Economic Challenges & Sustainability - Princes Trust Presentation

Economic Challenges & Sustainability - Princes Trust Presentation

• 1.
  Economic challenges andsustainability Janet Dwyer Professor of Rural policy Director, CCRI, University of Gloucestershire
• 2.
  Outline • Challengesand future trends, global and local • Sustainability: why aren’t governments taking it seriously? • Learning from practice – identifying ‘business success’ • Lessons for practice and policy
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  Food Biodiversity Habitats Economic Viability Climate Change Resource- management Bioeenergy Biomass Supply Chain Integration Agri-Rural Challenges and Opportunities (thanks to Martin Scheele, DG Agri, European Commission)
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  Economic outlook (afterPiketty, 2014) • After the turbulence of the C20th, we are returning to a global pattern of relatively slow growth • Most future growth will be where populations grow – in the developing world • In the developed world, low growth and population stasis will combine with diverging incomes (bigger gaps, rich and poor)  Successful (developed) economies will be those which can reduce these disparities, become more efficient in using resources, and maintain well-being, in a ‘steady state’ – we cannot expect to grow our way out of difficulties, indefinitely
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  Food demand: Projectionsto 2050
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  Food demand &production FAO, 2012 • Global demand for agricultural products will grow 1.1 % a year, to 2050, and 0.4% a year after that (half the rate of past 40 years) • The growth in world food production needed to meet demand will be lower than in the past • Main demand growth and ‘natural’ potential for production increases are in the developing world • Climate, water and social/governance issues are the most likely limiting factors • ‘Global resources are sufficient, but the devil is local’ • challenges for sub-Saharan Africa, parts of Asia and South America where persistent low yields and marginal land coincide with high population growth
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  Increasing, volatile prices 0.0 50.0 100.0 150.0 200.0 250.0 300.0 350.0 400.0 1/1990 10/1990 7/1991 4/1992 1/1993 10/1993 7/1994 4/1995 1/1996 10/1996 7/1997 4/1998 1/1999 10/1999 7/2000 4/2001 1/2002 10/2002 7/2003 4/2004 1/2005 10/2005 7/2006 4/2007 1/2008 10/2008 7/2009 4/2010 1/2011 Real Food Price Indices (2002-2004=100) Food Price Index Meat Price Index Dairy Price Index Cereals Price Index Oils Price Index Sugar Price Index Source: http://www.fao.org/worldfoodsituation/wfs-home/foodpricesindex/en
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  Growing energy demand = Growing competition for non-UK energy from fossil fuels, but much uncertainty over pace, supplies and price trends
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  Future energy prospects • Uncertainty: in USA and Europe, short- and long-term debt remains a key concern for future growth in demand (USEI, 2014); in other key nations, unrest / conflict likely to trigger price volatility • This affects estimates of future energy prices, e.g. Oil: – World Bank predicts 10% decline 2010-2025; – IEO predicts 60% growth, 2011-2040: – DECC projects a range -20% to +80% by 2030, • Climate change factors will be influential (affects both supply + demand)  Likely sustained growth in renewables
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  Farming and energy ‘Energy can be an important driver of the cost of agricultural production. This reflects the cost of fuel used for machinery and transportation as well as the significant energy-cost component of key agricultural inputs such as nitrogen-based fertilizers made from natural gas. Overall, energy accounts for 15-30% of the cost of crop production.’ MGI resources survey, 2013
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  highest negative impactsignificant negative impact some negative impact no/marginal impact low positive impact n no/limited data ESPON CLIMATE study EU regions: climate change vulnerability Demographic change will exacerbate pressure points: coastal settlements in north, water stressed areas in south, will see growth from in- migration
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  Climate ‘hotspots‘ -Key issues for agriculture and forestry Impacts • Crop yield – increases from warming / limitations from droughts or flooding ( more variable) • Increased severity of flooding, coasts and river basins • Increased intensity and frequency of forest fires • Soil erosion, from more drought and/or more extreme events (floods, fires, storms) • Rural economic vulnerability (e.g. tourism declines / is limited) Mitigation needs • Protecting and building topsoil-C, both mineral and peat soils • Reducing methane emissions from livestock and manures • Reducing N-O emissions from cropped soils and manures • Producing renewable energy (AD, solar, geothermal, wind, hydro)
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  Implications for ruralactivities & resources • Agriculture and the whole food sector must become much more resource-efficient: fewer non-renewable inputs, conserving carbon, soil and water, reducing or eliminating waste • The multifunctionality of rural space must be maintained and increased: embracing energy generation and non-food products / activities, plus sustained use for food production (these demands will not diminish, but grow)
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  The paradox: foresightvs. response The challenges are widely recognised, but global and national responses are inadequate: – preoccupied with public debt, ‘Growth at all costs’, market liberalisation and globalisation – capital-intensive production, decreased labour use, spatial concentration of sectors, dominance of a few large outlets, considerable movement of inputs and outputs across countries – environmental management policies conflicting with farm business drivers / goals, bureaucratic, standardised, incoherent across landscapes Based upon old models of economic development and business success, ‘trickle down’ theory, ecological blind-spots / technological optimism, silo thinking –politicians and societies are unwilling to change these habits - or at least, too slow to do so How to achieve more? Let’s re-think from basics…..
