Autor: Nuno Martins Neves
The price of milk paid to producers is one of the great battles between production and industry. The price has been falling recently. Is the producers' demand fair or does it reflect the international market?
Last year there was a very strong rise in the price of milk, first in Europe and then in Portugal, and now the opposite is happening. Since the beginning of the year, Europe has started to drop its prices and Portugal is following suit.
What I say to producers - and this is the big discussion - is that the industry ends up having little control over the price, because the market shapes the price. And the market has to do with demand and supply and the capacity for innovation and competitiveness.
Once producers internalize that the industry has little control over price formation, this will be the strongest way for us to work together. The producer does not control the price, the industry has little control over the price, so we have to work on what we can control, which is production costs, our ability to produce in a different way, more in line with consumer demands.
The price of milk will rise and fall more frequently with the end of quotas. Success will therefore lie in changing the mentality of not focusing on price. Of course, the producers' demands are fair and I don't question that: production costs are high, there are more efficient and less efficient producers.
We know that the subsidy part plays an important role in shaping the total cost and, therefore, these policies have to be in line with creating value. If the industries are successful, the price will necessarily be better.
Do you think regional public policies have been the best?
It has been Bel's battle in recent years: there was the end of quotas and the policy has remained the same since 1986, when we joined the then European Community. And that is what we think needs to change. What do consumers demand and value today? It is essential to create policies along these lines, to bring in a higher level of animal welfare, to bring the issue of CO2 emissions into farm management, to bring in the issue of management with fewer external product inputs - as far as possible, of course - to bring in an increase in milk solids. In our opinion, the whole policy has to be transformed in this direction. What is still lacking in the Azores is the ability of the various stakeholders to come up with a strategy to get value out of the money that is invested - and which is necessary.
Continuing with the policies we have had for over 40 years has led us down the path we are on now. We need to reverse that and create a future with [new] policies.
Milk is one of the region's great economic engines, but the path must be one of valorization?
Valorization has to do with every aspect, it cannot be neglected. Product quality is fundamental and that requires the quality of the raw material. Then there is the part that increasingly speaks to the consumer: it is not just about selling a product, but what is behind it: the environmental and social concerns that exist. And then it is about highlighting our strengths and communicating them to the target audience. So this has to be worked on from the raw material right through delivery to the consumer's home.
The Happy Cows program started in January 2015. Was it easy to implement? Nothing is easy these days. When we started the Happy Cows project, most producers were suspicious, thinking it was just marketing. But in the space of three or four years, we had gone from a phase of chasing producers around explaining what we want, to a situation where they came to us. This has to do with consistency, work and showing the benefits. Of course there is a lot of tension, and that is normal in business, but more and more we have managed to get across the message that it is only by working together and having common goals that you can create value.
Bel's latest project, regenerative agriculture, started this year. Has there been any feedback on the results?
It has been very productive. We started with a group of five pilot producers. The idea is to give life to the soil, which is made up of bacteria and fungi, which, in turn, are responsible for feeding the plants. And often the chemicals that are put into the soil end up breaking this symbiosis between plants and microorganisms. An option would be going back to the old ways with modern methods, maintaining production capacity and yields at lower costs.
How? By giving life to the soil and creating symbiosis between different plants, some of which have a different ability to penetrate the soil, which can help in terms of resilience and water collection. We have a group of experts from the United Kingdom, the United States and Italy helping producers to make this possible.
The tests carried out so far on the five pilot producers leave us satisfied. With less input into the soil, we have achieved the same or better yields than before. We see that the vigor of the plants is different, the capacity of the soil is different. Of course, it is a long-term project, because to regenerate soils we need 7 or 8 years; but in the short term, we have seen that we can do more with less. The path is very promising and I believe it can bring great advantages to Azorean producers.
The subject of Maritime freight transport has been on the table, whether because of the study that the Regional Government of the Azores commissioned, whether because of the various voices complaining that the Port of Ponta Delgada does not serve the needs of the industry. What is Bel's position?
At our level, we cannot say that there is a critical constraint, because our product has some shelf life and that gives us some flexibility. It forces us to have some storage capacity in the factory, sending the product only when it is loaded. However, our transport costs are high, if we compare them with transport costs between Europe, which penalizes our competitiveness. Of course we have the issue of serving the population, but it should also be based on cost. This is the key to being able to compete. When we send our product abroad, we compete with hundreds of industries, mainly in Europe, but not only. And if we do not have a competitive transportation cost, it makes the situation worse.