to visit countries and see businesses that I'd admired from afar to see how their experiences could apply to the UK.

Different countries As part of the Nuffield Scholarship, I travelled within the EU and to China and the USA. Each country and region visited had a distinct system of food consumption, approach to health, and lessons to offer. I planned to see 4 separate countries that I thought could each offer lessons. Spain, because of the generally held belief that the Mediterranean diet was the healthiest in Europe. China, in part because the Chinese food system is based on health principles, as is their medicinal system. And in part because of its huge potential to consume the worlds farm commodities. The USA to see how a land with hundreds of conflicting diets was also the one with the most obese citizens. And finally Austria, where wellness is almost a national obsession. Photographs of my visits can be seen online at www.flickr.com , just search there for “Nuffield2008”.

Spanish food market In looking at the Spanish food market, and attempting to understand how producers there gain added value, it’s important to understand the fragmented distribution system – retail chains there have a much smaller proportion of the food market, with the majority of foods bought by households from local markets and stores. Food culture here means that consumers are willing to pay for quality food, in a way that UK consumers are not. The Mediterranean diet is categorised by the use of fresh produce, with meal times and family life structured around the family. In Spain this is common through the country. My tour here took me from Madrid to Seville, and looked at the Mediterranean diet in general, and two specific industries. 1. Olive oil production – in its way very similar to the nascent virgin pressed rapeseed oil industry in the UK. 2. Jamon, the speciality air-dried ham. The Mediterranean diet is known worldwide for the resulting longevity and low rate of heart disease of its residents. Fresh fruit, vegetables, and low consumption of saturated fats, are all part of the average diet. Markets One of the most impressive examples of added value production, and worthy of a Nuffield study in itself was the production of air-dried ham (Jamon) in Spain, where it is a national institution and a highly valued product. There are several levels of quality, from standard to the most expensive with rigorous quality controls and widespread consumer awareness of the eating qualities and the healthy qualities of ham – there are beneficial nutrients in the oil, and high mineral levels through the

meat. Differences are partly caused by the pig breed, and partly by husbandry. Acorns in particular have a rich flavour and omega 3 level and this is used as a marketing proposition. The pigs are reared outdoors, in a relatively stress free environment. Interestingly, the organic question was not in any way an issue for most producers, and consumers were generally not aware of it.

Jamon

I met two producer's who were both interested in the health benefits of their products, and in sharing their knowledge. Although they did actively promote their Jamon, I was surprised at the level of demand within the general population for Jamon. As part of the tradition and culture of Spain, every consumer I spoke to was fully aware of the different grades of Jamon, production methods, and how it should be prepared and eaten. A similar level of knowledge from UK consumers about any foodstuff would be very unlikely, and the power and opportunity that comes to producers from having such a strong food culture was clear. The outlook for small UK food producers would be very different if the UK consumer was as passionate. The producers I met sold through a mix of outlets, from local bars, restaurants, and shops, through to distributors and agents who sold the product across Europe.

Olive oil production I was fortunate enough to meet up with the International Olive Oil Council in Madrid, and tour olive producers between Madrid and Seville, and speak to their marketing teams. Spain has around 4.9 million olive trees in production, making it the world's biggest producer with around 30% of the market. Thirty years ago the olive oil available in the UK was usually on sale in chemists for use as an ear drop. In 1984 the market for olive oil was estimated to have a value of £1million. It is now a £140million market, with a range available in any grocery store and prices varying from £3 to £30 per bottle. Yet in Spain, traditionally the biggest producer of olives and oil in Europe, it had been the archetypal commodity product, with a low quality level and lack of awareness of its benefits and potential taste attributes. Membership of the EU has provided the funding and structural guidance and the awareness of food quality prevalent through Spain has provided expertise and local demand. Olive oil is now a multi billion pound global market with a bewildering variety of brands from large cooperatives to single estates. Value has been created and shared through the food

chain here. What can be learned from this outstanding lesson in adding value to an agricultural commodity?

Romance While this may not be something that most farmers see in their crops, the visions conjured up by promotion involving olive oil are those of Mediterranean groves, with historic images and evocative sights and sounds. UK producers need to think through the messages sent to consumers – does technological superiority add value to UK production? In terms of increased yield, then yes. But in terms of consumer appeal, no. Sports nutrition aside, the appliance of science does not work for the vast majority of UK consumers. The olive oil market is one that uses health and taste at the front of promotional activity. The overall message is one of a romantic connection to the soil and the lifestyle of artisan producers. In no way is the industrial nature and efficiency of modern agriculture emphasised.

Chinese food market The next trip took me to China, where the population of 1.3 billion people is making the leap from an almost mediaeval agricultural economy to the most dynamic economy the world has ever known. Though the agricultural system there is predominantly based on a mass of very small producers using little or no technology, the average Chinese person's knowledge of food is staggering in it’s breadth and awareness of the health benefits and cooking methods required for each type of food. With such a large country in every way, it is hard to generalise across the Chinese food market. But the areas that I visited showed how fragmented the food chain is there, and how the country is increasingly divided into rural and urban. I initially travelled to Beijing, where I attended a farming and food exhibition courtesy of the Chinese Agricultural Ministry. This was a great introduction, as I had the chance to meet representatives from each province, who were all eager to show me their capability, and invite me to see their star producers. From here I travelled to see farmers producing vegetables and wheat for the Beijing city region. The standard of agricultural knowledge was high, though the level of the infrastructure varied from ultra modern to extremely simple. The level of interest and hospitality across my travels in China was outstanding. From Beijing I travelled to the X'ian province. Here I met fruit growers and processors, producing extremely high quality produce for the international market. Among other places I visited the county which produces one third of the worlds concentrated apple juice. It gave me a tremendous insight into the capability of Chinese exporters. I then moved overland to Shanghai, and in cities like Nanjing saw the diversity of the landscape, as well as getting an idea of the volume of people in China. There were cities I'd never heard of with populations of 2 – 3 million people. Every spare piece of land seemed to

