Jānis Garančs started his career at Aloja-Starkelsen 25 years ago from the bottom up. Now he is one of the most knowledgeable experts in the organic food industry in the Baltics.
With the war in Ukraine, there are reports that the food sector in Europe is destabilised. The industrial agriculture lobby is united in its insistence on abandoning the Green Deal, while the other side is calling for the opposite and for more to be done to drastically reduce dependence on the resources that have so far flowed into agriculture from Russia and Belarus. How do you see the situation?
We need to distinguish between the situation at the moment, when there is a war in Europe and not only food but many other supply chains have been disrupted. However, if we take a long-term view, we should not exaggerate Russia’s influence. It is a big country, but its impact on the world economy is not that significant. It may seem extraordinary to us here in the Baltics that such a large supplier should suddenly drop out, but if we look at the global level, or even just at the European level, Russia’s importance is rapidly diminishing. We do not need to change our long-term vision radically by adapting our supply chains to the new reality, because the warming of the planet continues. It is wrong to abandon the Green Deal. I am an optimist and I think that the war will not last for years, so we must continue to move towards a sustainable economy, agriculture and food supply chains.
How does Aloja-Starkelsen feel about the new market situation with the war in Ukraine?
Does the company have links with Russia and Belarus? We were directly responsible for the distribution of Swedish raw materials in Belarus. But this is a very small part of our overall business. We have not sold any of our products, which we process in Aloja, to the East. So our company has been affected more in the way that supplies of building materials, metal, have been disrupted. Our company’s main task is to buy raw materials from the immediate area within a radius of 300-400 kilometres, but we have not bought raw materials from Russia. We can look at the price increases that we are experiencing now as being more in line with real costs, because these very cheap raw materials that were coming into Europe from Russia, Kazakhstan and Ukraine did not reflect the true costs that they would have if they had been produced in Europe. Today’s prices reflect the true situation better. This will make Baltic farmers more competitive on the EU market in the future.
Is the trend towards shifting raw material purchases from third countries to the EU going to become more pronounced?
I would not globalise this. There are certain positions on the food market where the proportion of products from these countries was significant. For example, almost all organic strawberries in Europe came from Ukraine. There will be an impact on these products, but overall the break in the chain only seems significant at a glance – we do not have salt and soda! The effect is temporary, as the supply chain has been coming from the East due to low costs, but there are other routes.
How could the role of Baltic countries become stronger?
In fact, this was already happening before the war, as European consumers started to pay more attention to organic products being locally sourced or at least coming from the European Union. Consumers were increasingly aware that many organic products were imported from other parts of the world. It is therefore only natural that the demand for Baltic organic products will only increase.
Organic farming is the basis for all future food trends, as it is impossible to build a sustainable long-term system if it is not based on organic principles.Jānis Garančs
Why this aspect – focusing on the EU domestic market – has become so important?
If organic peas are grown in Canada but processed in China, and then the protein concentrate ends up in Europe, it is still organic, but in terms of sustainability, such plant-based protein is, I admit, worse than locally grown chicken. The second aspect is the credibility of certification systems outside the EU. There is a very well-defined and scrupulous system of control and traceability here, but this is not always the case in third countries. There have been many recent scandals where whole ships of produce are decertified because of the discovery of fraud with organic products. This has seriously undermined the credibility of the supply of organic products from third countries, but in this situation, I would say that it has completely collapsed. The product that has arrived on the shelf is controlled and safe, therefore cases of fraud do not usually affect the consumer – they are stopped at the port, where the ships are not unloaded.
How has Aloja-Starkelsen been affected by the change of ownership? And how will it affect the processing of bio-based raw materials?
