Transcription

• Speaker #0

  I think that it's time for the farmer to be properly valued for what they do, not only in the farming ecosystem, but at the community level, at the country level, in terms of what we say in economy, positive externalities in terms of health of people, health of the environment, biodiversity and everything. So I think this is really something that is undervalued today.

• Speaker #1

  Why do you think that is? Why are we not valuing farmers as much as they deserve to be?

• Speaker #0

  For me, the biggest reason to that is that we have considered the farmer in this industrialization as an industry. And the farmers and the farming in general is not an industry. We are more than any other sectors working with nature, working, feeding people. And so it's a very complex sector that is not really comparable to an industry, an industry that is transforming a product A into a product B. Farming is about cycle, recycling, and about bringing a lot of other value than just producing a product in the community.

• Speaker #1

  Yeah. I think I understand what you're saying here. We've been considering and treating farming as a purely extractive activity in the same way we consider mining coal, for example, from a coal mine. Yeah. where... the farmer's only purpose is to mine the soil and to produce food from it. But actually, farming is a lot more than that. Farmers are the interface between society and the living world. And the work they do also impacts the climate, it impacts biodiversity, it impacts water cycles, the landscapes that we love to see when we go on a walk in the countryside in the weekend. And so farmers are not just a productive tool that's... is there to be squeezed as hard as possible so that it can produce as much food as possible for as cheap as possible it's a lot more than that and when not at present time considering enough all of these other benefits of farming activities on

• Speaker #0

  society on the planet on the ecosystems yes yes i think so and uh and i don't want to be um fighting for the image of the farmer. I want to fight for the profitability of the farmers.

• Speaker #1

  There's the total value created by the entire supply chain. And maybe the value, the part of that value that goes to the farmer is not high enough.

• Speaker #0

  When you analyze that in different value chain, you will very quickly discover that the costs... of the farming activity in the final product of many different products. I'm always using the case of the barley in the beer because we like that in Belgium. But the barley costs in a beer, it's ridiculous. This can...

• Speaker #1

  Ridiculous how?

• Speaker #0

  If you take one liter of beer, the contribution of the barley cost into this liter of beer will be around 2 to 4 euro cents per liter of beer. Think about the value of a liter of beer. I let you make the calculation and realize how small this is. I used to say that it's, of course... um a disappointing news for the farmer to realize that actually his contribution into the value chain is nothing but this is also an element of optimism because it means that rewarding the farmer properly or significantly higher depending of what the good is doing to the planet to the soil to the community is actually not as difficult as we intend to think.

• Speaker #1

  I see. If you look at it this way, if the farmer is getting such a small share of the final value of the product, paying the farmers a lot better, even let's imagine twice as much in the case of barley here, would mean that... the total cost of producing that litter of beer is only two more cents right right it goes from two cents to four cents if i'm doing the math right yes yeah and so there's a real opportunity there to actually reward farmers who farm in a way that is taking care of nature ecosystem the soils biodiversity and all of these things that we really need uh for exactly and and and you know um

• Speaker #0

  I'm not saying that, again, to negotiate with the rest of the value chain and to say, OK, we want more money. I am really convinced that things have to change in farming. So there is a lot to do. And we're going to talk about that when we talk about region ag. So it's not that the farmers would be rewarded for just. the fact that he has been doing hard work for the last 30 years and so on. No, it's about the future. And I think that if you there is a possibility in the market, to my view, to reward properly the farmer for the change he will bring to incentivize also properly the farmers for farmers who are not convinced that they should change without automatically ask to the consumer to pay a huge contribution or to increase drastically his spendings. Of course, beer is an extreme case where these costs of the farming part is very small. But if you look at the bread, for example, if you look at the other crop, you will Most of the time realize that the farmer's contribution into the final product in terms of cost is small. And that's actually if the farmer increases costs or the value of his product to the first buyer in this value chain, the reflex of the buyer, the first one and the next one, would be to take a margin on the premium that the farmer would receive. the change he's bringing and the next one will take a margin on the margin and so if we are not really careful about keeping this premium in the pocket of the farmer and avoiding to inflate this premium an increase of price for the farmer will always end in a quite important increase of price for the consumer. I don't know if you understand.

• Speaker #1

  Yeah, I think so. I think I understand. Can I maybe try and re-explain this with my own words just to see if I understood this correctly? So when a farmer is producing food in a way that is regenerative or organic or both, that farmer is making an extra effort and is taking extra risk. And therefore, it makes sense for that farmer to sell their produce with an added premium. So let's take an example. I'm going to use completely made up numbers, but just to make the point, right? So let's imagine a farmer who's selling a product for one euro and decided to add a 20% premium because he or she is farming in a regenerative manner. So that farmer is now selling the product with a 20% premium at one euro and 20 cents. So you would think that the final consumer buying that same product at the supermarket at the end of the chain... would pay 20 cents more. So that premium from the farmer. But what actually happens is that every step of the value chain inflates that premium. And so the final price for the consumer is really high. a lot higher than the 20 cents added value for the farmer. And that makes the product much less attractive and that creates a lot less traction in regenerative products and farming. And same thing goes for organic. Is that sort of right?