be cropped, with harvest storage often taking place inside peoples homes. And once in Shanghai I took the chance to tour two regional supermarket chains there. The level of sophistication and range of produce was amazing by any standards, and the respect given to farmers absolute. They take their food security very seriously there. Unsurprising, given that famine is remembered well by the current political leadership. The majority of foods are currently sold from the producer to the local marketplace, where the local shops, restaurants, and consumers will go to buy produce and meats. As there is a preference for absolutely fresh ingredients, this means fish, poultry, and frogs still alive, and other meats and vegetables as fresh as possible. This demand for freshness has obvious implications for the supermarket chains that are setting up in the urban centres there. So the food distribution system is fragmented, though evolving fast. As such, it’s hard to predict exactly how it will develop, though the place that food has in the Chinese culture is such that food is more highly valued than in the UK, and will remain so. High added value producers from the UK should pay attention to this marketplace, as the Chinese demand for high status western goods and brands is strong. I saw numerous examples of oils made from seed grown in the USA such as safflower, evening primrose, and oilseed rape on sale as gift items in the luxury areas of Chinese supermarkets. A definite opportunity for UK growers!

History While in Beijing, I was fortunate enough to meet with Dr Dia Jiangping of the Beijing University for Chinese medicine. The strength of the links with food and medicine are clear in every restaurant – the average waitress there has a huge depth of knowledge on foods and their nutritional qualities. This is not a recent phenomena. The development and diversity of Chinese cuisine reflect China's long history. With each dynasty new recipes and techniques were devised until the art of food preparation reached its peak during the Qing Dynasty (1644 - 1911). Rather than the 200 numbers that we associate with a range of dishes on our local Chinese restaurant menu, the Chinese see there being 8 cuisines across their country. These are: Shandong, Sichuan, Guangdong, Fuijan, Jiangsu, Zheijang, Hunan, and Zuidang cuisine. Cuisines from different regions are distinctive to them in the same way that French and German, or Italian and Greek, are to the West. To the Chinese, we are very uncivilised for not knowing this!

Chinese medicine The Chinese believe that good cuisine has many benefits, and helps to prolong life, sustain the constitution and boost energy. So food there has strong links to Chinese medicine. Chinese medicinal cuisine is a long standing tradition. Early records show that it was in use as far back as the Han Dynasty (206 BC - 220). The level of knowledge throughout the country of which foods are good for certain health conditions is staggering to the western visitor.

Through continual improvement over the centuries, it has developed into a practical science of nutrition, though very different to western medicine. This is not a simple combination of food and traditional medicine, but is a distinctive cuisine made from food and medicinal ingredients following the theory of Chinese medicine. This not only became the means of health-preservation among the Chinese, but also spread abroad, especially into Southeast Asia. There is a wide choice of foods that are used in many different ways to promote health and well-being. It is estimated that there are more than 600 different kinds of medicinal food ranging from cereals, fruits, vegetables, meats and marine products. Many of these will be unfamiliar to foreigners who may be reluctant to try them; however all are perceived as precious and effective as medicine. Many different ingredients are used to add to the appeal as well as to strengthen effects of the cuisine. Wine, sugar, oil, salt, vinegar and honey, and other commonly available items such as almonds, mandarin orange, or peanuts, all are utilized in the cooking process. Medicinal cuisine has different categories, from a soup to help lose weight to soups that can ‘add beauty’; and dishes that give strength, build the immune system, and rehydrate the body. While many in the Western world are dubious of all the claimed benefits, it's hard to dispute that the Chinese are generally not overweight, and on the whole value food in a way that we in the UK value designer brands and luxury cars. Dairy Traditionally the Chinese eat no (or very few) dairy products, and it’s a country where food is prepared fresh and ready to eat instantly. But times are changing fast, and the food used in China has changed through history. With food, the Chinese are not nationalistic to the point of resisting imports. In fact, foreign foodstuffs have been readily adopted through their history, partly because of the low level of agricultural productivity. Wheat, sheep and goats were introduced from western Asia in prehistoric times, many fruits and vegetables came in from central Asia during the Han and the T'ang periods, and peanuts and sweet potatoes from coastal traders during the Ming period. These all became integral ingredients of Chinese food. In the same way, you can now see milk and dairy products becoming more prominent in Chinese cuisine. This adaptability is shown in other ways. One of these is the amazing knowledge the Chinese have acquired about their wild plant resources. The Chinese peasants apparently know every edible plant in their environment. Most would not ordinarily belong on the dinner table, but have been adapted for consumption due to the lack of alternative. It’s easy to forget that famine has been a regular feature of Chinese life. The Chinese way of eating is characterized by ideas and beliefs about food, which affect the ways in which food is prepared and eaten. As I was told by the head buyer of the Shanghai supermarket chain, City Shop, if selling into the Chinese market, the overriding idea about food in China is that the kind and the amount of food eaten is directly relevant to health. Food not only affects health as a matter of general principle – as in the West - the selection of the right food at any particular time must also be dependent upon health condition at that time. Food is really a form of medicine. Interestingly, despite the absolute focus on health, there seemed to be little attention paid to the use of pesticides in production, and animal welfare did not register. Organic certification

has a long way to go in the dynamic Chinese market! The bodily functions, in the Chinese view, follow the ‘yin-yang’ principles. Many foods are also classed into those that possess the yin quality and those of the yang quality. When yin and yang forces in the body are not balanced, problems result. Proper amounts of food of one kind or the other may then be eaten to balance yin and yang. If the body is normal, overeating of one kind of food would result in an excess of that force in the body, causing disease. Finally, perhaps the most important aspect of Chinese food culture is the importance of food itself in Chinese culture. There are whole ceremonies surrounding eating duck, drinking tea, and the family meal. You don't get this in the UK. I couldn't think of any culture as food oriented as the Chinese. And this was as ancient as Chinese culture itself.