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  Challenging norms: ‘Tobe more profitable, get bigger and specialise’ - general pattern since 1950s, supported by sector GM analysis BUT • Weak / no correlation between profitability and scale now, in many sectors (e.g. Dairy, grazing livestock, high-end fruit & veg) • With different tactics and markets (adding value, vertical- integrated, diversified), big can mean vulnerable or stretched • Evidence shows knowledge, management skills, understanding markets, are more important • Under uncertainty, economies of scope give resilience, outputs cross-subsidise one another, better use of labour / fixed costs • If dealing direct with end-customers, a more diverse offer is more attractive (e.g. farmers’ markets, online sales). • Need to recognise varied land capability, to use it best
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  ‘Business success meansgrowth, in turnover and profits’ BUT Business goal: maximising, or making a satisfactory return? Security/ resilience: the customer relationship is vital – trust, quality, responsiveness; offering a ‘buying experience’; can pay longer-term dividends (stability, market development / growth and new opportunities) Good business is a long-term concept, especially in land use - aim to hand on to the next generation in ‘good heart’ • The business has to suit the family / people involved • Business needs to be rewarding socially and reputationally • Well-being may come from knowing you’re doing something right for people, for nature: giving something back • The state of the environment is part and parcel of farming well These are sound business ethics upon which to build: policy and practice need to acknowledge this
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  www.dairyco.org.uk/datum/dairy-processing-trade/dairy-supply- chain-margins/liquid-milk-margins.aspx Howperfect are agricultural markets? Do farms have enough influence over prices? Do processors and retailers reflect consumer interests? Do consumers understand what they buy? Where they are not perfect, what actions are needed – In the food chain? In policy and regulation? In skills and training?
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  Examples of ‘triplebottom line’ business success • Direct sales, local sourcing – dairy, vegetables, flour/milling, woodfuels • Community shops • Soil management groups, ‘min-tillers’, grass-fed livestock groups • Care farms UK – delivering health services • The ‘Agriscôp’ experience – farmer-led learning for diversification / production • Retailer partnerships: Waitrose and LEAF Econ Env’t Social √ √ Some √ Some √ √ √ ? √ (non- food) Often √ √ Not yet √ √ √ √
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  PlanningDiscussing Scoping InvestingRealising Key needs: time, skills, resources, confidence
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  Recipes for amore sustainable future Markets are an ‘ecosystem’ of varied operators and styles – need to embed sustainability in the business, innovate in products, marketing and management • Learn from early innovators – many existing rural businesses are highly successful; many ‘green business’ models now, in sectors including fuel/energy, food & drink, leisure and well-being • Make the links – strengthen farmer networks, exchange ideas and experience, support ‘triple-bottom-line’ thinking, continuous improvement • Supply chain relations will make or break sustainability – encourage vertical partnerships based on mutual respect, shared knowledge, reciprocal commitment (risk-sharing), ethical pricing • Use social media: opens up new options for learning, promoting, and finance (more flexible than conventional channels?)
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  How can policyhelp? • To encourage sustainable practice, it must enable and underpin, as much as regulating – facilitate integration into farm and forestry business models • Risk-sharing: give more certainty in medium-term governance & support, continuity in delivery (trusted, long- term staff) – this is an investment in behavioural and business change • Prevent audit-led, distanced policy design (bureaucratic, inflexible, inefficient) • Foster learning communities, between officials, scientists, farmers, NGOs:- not prescribing detailed action; allowing experiments, developing ideas, listening to practitioners • Offer more outreach for the disengaged, personal contact, quick wins, better feedback