• Speaker #0

  Yeah, it's exactly what I was trying to explain. So the conclusion of this simplistic calculation, which is a reality, is that the consumer say, Okay. Oh. people we say very nice what the farmers are doing very nice this concept of regenerative agriculture or organic agriculture but too expensive only the rich or the richest part of the the community is able to afford it which is actually not true if we look at who has made the the change and the effort and has taken the risk the rest of the value chain will definitely have a little bit more cost to isolate the batches of grain to communicate to certify whatever but nothing compared to what the farmer has put in terms of risk effort investment yeah so the big share of this premium if we call that a premium should go back to the pocket of the farmer obviously without impacting too much the consumer yeah yeah makes a lot of sense doing

• Speaker #1

  this podcast and releasing new episodes every single week it's a lot of work and it's actually a full-time job for me right now and I couldn't do it without the support of Soil Capital. So I just want to thank them for supporting me and my vision and my work doing this podcast for the last two years already and for giving me the total freedom to choose my guests, to choose the topics, to choose the questions. So yeah, just a little moment of gratitude towards them. And towards all of you who are listening to the deep sea, thank you so much as well. Let's get back to this conversation before I start to annoy you and you decide to skip to something else. Let's go.

• Speaker #0

  So Cultiva is a cooperative we created seven years ago, I think, when we actually realized that having implemented region act practices in a certain number of farms in the region here, in the center of Belgium. Having achieved savings using more efficiently our pesticides, reducing the tillage and reducing the fuel consumptions, having basically achieved 70% of the potential of the savings and the cost benefit of those transition, and having also spent a lot of time investing in new practices, taking risks to develop that, to adapt that to the region. we were still selling our crop and our clients were still selling their crop in the same channels as a conventional farmer. And so we as agronomists, consultants, farmers, we should develop a different link between the farmers and the consumer and between the regenerative farmers and the consumer. We should try to create... some value also. And so we very simply decided to talk with a few small craft breweries around us because there was a development of these new industries in the region here. So I asked guys if you would be interested or not to have local barley produced with Regenac principles. And very quickly, we had one or two guys interested. to do that. There was a brewery close by here called Valduc. Another one also was very interested. And so we started selling them a few tons of barley to produce beer. We had a collaboration with Moultrie to do that. And actually very quickly we understood that this was a good way to go. because there was a certain traction from other breweries. The mortar was between the farmer and the brewer and that we were working with Bortmelt was also interested to continue to develop this idea. And we had actually one... employee of this big malt tree, Bortmald, was really interested to understand about regenerative agriculture. There was a personal interest into that and Alexander decided to try to advocate and to speak to his clients who were buying malts, so the brewers, about Regenac. He did a good job and very quickly we went from 30 tons the first year to 100, 200, 500. And now we're going to produce a few thousand tons of regenerative barley. And this was actually the beginning of the cooperative. In parallel, we also realized that producing and storing barley or cereals to sell to the industry is also something that you have to do professionally. You can do that. You can do one trailer and store it in your warehouse. That's no problem. But if you have to store more, you have to build infrastructure. That was one important conclusion from the beginning. So having the facility to do that. Second important observation is that you can't do that alone. one farmer as we were doing at the beginning we were just working together with one friend, Nicolas again, producing his barley for one brewery, you can do that one year, two years, but the day we don't have the quality to deliver, you have a problem. And so the idea of collaborating with a number of farmers to de-risk this project and also to ensure to our growing brewers that we're going to have the quality year after year and that the day they're going to print. on their stickers that it's local regenerative barley used for the beer, we will be able to continue the production every year. So that was an important factor to scale, is to put farmers together, not only to share that with many farmers and to have a bigger impact, just for the security of supply and quality. So that was the two elements we faced when we started. uh the cooperative yeah and so how has it gone so far you how many farmers do you have now in the cooperative today um so as i was as i said we increased the volumes to a few thousand tons are we going to reach 10 000 tons uh soon of production uh and uh we've been very surprised because our we've developed uh storage and and sorting cleaning activities as well but those uh infrastructures are not big enough so we are partnering with other merchants or cooperative to use and death farmer also to produce for the different industries we are working with so the barley was the start but we also for the last year developed partnership with other industries agro industries so we now work with people who are using wheat for the flour and the bread. We're working with people using oats to do milk. We are also working with people who are using spelt, rye, and different...

• Speaker #1

  So there's some connections being made with other actors trying to do something similar to you, but in different fields with different crops. And there's sort of synergies between you.

• Speaker #0

  Yeah, and I think the first idea is and was to enable a regenerative farmer to value not only one crop, but several crops into a dedicated value chain. So that was the first idea. The second idea was also to bring to the same table a certain number of agro-industries. and hopefully this is not completely materialized today but to create some synergies and some common way of measuring regenerative agriculture, defining a premium for the farmers, and to have that together with these industries and not having Danone that we work for, for example, would define a certain framework and having a Puratos, we work with them as well, would define also another way of measuring and a different way of to be in relationship with the farmer. So the cooperative wanted to try to make the link between those different agro-industry and the different farmers and the different production. That was also an idea to try to contribute to certain harmonization of the way we produce, the way we build those value chain. And we're working today with a little bit more than 100 farmers. So more Yes. The footprint of the cooperative would be around 10,000 hectares today, 10,000, 15,000 hectares.