Western foods? As mentioned above, the Chinese are interested in new food products, and the rise in fast food chains and western style restaurants is a clear sign of this. Every busy street corner in cities across China had a Macdonalds, KFC, or Pizza Hut there. The difficulty I had in describing the local food movement in the UK to my translator out there illustrated for me the opportunities for international businesses. They couldn't believe that customers might choose food from the home market over exotic and more expensive imports. For UK producers, there are few routes to market that are suitable for farm-based businesses, with shipping costs and distribution being too complex to be truly viable for many food products. This may change though, and there are certainly huge opportunities for luxury goods in the Chinese market. This could easily extend to luxury foods in time. But the influence of Chinese demand on farm commodity prices will be massive. The number of Chinese moving from the countryside to the cities is forecast to be roughly equal to the number of consumers in Western Europe and the USA combined. These people will need feeding, and will demand cereal based protein – chicken, pork, and beef, as well as cereals themselves. Dumplings and noodles are also made with wheat and are generally eaten once prosperity rises, in place of rice. This surging demand is a point often made, but as the recent rapid rise in world wheat prices indicates, not always fully appreciated. So perhaps the biggest influence on UK arable farmers from dietary trends comes not from the opportunity to supply value added niche products to UK consumers, but from the increased demand for basic commodities from dietary and cultural trends in the Chinese market.

Austria Following from a mind expanding trip to China, my next visit was to a smaller and less dynamic place, although one with some great lessons to teach, Austria. Here my objective was to look at pumpkin seed production. The pumpkin has a similar place in Austrian culture to the olive in Italy and the ham in Spain.

The seeds are grown in a particular region, Styrian, and are a cherished part of the local culture. Harvest is celebrated, and the first pressing of the oil is carefully controlled and monitored by the producers. They work together as cooperatives to market the seeds and oil and add value by restricting supply to carefully managed and marketed outlets. This works on many levels. The growers retain the value created as owners of the brands that they produce, and consumers have an attachment with the products as a result of the marketing efforts. Investment has been made in the technical process, with funding available for machinery and processing equipment, but has also been made in long-term research projects with local universities. The University of Graz has a strong research background in the healthy properties of oils, and this partnership provides invaluable support to the pumpkin industry.

Pumpkin Crop in Styria In addition to the scientific base, the producers are also clearly focused on the intellectual property of the business, which is reinforced through regional protection of the products through the EU’s Protected Designation of Origin / Protected Geographical Indication scheme. The cluster of individual growers, who are open and collaborate willingly, while using the back up supplied by the Universities and research departments available to them provides an excellent production base. Again, the romance and the story behind the production of the crop, reinforced by scientific research and a strong and patriotic food culture form the platform for the successful marketing of an agricultural product into the food system.

I also took the chance to visit headquarters of the global drinks company, Red Bull. As a functional drink Red Bull has in the space of 15 years grown from a small scale Thai tonic drink into a £2billion business. An enterprising Austrian had seen it on his travels and decided it would work on a big scale. The process of clever product placement, innovative word of mouth marketing through student parties and sports and music related promotions has played a huge part in the success. Marketing, not production of food and drink is the key!

USA I travelled within California from San Francisco in the North to San Diego in the South. Driving along the central valley in California I saw mile after mile of hugely productive cropping. Kern county alone grows over 280 different kinds of crops ranging from annuals such as wheat and cotton to orchard crops such as almonds and pistachios worth nearly $3 billion. Table grapes alone account for $600 million. But this is a traditional agricultural economy, where the value does not always remain with the primary producer. Despite the production capability and range of commodities produced, the farmers I spoke to – growing grapes, almonds, or peaches – all faced similar issues to UK producers. Strong supermarket buyers, weak negotiating positions, oversupply, and a lack of marketing knowledge all work against primary producers and their potential to add value.

But there were some outstanding examples of agricultural marketing. In particular, I was fortunate to visit PomWonderful, the pomegranate juice company, and other growers through the Californian Pomegranate Growers Association. PomWonderful is a company that grows the 14,000 acres of pomegranates used to make PomWonderful's products. The orchards are owned and farmed by the company. This makes PomWonderful the only vertically integrated company in the pomegranate business. The UK has some examples of privately owned farm businesses that add value, but nothing on this scale. Research and marketing PomWonderful provided over $25million dollars of funding to support academic research into the health giving properties of Wonderful variety pomegranates. This research has been conducted at leading universities around the world, including the USA, Italy, and Israel. Twelve human clinical studies investigating POM Wonderful juice and extracts have been published in peer-reviewed medical journals. These preliminary studies showed promising results in conditions including heart disease, prostrate cancer, diabetes, and erectile dysfunction. This $25 million compares with the – approximately - $13 million spent on conventional marketing and advertising. This includes award winning advertising, great product placement on TV shows such as Desperate Housewives, and a full range of alliances with charities such as the American Heart Foundation. And the results of this effort? The annual turnover of the company grew from $12million in 2003 to $93 million in 2006, with similar growth forecast for the last year. Admittedly, the owners of the farm themselves are extremely successful and active entrepreneurs across a range of industries including mail order, food processing, as well as commodity agriculture. But the opportunities for positioning a natural food product as a health tonic are clearly shown here. Knowledge and partnerships are the keys to success. The knowledge from clever product design and correct use of imagery and marketing, the academic studies; and the

partnerships with external organisations, from grocery chains, to distributors, to charities, to leverage the expertise the company had. And the success has been despite widespread competition – one estimate had 350 pomegranate juice products on the USA marketplace at the end of 2007. The marketing staff I spoke to at PomWonderful were clear on the importance of great execution of the business plan, and not being too concerned about competitors.

'The Antioxidant Superpower'

Overall market structre The USA has similar market conditions to the UK, but on a completely different scale. Traders at the California farmers markets I attended thought nothing of travelling 250 miles to attend a market. In the UK this would not be considered local! While the concentration of multiple retailers is slightly diluted by the size of the overall marketplace, similar foods are eaten, and the importance of convenience is massive. And the influence of the media, and of fad diets is similar, if not even greater than in the UK. The lack of food culture and knowledge about foodstuffs means that the USA and UK are more susceptible to fad diets than the Mediterranean and Chinese markets.

