HonestFood: A 3rd Way for Putting Food on the Tables
Giacomo Pedranzini, CEO of Kométa 99 Zrt.
The Budapest Business Journal talks with Giacomo Pedranzini, winner of the 2022 Expat CEO of the Year award and CEO of Kométa 99 Zrt., about his concept of “HonestFood.”
BBJ: In your CEO biography (see page 76), you stated your passionate belief in HonestFood. What is this concept?
Giacomo Pedranzini: HonestFood aims to change the food supply chain. Today there are two principal systems for getting agricultural products from producers to consumers. One is semi-industrialized conventional agriculture, and the other is organic farming. In my view, neither of the existing models can meet the food needs of a growing world population in a sustainable, long-term way. Neither guarantees a fair return and economic viability for all actors in the supply chain. Over the past decades, the price has become the sole cornerstone of market competition strategy. Therefore, we all, collectively, pay too high a price for cheap food.
I am convinced that the time has come to find a new way forward: we must find a good middle ground between industrial and organic farming and return to common sense. It’s time to change our mindset and put “quality at a fair price” at the heart of our business policy instead of “high volume at a low price.”
How can we supply our consumers with food of sufficient quality and quantity without exploiting animals, destroying the environment, and flooding the shops with cheap but low nutritional value products? The HonestFood concept must take over from industrial agriculture the mission to guarantee a stable food supply for all humanity while ensuring a fair income for all supply chain actors. But we need to incorporate the commitment of organic farms to nature into our concept, with a particular emphasis on protecting the health of people, animals, and our planet.
BBJ: How did you arrive at these conclusions?
GP: In 2012-13, Hungary’s meat industry was in crisis. I kept thinking: what are we doing wrong? How can farmers and food producers struggle to survive in a country like Hungary, a paradise for agriculture? The bankruptcy of several competitors, who had always pushed down prices, made me realize: we collectively pay a high price for cheap food. It made me understand that the existing two models are inadequate to supply the planet’s growing nutritional needs. If we want a sustainable supply chain, we need to change.
BBJ: What do you mean when you talk about a sustainable supply chain?
GP: The production chain’s most sacred priority should always be human health. We must make healthy products and in such a way that their production does not pose risks to human health. After all, our diet critically impacts our health and life expectancy. We should also apply production techniques and technologies that do not endanger the ecosystem, do treat animals with respect, and guarantee that our natural resources can regenerate.
But there is another aspect of sustainability of the food supply chain that is barely discussed: economic and financial sustainability. We are talking about a sector with high exposure to vis major circumstances, such as weather, where prices are often highly volatile; thus, profit is not balanced. Sometimes a year of plenty is followed by two years of famine and vice versa. It is also a sector where, because of the low and uncertain profitability, it has been becoming increasingly difficult to attract young farmers; therefore, the aging of active farmers is a serious problem in the long run.
Volatility is not only harmful to the farmers. In the end, the consumer is paying the price. Too high prices deprive the poorest and most vulnerable strata of the population of food. Therefore, guaranteeing fair prices, partially by limiting volatility, is in the common interest of consumers and producers.
The distribution of profit is unequal in the supply chain. And the actors who are the weakest links, the farmers, breeders and craftspeople, are the most vulnerable. There was a famous case in Italy, which discovered that the income farmers gain from tomato sauce, sold at a shelf price of around EUR 1, was only about eight cents! Several good initiatives restrict unfair trading practices, which is an important step forward. But there is still much to do to guarantee fair profit distribution among the supply chain.
Because this is the key to the economic and financial sustainability of the supply chain: a fair share of return for all actors involved. Otherwise, human and financial capital will leave this sector behind. And I am convinced we do not want to wait and see what happens then!
BBJ: How could the food supply chain be changed?
GP: We need to study modern technology, the achievements of the fourth industrial revolution, at every stage of the production process. We also need initiatives from the bottom up involving those actively involved in the day-to-day running of the agro-industry. We need to combine the knowledge of scholars with the experience of practitioners.
Large international retail chains will play a vital role in this process. With great power and influence comes even greater social responsibility, professional thoroughness, and a long-term vision for the future. These players will determine the products on the shelves, the profit margins and, thus, the prices.
Finally, all of us as consumers must be involved. Consumer behavior is the most powerful tool to make a difference. We can make better purchasing decisions. We as consumers must be informed, read the labels well, look for quality, and instead of running from one store to another in pursuit of promotions, we should look for fair prices 365 days a year.
There is a saying: The world of tomorrow will be the consequence of the decisions we make today. We must be conscious when making decisions regarding our consumption. We must look for products made in the spirit of the ideas in which we believe. These are small but concrete steps to change the production chain and the world for the better.
BBJ: It sounds ambitious. What steps have been taken so far?
GP: We are still at the beginning of our journey. HonestFood does not insist, “We have the only truth in our hands; follow us!” We intend to base our movement on rational consensus and intellectual debate, with a willingness to learn from others to achieve our goals.
We have been engaged in Hungary in awareness-raising among the professional audience and our industry peers, and the general public. We have been actively subsidizing research regarding public awareness of various issues, including the implications of an active lifestyle and healthy diet on life expectancy and also food waste.
We also actively promote these ideas with professional peers at conferences, round table discussions and industry forums. Our activities are not limited to Hungary; we are also active in Italy and Croatia. And we hope that we will be able to spread these ideas step by step across Europe, if not worldwide.
BBJ: What has been the reception of the HonestFood concept?
GP: Overall, the reception has been positive. There is interest in joining the movement. We are actively seeking partners in the food supply chain to join. But we also welcome private individuals who agree with the ideals of HonestFood.
BBJ: What are the next steps?
GP: We aim to become a legal entity, probably an association, and to set a plan of action to achieve substantial changes in the food supply chain. Kométa has acted in the spirit of HonestFood in the past years, offering our live pig suppliers a frame contract, which set up a scale based on the German stock market price of pigs (ZMP). Based on this scale, when pig prices were too low, Kométa paid the producers a significant bonus, helping them get through the difficult times. In return, the pig producers gave us a discount when the price went too high. Overall, it helped reduce volatility and decrease the risks in the supply chain.
We intend to find a way to retailers, as they hold the real power in the supply chain: they decide which products will appear on the shelf and at what price. We hope that they are also interested in the long-term sustainability of the supply chain and that we can think and act together to bring lasting change. We have started constructing our network in Italy parallel to our activities in Hungary; therefore, our aims are genuinely international. Successful bottom-up initiatives and movements such as Slow Food have inspired us, and we hope to have similar success.
This article was first published in Top Expat CEOs 2023 on March 24, 2023.
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