In ten years time the market for farmers in Dutch supermarkets will look different from today. Bulk products – anonymous supply from industrial (animal) production – will not be the main product offered in the supermarkets any more. The relation between farmers and supermarkets will change dramatically. The market for specialty products is rapidly growing, and this will actually be the main trend in the near future.
Main trends in fresh food chain
This is the outcome of the study ‘All Markets Included’ (‘Van alle markten thuis’) by the EFMI Business School, commissioned by the main Dutch farmer organization LTO together with the major supermarket chain Albert Heijn. The aim of the study was to review the present and future trends in the fresh food chain in the Netherlands. The study (unfortunately only available in Dutch) especially looked at the consumer trends, partnership models of consumers and producers, as well as value addition, which together promote the sustainability of fresh food chain.
Bulk products from large-scale and specialized production units currently fill Dutch supermarkets, and 70% of these products are exported. But times are changing. Niche markets are growing in importance, both in the Netherlands and other European countries. The three main drivers of the current change from bulk-production to niche products are: (1) changes in consumer preference and demand; (2) the expected lack of fresh produce; and (3) supermarkets wanting to distinguish themselves.
By far, most meat in the Dutch supermarkets today originates from industrial livestock keeping. But trends are changing!
Only 60 years ago, the agricultural landscape in the Netherlands was quite similar to what exists today in many countries: large numbers of small family farms that combine various crops with different species of livestock for milk, meat, manure, traction or transport, and also serving as cultural manifestations. Marketing was done directly at the farm gate or through small shops.
Since the 1960s Dutch agriculture has gone through a complete metamorphosis. Major government support was used to protect internal markets, providing easy access to credit and subsidies for the use of chemical inputs. Besides phenomenal growth in food production – milk production of an average dairy farm increased from 37,000 to more than 500,000 litres between 1960 and 2007 – the social effects have been equally phenomenal. Over 90% of the farms has had to close down – and employment in the agricultural sector was reduced 18-fold.
Moreover, this process of specialization and scale enlargement in agriculture implied a change from local marketing to the dominance of the four major retailers and supermarkets that we have today. Today over 90% of the Dutch citizens go to the supermarket for their basic needs in terms of food.
New relations between farmers and consumers
The complete dependence of farmers on supermarkets culminated in 2012, when the major supermarket Albert Heijn sent a letter to the farmers indicating that it had unilaterally decided to pay 2% less for the produce than what had been agreed upon. This resulted in numerous protests by both farmers’ and consumers’ organizations. The supermarket chain had not been able to fully understand the rapid change that was going on in the fresh food chains, with more direct marketing and linkages between consumers and producers. (see also blog News Ways of Marketing based on an Old Tradition)
This incident also stood at the basis of the current study All Markets Included. It shows that even in a highly urbanized country as the Netherlands – niche marketing is the future. Supporting such niche marketing initiatives may be one of the best ways to invest in the future of family farming and in the future of the planet.
In September 2012 the uni-lateral decision of supermarket Albert Heijn to reduce prices paid to farmers by 2% led to joint protests of consumers and farmers in front of the major supermarkets
Gradually the relations between farmers and consumers are changing – as the awareness of the origins of food is growing…
Over the last few years special products from local breeds have become more important in the Netherlands – increasingly being promoted by famous cooks and popular journalists
Niche products provide opportunities – but require special expertise
The new trends towards niche-marketing implies special opportunities for smallholder and pastoralist livestock keepers; those who have built their livelihoods on local livestock breeds. This opportunity has already been highlighted by the FAO in 2010, in the Animal Production and Health paper no. 168, entitled Adding Value to Livestock Diversity – Marketing to promote local breeds and improve livelihoods.
“These local breeds are hardy and disease resistant, and can survive on little water and scant vegetation. They can continue producing meat and milk in areas where modern, imported breeds succumb without expensive housing, feed and veterinary care. They enable people to earn a living in otherwise inhospitable areas, and embody valuable genetics for future breeding efforts. Nevertheless, these breeds are in danger of disappearing, pushed out by modern production techniques and out-competed by exotic breeds. Finding niche markets fort heir products is one possible way of ensuring the survival of these breeds, and enabling the people who keep the to earn more from their existing lifestyle.”
But niche marketing has special challenges that need to be met. According to the same FAO report the four main challenges require improvements in: (1) Animal production; (2) Processing; (3) Farmer Organization; and (4) Building value chain with the market. Fortunately new techniques are available to support this process. For example traceability systems, that can guarantee the background of niche products for consumers.
The recent report All Markets Included – has concluded that niche markets are growing, but require new expertise from farmers. Luckily this experience is growing by the day – through joint efforts of both farmers and consumers
The growing trend of niche marketing of animal products provides new opportunities for farmers throughout the world. Such special animal products are usually based on local animal breeds – kept under specific local circumstances – and fetch good prices.