Back in the UK So what did I learn that was relevant to the UK? There were so many lessons and examples, and in the next pages I've tried to distill some of that information and how it's relevant to the UK market.

A look at trends The concentration of outlets in the UK means that the outlets that foods are available through

remain similar, but the status of products sold does change. There are different trends at work – low prices work for some consumers, while premiumisation has been a key trend, with Institute of Grocery Distribution (IGD), figures putting values on the premium market of as much as £13bn, with projected growth to over £19bn by 2011. This was based on a premium definition that included the following product types: organic, fairtrade, locally & regionally sourced, specialist/fine foods, retailers’ premium private label and premium branded products. The premium sector has been where most of the successful farm food businesses in the UK have been aimed. Local food has been a buzz phrase in the UK for 3 years now. If anywhere, it originated in Berkeley, California and was championed by the chef and restauranteur Alice Waters at Chez Panisse. A great lunch if you're anywhere near! Interestingly attitudes to local food varied in the countries I visited. The Chinese couldn't comprehend why it made any difference to demand. The urban Americans thought it was essential, although their definition of local was generally local to their state – in the case of California that makes anything within 1000 miles local! This makes the 30 mile limit of Waitrose seem quaint. The Spanish thought that each region had its speciality and should stick to that. And the Austrians were fiercely patriotic and had bought regionally for centuries. It’s now a trend that UK supermarket groups are exploring – each has a local sourcing and buying team, and some are finding this a successful way to appeal to consumers minds, and a useful way of enhancing their corporate image. The actual volumes sold are currently small in comparison to the mainstream, though growing.

An apple a day And underlying all the current trends is a move towards a healthier option. This is not new. For as long as foods have been promoted and consumed, their health attributes have been part of their appeal. Some of the biggest global food products, including Kellogs Cornflakes and Coca Cola started life as alternative health products. The huge upsurge in interest from the media and consumers about healthy eating, obesity, and school meals was one of the reasons for the establishment of the Fruitface business and the application for this scholarship. So there is a general shift towards quality, and a rise in the demand for local food. The success of many farm shop businesses and food halls, and recent launch of the US chain ‘Whole Foods Market’ in Kensington exemplifies the premium and healthy approach that the UK’s affluent consumers are moving towards. The Whole Foods Market, and other stores including the John Lewis Food Hall are currently relatively tiny outlets, but ones which the major UK retailers are watching closely.

General trends in healthy eating There has never been so much concern over the food that we eat. Whether they’re 20somethings living in studio apartments or 70 year old divorcees from the suburbs, consumers tend to pick up ideas on how to eat not from knowledge handed down through generations, but from a huge variety of media channels including fairtrade websites, celebrity gossip magazines and TV chefs. These fragmented and diverse influences lead consumers to local foods, exotic imports, energy supplying foods, foods providing good bacteria, low fat,

good fat, anti cellulite, muscle gain… the list is long and sometimes bewildering. It is not surprising then, that consumer demand can change almost daily. But the average farmer – who is male, aged 58, and lives in a quiet rural area – generally has a very traditional diet and lifestyle compared to the rest of the population. How primary producers cope with varying population and food trends is a key issue for UK farming. At any time, there will be several trends affecting consumer buying behaviour - including a move away from traditional foods such as white bread, cakes, and red meat in favour of convenience, health, and low cost produce. This is not an ideal trend if your business model relies on selling tonnes of potatoes, sugar beet, and wheat at a high price. Fortunately, there has been a large rise in interest in ethical consumerism – the willingness of consumers to buy products with provenance and perceived ethical benefits. This leads to consumer demand for higher value goods that farm based businesses can supply. These include local food, and food products with health benefits. The healthy eating trend is part consumer led and part caused by Government and international awareness of the problem and added cost of an unhealthy population. But what is a healthy diet? There are hundreds of diets, some good (GI index), some bad (fat rich Atkins), and some bizarre (the Jesus diet). Sadly for producers, leading health experts across Europe and the USA can agree on one thing - in the Western world, eating healthily usually means eating less. For UK producers brought up to maximise yield this trend towards lower volume and higher value requires a massive shift in attitude. Other trends in the food sector include a drive away from processed foods towards more natural, unadulterated products. Foods that are recommended include whole grains (such as brown bread, rice and beans), fish, white meat, fruit and vegetables. These are acknowledged to be the healthiest food groups and the staple ingredients of a good diet.

Globalisation Globalisation has had a huge influence on dietary trends, both in production, productivity, and on dietary habits. Products are now shipped globally, and foodstuffs quickly appear that would have been unheard of 30 years ago. Hummus, tahini, olive oil, soy milk, beansprouts are now staple parts of the UK diet. Dripping, suet, spam, and turkey twizzlers are all products that have been superseded. The speed that Supermarkets in the UK can introduce products was shown to me when my business Fruitface introduced our range into Asdas stores through their local sourcing groups. After our initial meeting in June 2007 we were stocked by them within two months. In the same time frame, they had sourced an own label range with a strangely similar pack design at a much reduced cost. Flattering, but very concerning!

Dietary trends There are at any point hundreds of diets available to anyone seeking to lose weight, tone up, reduce blood pressure, or otherwise improve their health. Although over the long term most are very hard to follow, and don’t work, the power that some briefly take on when they capture the public imagination is huge. Atkins, Zone, South Beach, GI, are all diets that have become successful through shrewd media placement and celebrity endorsement. Unfortunately, these shooting star diets tend to explode onto the public consciousness, catch the mood of the time, cause food companies to launch new products based on the principles of the diet and promoted alongside the diet, and then decline as quickly as they appeared. This poses problems for all food companies, even those that have a more flexible business model than the average farmer. For arable farmers, who have a ‘product cycle’ of one crop per year, the flexibility needed to produce crops that fit in with fast moving dietary trends is impossible to create. To benefit from trends in diets, producers have to look at long term shifts in consumption, and align the crops they produce and products they create with these trends. Long term, wholemeal products are more popular, demand for oats is rising, and demand for oilseed products made from non saturated fats is helped by media promotion. In some cases, it may be possible to create genuine cultural preferences for local farm products through long term marketing – in part the process outlined earlier in this report. Austrian pumpkin seed growers, California raisins, and Spanish jamon producers are all outstanding examples of regional producers that are now internationally known.

