Federico Romeri on disrupting the €7,5B Italian CAFO factory farmed beef market

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A conversation with Federico Romeri, founder of Pascol, to dive deep into the beef market in Italy and how to move it from CAFO factory farming to a regenerative one.

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Everyone knows the animal protein market has to be disrupted massively and maybe, most of all, the beef market. Take for instance Italy where 85% of beef comes from factory farms, which means inside with a lot of inputs and horrible animal welfare practices plus, of course, the negative health outcomes for those who consume that meat. Plus 50% of the total beef consumption is imported. Saying that this should change is easy, but how do you actually do that? How do you build a supply chain or web from the ground up b2c and b2b and how do you work with the supermarket chains to get your products in front of more people?

THE BEEF MARKET IN ITALY AND THE REST OF EUROPE SHOULD BE DISRUPTED

85% of the meat consumed in Italy, which also replicates in the rest of Europe, comes from factory-farmed cows that have never seen the light of day and, in many cases, are fed on imported feed. Plus animal welfare is horrendous. 50% of the total market is imported. There’s a broken market waiting to be disrupted.

‘These supply chains are very dependent on importing cereals, for instance, from Russia, Ukraine, and so on. And in this case, when there is a war and a problem with the raw material in general, these prices go up a lot. And the price of conventional meat at the supermarket, went pretty much close to our meat. So you pay basically the same for a product that it’s completely different.’ – Federico Romeri

‘Our supply chain is very self-sufficient. Also in the production of raw materials, such as cereals, of course, our cows are raised extensively. So the amount of cereals they eat is very, very small. It’s about 20% of the total ratio of the nutrition of the cow. All these cereals are basically homemade on the farms, GMO-free and so on. And in the conventional beef supply chain, the amount of cereal that the cows eat, it’s around 80%.’ – Federico Romeri

SMALL PASTURE-BASED PRODUCERS ARE NOT ABLE TO COMPETE WITH BIG CAFO MEAT

The local farmers of small dimension cannot manage all the required aspects, for instance, managerial activities, sales team, organization of good systems, logistics, supply chain, etc. Small pasture-based producers don’t have the capabilities to regulate the value proposition and all the values that their farms have, which means they have very big problems with commercial activities. Plus, they raise cows but cannot be sure to sell the whole production.

There are not large enough fields to put all these animals in the pasture, which means you can’t scale these kinds of farms in Italy or do extensive kind of breeding. You have to keep your farm small or medium, which means an average of 100 animals per cattle. If you want to scale it, you have to do it intensively.’ – Federico Romeri

‘The intensive breeding has a short term return on investment because the animal lifecycle is shorter. And in this case, maybe you need three years or so. In our case probably you need double the time and you cannot either do marketing and communication in a good way because you’re probably two people, three people, four people maximum.’ – Federico Romeri

GETTING INVOLVED IN SUSTAINABILITY NOW IS AN INVESTMENT OPPORTUNITY

Sustainability is nowadays an optional choice, but in 10, 20 or 30 years it will be a mandatory one, a needed opportunity. Federico argues that people will have to do it to eat, drink, or breathe good air.

‘We explain to them also, that, from an economic point of view, in the long term, the nature path is the best one. Because, in the short term, with chemicals and so on, of course, you can improve the quantity of a product that you make, but in the long term, it’s all about the fertility of the soil. It’s all about biodiversity.’ – Federico Romeri

‘That’s the reason why I was suggesting to investors to invest in this way. Because this is an example of how I grew the supply chain for the system. It’s also good for the wallet of the investors, because, one of our goals is to build a totally sufficient supply chain. So without anything imported, or exported outside the supply chain, you protect a lot yourself from whatever happens.’ – Federico Romeri

WHY B2B IS AS INTERESTING FOR PASCOL AS IT IS B2C

Pascol doesn’t give much importance to where the product goes, the only important thing is the product itself. They seek to add value to the system and to give customers the freedom to make a different choice with their money because the best way to change things is by creating consciousness in consumption.

‘We started in 2019 on B2C channels, so the e-commerce basically, and then we approached also the B2B channels, because our value proposition is not about the distribution of the product, but about the product itself.’ – Federico Romeri

BIG SUPERMARKET CHAINS WANT PASCOL ON THEIR SHELVES

The meat that Pascol brings has an original taste: you feel the meat, and the properties of the meat depend on the pasture, on the animal, on the zone, and on the area. Many factors can influence these. They also offer their customers data about proteins, vitamins and many other things that are contained in the meat. This data is much more detailed in comparison to that of the conventional market.

‘We are not a commodity, we are not just about margin for them, but we are also about branding. The distribution brings Pascol into their store, also because they love to associate their brand with someone who tries to bring value to the environment, to the small breeders and so on.’ – Federico Romeri

FUTURE PLANS

The plans Federico mentions are related to virtual fencing, blockchain, traceability, LCAs and more.

‘We would like to implement the partnership with NoFence, and maybe also Ruumi, all the tools that can bring value. And then, of course, finding more and more clients, because the more clients we have the more producers and farmers we can add value. And in the middle, we’d like to build a customized software to bring all the data about the supply chain together, transportation, farms, livestock pasture, and so on. And try to make a lifecycle assessment of the water supply chain in order to understand the real impact, in order, of course, to calculate the CO2 emission, but also to systemic benefits. We’d like to measure the biodiversity of the environment where our farms work, the quality of the soil, the quality of the water, and so on. And we’d like to do it in blockchain if possible.’ – Federico Romeri

OTHER POINTS DISCUSSED

Koen and Federico also talked about:

  • How Pascol started;
  • How to improve grazing;
  • Producers and customers should be educated;
  • What would Federico do if he was in charge of a billion euros;
  • What would he do with a magic wand.

To know more about Federico Romeri e Pascol, download and listen to this episode. 

LINKS:

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The above references an opinion and is for information and educational purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice.

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