Will the market pay more for welfare?
High-tech webinar navigates the issue and what it means for farmers
Posted: May 29, 2014
Does enhanced welfare translate to a higher price point? Photo credit: Canada Beef
It's a deceptively simple question that encapsulates many complex and difficult realities for livestock producers and their industries.
Several key viewpoints were offered during a recent major webinar on animal welfare and the food industry, presented by World Society for the Protection of Animals (WSPA) and Canadian Business for Social Responsibility.
The high-tech session, connected via both the web and in-person TelePresence conferences in four Canadian cities - Toronto, Montreal, Calgary and Vancouver - featured an expert panel that delved into a number of hot button topics. It started by quickly honing in on perspectives around the 'Will the market pay?' question.
Balancing risk and opportunity
"We have a core belief that we want to move the world to protect animals," says Martin Cooke, International Head of Corporate Engagement, WSPA , who joined the session remotely from London, England. "In saying that, we recognize that any solution that improves animal welfare fundamentally has to be right for business as well. What often happens is that businesses move toward thinking about animal welfare because they see the issue as a risk to reputation or to production. One of the messages we'd like to get across is that there's also a great opportunity."
Fiercely competitive retail market
This message resonates with a broad and steadily increasing number of major food companies that are paying close attention to the rising consumer interest around welfare and other 'social responsibility' attributes, says Rory McAlpine, Vice President of Industry and Government Relations, Maple Leaf Foods. Finding the right balance between risk and opportunity can be extremely challenging, particularly when decisions involving welfare-enhanced standards carry heavy implications for supply chain logistics and overall competitiveness, along with relationships with producers.
"Certainly no consumer meats company today, such as ourselves, can be anything other than very conscious and concerned about welfare," says McAlpine. "We have to be involved in continually trying to improve practices. At the same time, certainly in North America, we face a fiercely competitive retail market with a wide range of consumers, and a supply chain that's under a lot of competitive stress."
It's not easy to decide how best to adapt, and willingness to pay is a major hurdle, he says. "Finding the right balance is challenging. How do you incur a potential increase in cost, or take on issues to manage, but maintain workable price points at which ultimately consumers will purchase the product?"
Social media age drives pace of change
Steve Easterbrook, Founder of Rabbit River Farms near Richmond, BC, brought a unique, long-term perspective as a pioneering producer in bringing forward organic and welfare related innovations with his egg business. Getting a comfort level, he says, is a process that hinges on trust and is accelerated in today's hyper-aware new media environment. "Today more than ever people's choices are value-driven," he says. "There's a fear among retailers that they'll introduce a product that is more expensive than their competitors. In the early days, that withheld the buy-in of moving up to a better welfare product."
What do the trends mean for Canada? Photo credit: Canada Beef
But today there's far more awareness on all levels. This is building demand and trust, says Easterbrook. "Parallel to 25 years of evolution of animal welfare awareness and improving practices is a more exponential evolution of communication. The combination of those two things creates the consumer behavior. Price point is important, but how many of us with children have a request from their child to buy a cheap mobile phone as opposed to an iPhone or Samsung. Everybody is driven by what's around them, what they're aware of, what they learn from. Today social media is a big factor and awareness of welfare and other social responsibility attributes is higher than ever. So cost alone is becoming, in our era, less important."
'Band of reasonability' to innovate
As a result, today there's a much wider "band of reasonability" to innovate, says Easterbrook. "If you're within that band and you communicate well, an informed consumer will choose your product even if it's higher priced than a conventional product."
The panelists recognized that for many producers the debate around welfare pressures is primarily one of business viability and the need to have reasonable time, cooperation and assistance to adapt effectively.
"There's no question welfare enhanced systems by and large cost more. But there is also added value that is being recognized in the marketplace," says Cooke. That certainly has been the case in Europe, he says, and a similar evolution is anticipated in North America.
Bringing producers 'along in the journey'
Retailers and other food companies that communicate with their supply chain well in advance of change, and provide an opportunity for them to 'come along in the journey,' are much better positioned for success, says Cooke. "I used to work for Tesco. And in that period our approach was very much a conversation with producers. We can't do this alone. We can't impose this sort of thing on producers and it's got to fit with their capabilities to produce.
"But at the same time change has to be led by the market. The market will take it there and we need to work together to address what the market wants."