Superfoods By attaching the label superfoods to products, manufacturers and the media have combined to create huge growth areas for products such as broccoli, spinach, salmon, and blueberries. Each has benefited from press coverage, in particular the blueberry and the pomegranate, both relatively unknown and underused fruits until they captured the imagination over the last three years. Producers and manufacturers have used the media to harness these trends. The power and change in media and how they can be used are critical to food producers. The Californian company PomWonderful is a great example of how a marketing campaign can revolutionise an agricultural commodity.

Trends affected by media coverage Dietary trends are particularly affected by media coverage, and the changes that have occurred in the structure of the media partly explain how people's eating habits have become so diverse. The media world has become more fragmented, more diverse and has been transformed by technology. The main BBC and ITN news reports used to have audiences of 8 and 10 million, yet today they average half that. At the same time, there are rolling 24 hour news

programmes with small audiences that cover events as they unfold. In the early 1980s, there were 3 TV stations broadcasting in the UK, and now there are several hundred. Newspapers also fight for a share of a shrinking market. Many are now read on-line rather than the next day, and the value and volume of internet advertising has overtaken newspaper adverts. There are roughly 70 million blogs available online now, with thousands being created every week. Many are not influential and never read, while some are read and repeated by journalists and broadcasters. In particular, young people less and less get their news and opinion from traditional outlets. The websites Google, Facebook, Myspace, and other sites are the destination of choice for news, views and general information. Individual producer's contributions through videos, blogs, and other online activity have a huge role to play, and should be encouraged. Multinational corporations with huge marketing budgets target these channels, but there are no financial barriers to putting information on such sites. Here the power of a great story comes through, and so the possibilities for promoting small business are huge. Some great examples of small companies that use direct online communication include Howies (www.howies.co.uk ), Innocent Drinks (www.innocentdrinks.co.uk ), and Wiggly Wigglers (www.wiggglywigglers.co.uk ). So consumers are bombarded with different stimuli, each with diverse and sometimes conflicting messages; and traditional methods of eating are changing. There is a huge diversity in the profile of the average UK consumer. When you combine this with the more traditional demographic of the average UK farmer: male, aged 58, stable family unit, farmhouse diet of meat, vegetables, then pudding; it is easy to see the lack of connection with the rest of the population, and say that targeting opportunities in the food market will not be suitable for all.

New media threats and opportunities Traditional media techniques no longer can be used on their own. This is an opportunity and a threat. An opportunity in that small, flexible, and creative producers can get their story told and promoted to a mass market without the traditional marketing budgets needed by consumer goods businesses. And a threat from several angles. Farming is an industry that in part relies on heritage and tradition for its product's appeal, and the organizations that farmers generally use for promotion – the NFU, the levy boards, and producer groups - are structured on traditional lines and use traditional means of communication. This is unlikely to change given the average age and societal background of the UK farmer. Despite individual examples of great communication including grass roots campaigns such as Open Farm Sunday and the rise in local food and farmers markets, there is a dearth of more sophisticated communication from the farming sector. When you compare the proportion of revenue that consumer goods businesses put towards promotion – and recognize that these are the companies that farm businesses have to compete with – there is a clear gap here. However, farms should not assume that the best way to compete in the food market is to fund similar communication strategies as their competitors. The strongest attribute that UK agriculture has from the marketing side is its unique story.

In order to compete effectively with established food businesses, and successfully negotiate with supermarket buyers, farm food businesses need to have a point of difference, and to brand themselves effectively. If businesses are interested in adding value to their commodity and creating a bond of loyalty with their customers, they need to brand their product. Unfortunately for farmers who see themselves as men of science and pragmatic, practical people, branding is an inexact science, where emotions matter at least as much as hard facts. Great brands are not just made up of images on labels, they also connect with customers through the power of storytelling. As a real and authentic industry with a living and growing storyboard, farmers and farm based businesses are well positioned to create great stories and thus great brands. The story of a product created from a commodity then packaged and with minimal processing ending up in the consumers’ plate is one often used by food companies. Del Monte, Starbucks, even McDonald's all use this kind of imagery to sell their brand, and in time their products. This has a real value, though not one realised by UK farming. This appropriation of the hidden value in farming’s image by others has gone on for too many years. UK agriculture is severely under resourced in marketing, primarily because of a lack of knowledge, sophistication, and awareness rather than a financial shortage. But to plan a promotional campaign there must be a clear identity to promote. As the media world has become more fragmented, there are many segments within UK agriculture that set farmers against each other. Organic vs conventional, corn vs horn, white meat vs red meat, are all potentially divisive areas that could cause confusion in a consumer's mind. The result is that while use of the media is absolutely necessary to business, it is essentially not possible to guide the media unless there is clarity and coherence. Media coverage is driven on by desire to find the ‘new new’ thing. This may well be in favour of a UK product or service, but there are hundreds of other ideas and products clamouring for attention, and these can all have an impact on the minds of consumers. And in what way can the traditional farm lobby groups have a voice in this? There needs to be a level of professionalism and awareness of New media that hasn't been seen previously.

Categories UK grocery aisles are separated into differing parts. While there are niche opportunities in the free from and wholefoods aisles, the majority of revenue comes from the mainstream aisles, where competition is intense from well established and resourceful businesses. Traditional products derived from arable crops include: porridge oats, granola, bread, cereal bars/flapjack, crisps, and oils. These are all established products that contain a large proportion of ingredients that are or could be grown on UK arable farms. Of these, crisps in particular have been rebranded initially by Kettle Chips, but more relevantly for farmers, by Tyrells, Pipers, and Yorkshire Crisps as a prestige farmer produced product. Crisps (and snacks in general) are a more appealing market for producers to enter than standard grocery products due to the range of outlets that can be supplied away from supermarket retailers.

