Local collaboration gives rise to premium prices
Opportunities still exist for farmers to capture a premium price for their products above their pure commodity value, chairwoman of the Food Chain Centre Joanne Denney-Finch told the Oxford Farming Conference.
Research showed that 70% of shoppers were already buying local food and almost 50% said they wanted to increase the amount they sourced locally.
Another 31% put quality and taste ahead of price when assessing a product’s value.
“Lots of farmers have raised themselves above the commodity markets and trust me, there is still great scope for others,” she said.
There were also opportunities for the whole food chain to take out costs to boost incomes.
“We’ve found that typically around 20% of costs in the chain are unnecessary,” said Ms Denney-Finch.
“They include physical waste, damage, distribution inefficiencies, admin snarl-ups and forecasting errors.”
That 20% exceeded the total profit of most food chains, she added.
Sion Roberts, chief executive of English Farming and Food Partnerships, said farmers should also collaborate more to capture a greater share of the food chain value.
Over the last 15 years the size of the UK food industry had grown from 60bn to 111bn, but over the same period, farming’s turnover had been static at about 15bn.
Collaboration could take many forms and had been shown to drive down costs and increase farmers’ selling power.
Mr Roberts said there was a clear willingness for farmers to collaborate.
A survey of 400 producers had revealed that 75% wanted to co-operate, and over the past 12 months the output of collaborating businesses had grown by 1bn, or 28%.
“That’s the greatest increase we’ve ever seen.”
Colin Smith, chairman of Assured Food Standards, said it was also essential to convince consumers of the virtues of British food over imports.
The Red Tractor had laid the foundation, but it was also necessary to understand what influenced their buying decisions.
Research by AFS had found that consumers buying Red Tractor products did so because they liked the idea of collaboration along the food chain, and the fact it was independently audited.
