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Redefining the Food System: Foundational Shift in Market Drivers

The scarcest resource in the decades ahead won’t be oil or rare earth metals, but social trust, according to Axios. It’s true. Trust is an organization’s most valuable intangible asset. And like any other asset it must be invested in and protected consistently over the long-term to maintain value.

Earning and maintaining public trust is what gives the food system the freedom to operate – that social license to continue to grow, raise and produce food.

But consumer expectations for how the food system gets the job done are changing.

The History of Productivity and Efficiency

Let’s take a look back for context.

There was a time in the United States when food security was national security.

In 1943, when the U.S. entered World War II, agriculture was called upon to dramatically increase productivity. Allied countries were hungry and soldiers needed food as fuel to fight.

The U.S. government encouraged farmers to produce more with campaign slogans like, “Farmers meet your goals and they’ll meet theirs,” and “Plant more sugar beets: sugar is energy, let’s give ‘em plenty.”

America’s farmer rose to the challenge. Increased productivity and efficiency were key and have continued over the decades, making U.S. agriculture one of the most efficient food systems on the planet.

We are now at an interesting inflection point that became much more evident over the last 18 months when COVID-19 upended our world.

New Priorities

There is no question that everyone in the United States and around the world has benefited from U.S. agriculture’s focus on productivity, efficiency and throughput. But today, engaged consumers, investors, policymakers and other key stakeholders have new priorities.

While these stakeholders want farmers to continue to be productive and efficient, they’ve turned their attention to attributes they feel should have equal priority: environment, social and governance attributes, or ESG. Greenhouse gas emissions, soil degradation, deforestation, fair trade, animal health and wellbeing, food waste, worker safety, and racial and gender equality are just some of the emerging concerns. In fact, CFI, as part of its Optimizing Sustainability framework, has identified more than 250 separate attributes of sustainability and corporate social responsibility that are important to different organizations across the food system.

Giving ESG the same priority as productivity is a significant shift for everyone in agriculture.

Watch Charlie Arnot discussing the drivers redefining the food system.

Branded food companies are responding to these evolving consumer priorities and the reprioritization is impacting their supply chain, including those in agriculture. There is a growing awareness in ag that ESG priorities must now be factored into operations to maintain social license and freedom to operate.

Driving the Change

So what’s driving this change? Consumers, particularly millennials, and Gen Zs are voting with their wallets. They are making absolutely certain that the companies they spend money with demonstrate values that are aligned with theirs. Considerations go well beyond cost, quality and affordability, the historical drivers for purchase.

There’s an absolute essential demand for greater transparency. Consumers want access to easy-to-understand information – from credible sources – to make choices that feel right for themselves and their families. And they want the ability to engage and be heard across the food supply chain.

One area that has received particular focus since the pandemic is the relationship between diet and health. That trend was already growing and it picked up speed when COVID-19 hit our shores, with a particular emphasis on boosting immune health.

Prioritize and Prepare

With a dizzying number of attributes emerging, how does the food system prioritize and prepare? Determining what’s most relevant to your companies and brands, and what’s most relevant to your stakeholders and customers, is an ongoing journey.

“Today, a brand’s market cap is based on the strength of its consumer relationships, living and dying via the sentiment created by Instagram influencers and the interplay between brand and consumer communication,” according to Kevin Ryan, CEO and founder of Malachite Strategy and Research and a member of CFI’s Consumers Trust Insights Council.

Those relationships cannot survive ambiguity. “The deeper the bonds that brands attempt to make, the less they can stay on the fence of any issue,” he said.

We’re seeing corporations now lean into a wider range of issues. This is particularly important for millennial and Gen Z consumers who are leveraging online sources and apps to identify brands they’ll support – the brands that they can count on to be aligned with their social expectations.

It’s a phenomenon that will only continue to grow as Gen Z and millennials become more dominant and drive the actions of companies they support.

Values and Trust

Historically, agriculture and food have focused on sharing facts, believing that consumers will come to their side if they have the right information. But none of us make decisions based on facts. We make decisions based on our values.

In fact, the CFI peer-reviewed consumer trust model shows that incorporating shared values in our communication is three-to-five times more important to earning trust than simply sharing facts, science and data. In other words, consumers simply want to know that you’re like them – that you value safe food, protecting the environment, raising animals humanely, treating workers fairly, and the like. It can feel like an uphill battle, particularly given the “big is bad” bias where consumers believe that as food and agriculture grow, principals are sacrificed to maximize profit.

A 2021 Wall Street Journal survey on the most sustainably managed companies in the world showed that only  one food company made it into the top 100. Clearly, there’s work to do. And that work includes not only improving on how ESG attributes are addressed, but communicating the improvements in a way that earns trust.

The productivity and efficiency that was so vital in war time isn’t sufficient to build trust with today’s consumer.  The food system as a whole must embrace the change, be open to acknowledging and understanding consumer concerns, pivoting where necessary, and engaging for the long-term to earn social license and maintain freedom to operate.

It’s a balancing act, as a change in one variable can impact a highly interconnected system. So decisions must be made carefully, weighing the benefits and tradeoffs. But regardless, consumers are in the driver’s seat and the food system can either get on board or be left on the side of the road.