The same principles can be applied to the other products listed. Premium, wholesome, and home produced are all great selling points, and there will still be opportunities for genuinely new products. But in every market there is only room for a certain number of products. If you look at the breakfast cereal category, there are Kellogg’s products, Weetabix, and supermarket own brands in any number of varieties. Alongside these appear Jordan’s cereals, and other companies including the Dorset Cereal Company, which stress their natural and farming roots. At a local and niche level, small farmer producers supply fine food outlets and other alternative channels. It’s great to see some market leading businesses in the food sector leading by emphasizing their rural roots and farm origins. However there is only room for a certain number of brands – both on shelf, and more importantly in consumer’s minds, and any success story has to be backed up by a well executed business operation to prevent copycat businesses entering the market.

Conclusions There is a limit to the number of food businesses that can profitably co exist, but the fast moving nature of the UK food market – when compared to more conservative and traditional markets such as those in France, Spain and Italy – means that opportunities will continue to appear.

Industry wide recommendations The gap between industry bodies and consumers has been widened by the fragmentation of the media. It is not only the duty of the levy boards and industry organisations to promote themselves. It's also up to individual producers and businesses to market themselves – as some are doing successfully. The best models to follow appear to be that of those few agricultural producers who successfully add value right through the chain to the consumer wine producers, Spanish ham producers, olive oil growers, pomegranate growers, and Styrian pumpkin seed farmers. These seemingly random producers all use similar techniques to make sure that their produce is demanded and consumed.

Academic research As a means to attract publicity and verify claimed health benefits, having academic studies that state the benefits of a product can be of huge value in increasing demand. Probably the best example of industry-sponsored research comes from the success of the PomWonderful pomegranate juice brand. Based in Los Angeles, the drinks brand had over $20 million US spent on research projects that support its health claims. This though, works best as part of an overall strategy. Given that the real strength of farm based food businesses is in their uniqueness and in the story that lies behind the product, an over reliance on science can be a misallocation of resources. Look at the below pictures. Both people advocate certain types of diet. Which has more impact and a healthier image?

A scientist

Elle MacPherson

Celebrity endorsement As important as scientific claims are, in today’s world there’s nothing like a celebrity endorsement to attract demand. And here again, in the UK the absence of a strong food culture results in a consumer base eager to believe what they’re told is a good thing by someone they look up to. There is huge possibility within the UK food market for celebrity endorsement. The limits are only imagination and financial resources. And while celebrity chefs provide a valuable service in promoting local foods and recipes, there is much more that can be done. Globally, the biggest British icons are its actors, musicians, models, footballers, and writers. These are rarely seen promoting food types, and seem to have little connection to farming. They could have, and should be used more effectively. Does the NFU have any link to the Football Association, or the British Academy of Film and Television? These are the types of external partnerships that UK farmers who target consumers need.

General Issues raised by the studies On farm processing issues With the current increase in demand for all natural resources, commodity production looks promising, but if historical trends are a guide, then farm size will increase, as will equipment, and staff levels will fall. This in the long-term means a very different agriculture; with low employment levels, bigger machinery, and fewer and fewer customers. So more industrial, and less in touch with consumers. For farming to enjoy the current level of public goodwill and political influence commodity production shouldn’t be the only way forward. The business model of the average arable farm in the UK is one that has historically needed a low level of investment in sales and marketing. Despite the recent rise in commodity prices, arable farming will continue to follow the historical agricultural trend towards lower staffing levels, increased mechanisation, and the consolidation of holdings to spread fixed costs and enhance returns. Unfortunately, this trend towards scale raises a number of issues, especially when the value of crops is low. The decline in employment in farming means a reduced proportion of the

population are involved in farming and are less connected to the production of food. As there are fewer farmers, they have less political influence – and without government and political intervention, UK farming would be very different. The market for commodity production looks promising for the future. There are two main reasons for this. One, it’s clear that globalisation has caused a rise in the worlds prosperity across all continents and an unprecedented level of demand for all commodities from rubber to rapeseed. Secondly, and reinforcing the rise in demand, concern about global warming has become a scientifically accepted reality. From this international policy has turned toward biofuels as a sustainable energy resource, and demand for soft commodities to produce biofuels has grown exponentially. This level of demand has not existed before, and is acting as positive support across the globe.

Future options So what are the options for farmers? These vary in the same way that each farm in the UK varies. If you have a great location, then there are numerous successful farm shops and leisure attractions to provide inspiration. England has the highest population density of any major country in the Western world. If you have great scale, then use it to produce more and more. And if you have an interest in food and marketing, then use that, either on your own, or in partnership with other interested producers, and take a consumer product to market. This may work, and give outstanding profits and public appreciation, and it may fail, and leave you with a depleted bank balance and public failure. Without some strategic advantage as a small producer, it will be increasingly difficult to survive. If this strategic advantage is permanent in the form of land, then it will be easier to prosper. But if this is not the case, then personal attributes have to be encouraged and developed. Training, education, and skill development have to be taken seriously if farmers are to add value and not be dependent on the fluctuations of the world cereals market and the whims of OPEC. It’s customary to look at arable farms as a group, applying standard yields and returns to each farm, and estimating benchmarks from that. If farmers are to enter the food market, then the standards are different – each business is different, with a real range of resources. So it is harder to quantify returns and opportunities. But it is possible to look at examples, and use these. If you examine the crops grown, then there are opportunities in the health food market. Wheat, barley, oats, and oilseed crops are all used by food manufacturing businesses as part of their healthy product range. Can farmers do the same? From my own experience, once you get beyond the local outlets and independent trade (farm shops, delicatessens, sandwich bars) to sell into the likes of Asda, Tesco, and Morrison's, is not an easy task. Market conditions change, as do buyers. How well the local food market

stands up to the drive for lower cost foods is crucial for the future of food producing arable farmers.