The company is in a process of exponential growth. We are expanding our activities and increasing volumes. We had become a leading supplier of organic potato starch, we have started pea and bean protein concentrate production, but our goal is to go further and become an international player in sustainable food solutions. Because it is important not to lose sight of environmental, social and economic sustainability. There are examples where everything else is put aside, only the organic certificate is relevant. This is especially true for third country suppliers, for whom this certificate is enough to enter the EU market. Regardless of the transport or resource costs to obtain the product. We want to keep sustainability as a core value, because without it, the transformation to organic production is meaningless. For example, if we cannot run the new factory 100% on organic raw ingredients, we will produce both organic and non-organic products – not to lose the efficiency of the company. That’s why we are scrupulous about ensuring that other pea and bean suppliers are local and integrated farms, and we require ISCC Plus sustainability certification. For five years we have been weaning ourselves off the pea segment, processing only organic produce. With the new line, the situation is changing. As far as potato starch production is concerned, 50-60 per cent of the potatoes processed are organic.
There are cases where people switch to a plant-based or organic product, regardless of how it looks, what the texture is, how long it can be stored, whether it tastes good. A proportion of shoppers are prepared to sacrifice the organoleptic quality of their food because it is green. In my opinion, that is not the right way to go. Food has to be green and tasty at the same time. For example, there are veggie burgers that are tasty and cool, and others that are just pea fritters. Green cannot be an excuse for lower quality.
Organic food is not a step backwards – we cannot abandon progress. The right direction is to use modern science to produce quality products without harsh chemical intervention. And this is the path chosen by Aloja-Starkelsen. Rather than simply producing potato starch or pea and bean protein concentrate, we are creating new food solutions. We are creating plant-based ice cream, cheese, meat and egg substitutes. Our vegan mayonnaise is even tastier than the classic one! If we use the emulsifying properties of grey pea protein, for example, we no longer need chemically modified products, because we get the right texture from the solutions that nature offers.
Can you say that, after the first few years, grey pea products are finally understood in Europe?
We do not take the easy way and copy existing products for which there is a ready market. In addition, we have chosen to extract the protein by dry separation, which has many advantages in terms of sustainability, because wet separation requires at least 15 litres of water for every kilogram of peas, which must then be evaporated, consuming energy. There is huge interest in our products, including from the largest producers in Europe and the world. I am convinced that grey peas, or brown peas as we call them, have a future. The dry separation also preserves the minerals and vitamins in the protein concentrate. Grey peas are already appreciated by many customers because the concentrate is better than that from yellow peas. But not everyone accepts grey peas, because everyone is quite conservative about what they put in their mouths. If you have never heard of grey peas, you may wonder why you should eat them. They are called different things in different European languages – field peas, even cattle peas. We use the name brown peas. They are hardly known anywhere now, although 150-200 years ago they were eaten all over Europe because yellow peas did not exist then. We are in fact reviving the grey pea, just as spelt was revived a few years ago. Grey peas are a leguminous spelt. We process three types of raw material: yellow peas, grey peas and field beans. All the raw materials come mainly from Latvia, but Estonia is just behind the forest, so of course we also work with Estonian farmers. We also have a presence in Lithuania. We are planning to become one of the leading producers of long-lasting raw materials, so we are not going to stop with this one legume line, the aim is to build at least two more. Clearly, raw materials will be needed from all over the Baltics.
Are the principles of cooperation with pea growers similar to those with potato growers? Do you encourage organic farmers to choose pulses and how?
Some of the legume growers also grow starch potatoes, but some are new. The processing cycle is different. In autumn we buy all the potatoes, process them and store the starch in a warehouse. With peas, the process is reversed: peas are stored in the warehouse because the concentrate has a shorter shelf life. Peas and beans are supplied all year round. For farmers, of course, regular deliveries are a challenge. One of our partners is the Jurgensburg Agro cooperative, for integrated products – cooperative VAKS.
We are already offering delivery contracts for autumn. Our partner cooperatives offer favourable terms for pre-processing and storage. Farmers have stable and secure sales. The war situation has changed the terms of supply, as a big unknown has emerged – the price of energy. We reacted quickly and put a fuel price change component in contracts. If the fuel price changes, our procurement price will follow and the farmer will not be left alone in this difficulty.