“We must finally move from a pure value chain to an appreciation chain!”

We’re all familiar with the sensationalist headlines. Amid the vilifying of farmers for their sustainability record, criticism of the food retail sector and the patronising of consumers, it can be difficult to hold a factual debate on agriculture. The future of agriculture is and remains a highly emotive issue. Which is hardly surprising since what’s at stake is nothing less than food sovereignty and the transformation of the industry, security of supply and fair prices.

Being a farmer is no ordinary profession. It is a toil of passion involving long hours dedicated to growing specific produce in hopes of earning a living and having land and property to pass on to the next generation without fearing for your livelihood. Unfortunately, the reality all too often looks very different. The challenges facing agriculture are vast and cannot be easily resolved with a couple of laws. There is no silver bullet, unfortunately. There is no ONE solution, because there is no ONE form of agriculture nor ONE type of retail. It is a complex undertaking that requires, everyone – the producers, manufacturers, policymakers, consumers and retail – to do their bit. I firmly believe that only a combination of measures, an interplay of regulation, industry initiatives and new contracts, can bring about such major change.

In the debate about the future of German agriculture, retail is often called upon to introduce greater price transparency, for example, or give a clearer commitment to local agriculture. These debates are a regular feature of my day-to-day work. And I am happy to say that the REWE Group fully acknowledges and honours its responsibilities in the value chain. Our position is clear: farmers should not bear systematic losses while others in the supply chain, including the retail sector, make profits. This commitment is shared by our retailers and the board.

At the heart of discussions in this regard is the question of a ‘fair price’. At the REWE Group, we face the challenge of balancing diverging interests. Consumers and politicians demand that we keep food prices low to give everyone access to high-quality foods, while at the same time, and seemingly paradoxically, ensuring maximum returns for producers. This is a topic of intense debate, especially in price-sensitive Germany.

But the sums do not add up. This is because we in the food retail sector do not typically have a direct business relationship with individual farmers and therefore cannot directly influence how much they are paid. Each stakeholder in the supply chain has to take responsibility. So, what would be a possible solution? I would like to see us finally move from a pure value chain to an appreciation chain! This, in fact, was the vision behind the Competence Centre for Agriculture, which we set up with practitioners from production, science and agriculture. However, the REWE Group cannot pull off the transformation of agriculture on its own. We need a combination of the different measures described above. These include a regulatory framework from Berlin and Brussels, industry initiatives such as Initiative Tierwohl (Animal Welfare Initiative) or method-of-production labelling on animal-sourced products as well as company initiatives. The REWE Group was the first retailer to implement a tripartite contract in a pilot project that revolutionised the previous contract design. For the first time, farmers sit at the negotiating table as equal partners, creating transparency between the contracting partners retail, industry and agriculture, while respecting the legal boundaries.

This represented a first for German retail and a great achievement for the farmers involved. I am particularly proud that we also defined five specific criteria that put the contract on an even firmer footing. These include longer contract periods, price indicators, a revision clause and an automatic reward for meeting additional sustainability criteria. This affords greater planning certainty and stability while also offering a degree of protection against market fluctuations. Despite the more complex contract discussions, we want to increase the number of these tripartite contracts because we firmly believe that they are the way forward.

But here too, whilst such projects are the right approach to meet the challenges of agriculture, they alone will not change the market. There should be no illusion about this. We will not be able to implement tripartite contracts in all business relationships. Insisting on one issue would be disastrous and irresponsible. But yes, there needs to be more transparency on pricing, without neglecting antitrust issues. In my view, approaches such as a price observatory are worth discussing to avoid the blame games of the past.

Prices are a complex issue, especially in Germany. Consumers in this country are highly price sensitive. At the same time, agricultural products in Germany are produced to the highest standards. Simply raising prices, as politicians often demand, will not solve the problems of agriculture. Anyone demanding this is not looking at the entire value chain. Instead, we need transparency and a systematic approach that ensures the farmers also receive their share of the profits. It has long been the REWE Group’s policy to compensate accordingly for any added value that we demand from our suppliers. In the end, however, the customers also have their say at the checkout. Anyone looking to encourage regional structures needs to take this into account. Ultimately, projects intended to support agriculture only work if the customers are also on board.

REWE and PENNY are working with more than 33,000 producers in Germany alone. Some of these partnerships go back decades. I am sure that this is partly because working with a cooperative organisation like the REWE Group is different. We know what it means to represent and serve the interests of individuals over generations. These are values that we share with agriculture. That’s why we always aim to develop projects alongside producers, which have the potential to be adopted and replicated by the entire industry. Only if the entire retail sector moves in step can widespread change be achieved. We are also pursuing this approach with the Competence Centre for Agriculture.

During the Covid-19 pandemic and when supply chains were disrupted at the beginning of the war of aggression against Ukraine, we demonstrated that we can work together with resilience and dependability to ensure security of supply. These experiences give me hope that we will also master the next challenging times together. We are all dependent on each other.