Processing The value of processing on farm comes through the marketing benefits that can be gained from having an idyllic location. In some cases it makes sense for farmers to process themselves. In many cases it doesn’t. It is expensive, time consuming, and an investment in plant and machinery that can depreciate rapidly. Cooperation and partnerships have to be thought through as part of any business plan. Not every farm processor can be as successful as Tyrrells crisps, but inspiration can be taken from them. Much value is created by food manufacturers and retailers who use the image of farms and farmers in their marketing message. This is another untapped resource available to UK agriculture – its intellectual property. Brands can be created from existing assets, but in each case the producer must look for their point of difference. Champagne, Jamon, and Styrian pumpkinseed oil do not use their name without the value reverting to the grower. Growers must work to develop their partnerships with other businesses, and figure out what their business does that adds value. The major barriers to arable producers becoming more involved with the food chain and adding value are: - Farm production needs a high level of processing to turn into a food product. - It's expensive to process, both in terms of investment in plant, and also to create a brand and get the finished product to market. - Primary producers generally don't have the skills and knowledge to add value in this way.

Functional foods Functional foods have often been talked about as the future for food production, with patented ingredients seen as a high return solution to a low margin commodity structure. The rise in probiotic yoghurts, cholesterol reducing margarines, and isotonic drinks all show how much investment has been made here. But food is not a market where the appliance of science is readily adopted and the recent GM debate has confirmed that there is a general mistrust of science, particularly when applied to food. It is crucial to plan carefully before promoting one specific property of any food type. The number of failed launches of functional foods shows how fast moving and challenging a market like this can be, particularly for primary producers. For every successful manufacturer of Bio yoghurt, there are manufacturers of oat milk and oil blends that haven’t had the same success – due mainly to a lack of consumer understanding, convenience, and taste. Time and again consumers show that they prefer buying food over science. As much of the success of farmer owned businesses can be attributed to the emotional connection that they are able to make with the consumer, following a purely science based

approach risks losing that positive emotion and competing on science terms alone directly with the massive research and development budgets of large food corporations. This market is one to be approached with care. This is not to say that UK agriculture should ignore science, just that it should utilise partnerships with scientific research wisely, and tailor its marketing message to consumer needs. The lessons of GM should be born in mind here, and the main selling point for farm businesses – their unique ‘natural’ story – should be protected.

Organic or not? Although organic producers and their lobby groups have been very vocal in promoting the claimed health benefits of organic food, there is no real evidence to support the claims. The Food Standards Agency regularly confirms the lack of evidence, and it seems that any benefits that are claimed come from a different type of husbandry rather than the lack of chemical inputs. Despite this, there is a loose connection in consumer’s minds between organic and healthy, and conventional agriculture can learn from this. There are leading companies (Innocent Drinks, Birds Eye, Pret a Manger) that have a reputation for healthy, excellent quality food without being organic. Their examples show that it is not always necessary to be organic to attract wealthy health conscious consumers. There are though, many lessons that can be taken from the success of the organic sector. The food marketing knowledge, skills, and techniques so often lacking among conventional producers are often seen within the organic community. There are combinations of reasons for this: a lack of scale, an open mindset, and the necessity for consumer involvement have all caused farmers to seek new skills and add value.

Distribution channels It’s unlikely that pure commodity producers will benefit in the long term from any changes in eating habits in the UK. Any value added is created too far away from the farm gate to make any real difference to commodity prices. Yet primary producers looking to move away from commodity production and add value must realise that the standard food/grocery market in the UK is as competitive as any in the world. This means that the products they supply can either compete with experienced food manufacturers – who themselves struggle against retailers buying strength – or reflect the more fragmented outlets that they can reach such as food service, snacking, sandwich outlets, and direct sales. The concentrated nature of grocery food retailing in the UK means that any plans to sell into that market have to be looked at through the eyes of the biggest distribution channel – supermarkets. When companies such as Weetabix and Gillette feel that they have to sell out because they don’t have the power to negotiate with big retailers, why should farm scale operations be in any position to compete? They often won’t be. The farm businesses that do prosper will not be the ones that compete on scale alone. To add value, investment - not always financial - must be made in creativity, innovation, and in branding, story telling, and giving organisations and products a point of difference. Food products are generally easy to replicate, and must be differentiated in order

to add value. This requires much more than working with a supermarket chain. Just because products are on shelf in a white warehouse does not mean that passion, brand loyalty, and added value have been created. Primary producers have to understand that the market for their products may not currently exist, so they have to create a market themselves. This process can be extremely expensive. Fortunately UK farmers have ready-made resources that are unavailable to most food manufacturers. For example, consumer goodwill, an attractive physical location, and close proximity to a wealthy consumer base. These can all be used as part of an individual or group of businesses’ marketing strategy.

Connect with consumers So how do farmers get closer to consumers? There are industry initiatives available, including the Food Chain Centre, which provides access to research and knowledge based on TNS data, derived from Tesco customers shopping habits. Other ways of gathering knowledge range from being involved with local food groups to attending food events and selling direct – such as at a local farmers market, or from the farm gate. If farmers are serious about adding value to their products, they must be as involved as possible with the consumer. This leads to the consumer having greater emotional connection to agriculture and a respect for food, which can create a virtuous circle where consumers demand a higher standard, and are aware of and willing to pay for the extra value. Globally, public knowledge and awareness of food leads to healthier populations and increases the value of the food that is returned to the grower. The UK should not be left behind here. In addition, for an agricultural industry that needs positive publicity, it has to be a good thing to be seen to be providing healthy and thus socially responsible products. There are opportunities for farmer owned and farm based businesses to prosper from changes in eating habits, but they are not available to everyone. The changes to business structures and changes in mindset required will be beyond the scope of many. Those that do succeed will have a combination of assets in their favour that include personal skills and geographic location. There will be opportunities for larger businesses and cooperative organisations, but there are also opportunities for smaller, more flexible businesses, which have clever people but less financial and physical scale, and are thus less constrained by their current systems.

Recommendations and conclusions Development of food culture −

My travels and studies showed me that the countries that have the most ‘diets’ including the USA and the UK are those that have the most dietary problems. Conversely the Mediterranean countries and China, where food has a real place in society, have a

relatively healthy population and traditionally less time for fad diets such as Atkins, Zone diets, and diet gurus selling supplements. −

A lack of emphasis on the process of food preparation and too much focus on ‘healthy snacking’ and ‘meal solutions’ rather than the origin and provenance of food seems to have lead to an extremely unhealthy situation for consumers and farmers.

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Developing the food culture of the UK has to be the foundation of any British farming and food initiative. It is a sound approach for the nation, socially responsible, and enhances the reputation of British farming. This enhanced reputation helps not just speciality food producers. It adds value across agriculture, through facilitating a better negotiating position with policy makers, greater consumer appeal, and easier media access.

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It also means that other interested groups can’t move into the marketplace for UK food and take market share from conventional agriculture by undermining it’s reputation and practices. Too often conventional arable farmers see their roles as purely commodity producers. This is a common view, and ignores the benefits that farming receives from society and the benefits that commodity producers receive from their association with producers of food and environmental goods. These are widespread and include public goodwill, and an enhanced lobbying position nationally and across the EU. - The benefits of initiatives like open farm Sunday and improved access to UK farms help to reconnect agriculture to the rest of society. Ground level marketing and promotion like this adds value to UK production by cementing in the mind of the consumer the positive nature of UK produce.

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The story that farmers can tell about their products should not be wasted. UK farming has in its diversity and stories about individual producers the basis of a great brand. The stories that food retailers tell about their producers are tremendous sales tools.

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When entering the food manufacturing business, perhaps the biggest attribute that farmers have is their story. Consumers love it, it is something that other businesses would love to have, and it has a real value that is being given away by farmers to the processors and retailers. And although farmers may not currently have the knowledge and skills to appropriate the brand value of UK agriculture there are ways to access them. Agriculture has been guilty for too long of resting on its laurels, and being too slow to change. If there’s a good thing to have come out of the recent low commodity prices, its been that people have had to be creative and been forced to look at new ways of doing things, have had to reconnect with the rest of the economy, and at new ways of getting the best out of their existing assets.

Here in the UK we have a modern and sophisticated economy, some exceptionally talented and creative people, perhaps the worlds best designers – the Olympic logo excepted. But in terms of fashion, media, technology, sport, and architecture, Britain has companies and individuals that lead the way. Partnerships should be forged not just within agriculture, but also with groups and industries that agriculture can learn from. Just for a moment think how hard it is for an Australian or New Zealander to have such talent and demand within a few hours drive. So product ideas are available to us through inspiration from consumers and the media, we

have the means to test new products cheaply through farmers markets and the growing farm shop network, we have the media to help promote the products, and the capability to promote them lies in farmers hands. We’re so close to such an affluent market, and this should provide an opportunity for UK farmers to sell food direct and to thrive. There is a real demand, a real market, and the resources local to the UK to make farm based businesses that put the market first thrive and survive.

Edward Sweeting [email protected]

Personal reflections When researching my study, I've been struck by the interest shown in my own business, and how the report I've produced and the conclusions drawn have affected it. Well, the lessons learnt have been that it may not be wise to expand the business too far with our current product range and staff. We're based in a very rural area, with limits on our financial capacity and availability of staff. In order to effectively sell products through the food chain the marketing proposition for the consumer and retailer has to fit with their aims and plans. Our current product range was designed to fit on the delicatessens shelves as something different, innovative, and suitable to be bought as a gift. This does not translate well when put alongside cans of beans, multi packets of crisps and other staples. The slow dance with major retailers is too much like a slow smother for my liking. So we needed to have a rethink. It would be great if we had customers outside the door. But it's rural here. Unfortunately, it's four miles to the nearest shop, and if there are 10 cars drive by in a day the road is busy! A 'direct to the consumer' sales model, using online technology and catalogues is the next stage. We'd like to sell healthy food products all over Europe, but on our own terms. Commodity production is one thing, to really add value to a small part of the crop we'd like to sell it direct. The Nuffield experience has equipped me with many great experiences, friends, and hopefully with the perspective and the clarity to see that many customers can be better than just four.

With thanks for their time and contribution: Many thanks to all those who helped with this report, some of whom I have named below as a guide to the range of contributors. All your help and guidance was much appreciated. Spain Habib Essid –Executive Director, International Olive Oil Council Antonio Caravaca. Jamon Production China Chen Zhiangliang. Grower. Nanjing Ma Yanjung, Farmer, Shaanxi Province Venetia Paillard, International Food Buyer, City Shop, Shanghai Director, Song Minsheng, and all staff at the Department of Commerce, Shaanxi Province General Manager, Xi Ziwang. UK Amanda Ursell, Dietician, Journalist. Sunday Times, GMTV Jim Dowling, Creative Director, Ogilvy Public Relations EMEA. Fiona Richmond, Slow Food UK Dean Cook, Central Science Laboratory Austria Eva Holzschuster STEIRERKRAFT Tom Muller. European Marketing Director, Carpe Diem / Red Bull GmbH USA Randii Macnear Davis Farmers Market Karla Stockli, VP of Marketing, California Raisin Marketing Board Angel Mexa, Marketing. American Apparel, Los Angeles Mike Benzinger, Benzinger Winery, Sonoma County Marsha Guerra, Chez Panisse, Berkeley, California. Dr. Marian Nestle, Professor and Chair, Department of Nutrition and Food Studies, UC Berkeley Fiona Posell, VP Corporate Communications Pomwonderful Gabriele Ludwig, Almond Board of California.