What's Really Driving Sustainability in the Ag Supply Chain?
Dec 05, 2011
When talking about "sustainable agriculture," people often jump to the short-hand descriptors of "small, local and organic" – or, they become mired down in arguments about the need to defend conventional agriculture from attacks made by activists wanting to roll back the clock to a time when everyone farmed.
What I have learned about sustainability from working on these issues for many years and by working within many of the ongoing sustainability measurement initiatives that include food retailers and processors is that there is an entirely different discussion about "sustainability" and agriculture going on in the marketplace that often doesn’t get talked about much.
Food retailers and processors have increasingly been looking with concern at the long-term security of their supply chains. With the challenge of 3 billion more people joining the planet within the next few decades, resource scarcity or contamination is a real threat in certain areas.
Imagine if your company is primarily or exclusively, in some cases, sourcing its raw materials from an area that has been hit hard by drought and projected to lose access to a secure water supply source within the next 20 years! This is a major, and costly, business risk you are facing. I know from first hand conversations with processing companies that they are already making plant siting decisions based on these types of projections to both limit costs as well as avoid sustainability issues in the future.
Add to that numerous consumer research reports that indicate your next generation consumers are used to knowing a lot of information about anything they want – in the palm of their smartphone-holding hand; and you can see the outlines for why retailers, and consequently, food processors are becoming more and more interested in first understanding and ultimately, managing their long-term sustainability risks.
The key is that sustainability issues for these food retailers and food processors is really just a fancy and all-encompassing term for good old fashioned risk management. This is perhaps one of the biggest reasons why the burgeoning demand for sustainability data has not gone away even in a bad economy. The point I make to producers is that they should think about sustainability this way as well.
It is easy to think that "sustainability" is just the latest market fad that will disappear in a few years, and therefore, its just fine to ignore it. In fact, ignoring it could help make it disappear – the thinking goes. Having worked within a number of efforts that include food retailers and processors, I have to strongly disagree. For example, click on the highlighted links that follow to see what a number of companies are up to on this topic: Safeway, Walmart, Giant Grocery Stores, Kraft, Unilever, PepsiCo, Cargill (and many, many more . . .)
It is clear if you look at the stated policies and trendlines these businesses are following that sustainable data collection and ultimately, specific sustainable practice and data preferences are on the way for agriculture as an industry.
The danger of this is of course significant. If "sustainability" is defined in ways that are unworkable or biased against large-scale, efficient agriculture – or even focused on a one-size-fits all approach that so rarely works for diverse, dynamic living systems, there could be significant added cost and a push by the market for counterproductive practices stemming from unintended consequences.
Still, there is significant potential in this new trend as well. Agriculture, as an industry, is engaged in a mighty effort to "tell its story" to urban consumers who in many cases feel disconnected from the food they buy and increasingly are expressing or buying into concerns pushed by activists. This gap between growers and consumers is not good for either group. Yet, if the focus is on essentially, just a large public relations campaign, the result could be limited. But if agriculture’s "story" is paired with hard data backing up how efficient, safe, pro-community and yes, "sustainable" the industry is – then there is a real chance for connection trust-building between these two different cultures. That trust acts as a social license to continue doing business unfettered by bad regulation (not all regulation) that ends up not solving the underlying problem but making life harder for farmers.
So, given the new market forces driving the desire to assess, measure and improve the sustainability of agricultural products, it becomes extremely important for producers and the groups that represent them to engage in understanding, shaping and facilitating this new market need. This is all the more important because this is a market force, not a legislative one. If the type of efforts being sought by food retailers were instead being asked for by our government, they would likely be dead in the water – because it is relatively easy for any lobbying group these days to kill something on Capitol Hill. But you can’t call up your Senator and tell him to get Walmart, Safeway and Giant – among others, to stop measuring sustainability.
Agricultural groups are engaging on this topic, but of course, they remain very cautious. As a result, action from the retailers appears to be far outpacing involvement from producer groups – at least on the whole. To be clear, retailers are in the process right now of beginning to accumulate a list of sustainability "hotspots" they will look at as they decide who to buy agricultural products from. That’s pretty far down the road.
Far be it from me to tell any farmer how to do their business, but from where I sit, it seems to be a pretty good idea for producers to include as part of their risk management plan education at the least about what is emerging on the sustainability market side. A next step would be to engage either directly with efforts that are working on this issue or to support your farm organization’s greater involvement on these issues.
A few efforts you might be interested in on that front are Field-to-Market and Triple Bottom Line Commodities. Full disclosure, I work with clients that are engaged in field-to-market and I am the coordinator of Triple Bottom Line Commodities.
Field-to-Market is an initiative facilitated by the non-profit Keystone Center that brings together a wide range of interests from grower groups to environmental groups to food processing companies. The effort has resulted in a fieldprint calculator tool which allows growers to enter data specific to their farm and see how they compare on a number of environmental issues to others in their state and nationally. The tool also allows farmers to run different practice scenarios and see the changes in their score that would occur. This type of a tool empowers growers to assess their own land in a way that is anonymous. It also allows growers to see some of the hotspot issues that food processors and retailers are increasingly interested in measuring and understand how different practices utilized in different regions stack up.
A key benefit of this approach to assessing sustainability is that it is focused on measuring actual performance rather than merely meeting some arbitrarily assembled check list that supposedly encompasses sustainability. It helps the farmer see the value to their farm and to the environment if a certain practice is used on their soil type with their slope and in their growing region.
Another effort working on the business side of this issue is a unique network of farmers called Triple Bottom Line (TBL) Commodities. This group’s focus is on influencing and facilitating the private market’s growing needs for sustainability data. The group contains a diverse set of strategic-minded top producers growing commodities like corn, soy, wheat, beef, hogs, dairy and ethanol. Recently, this group joined The Sustainability Consortium – an independent organization housed within the University of Arkansas and Arizona State University focusing on developing a sustainability measurement system. With members like Walmart, Safeway, Giant and numerous food processors, the Consortium is becoming a unifying nexus for establishing general parameters for sustainability measurement. There are only 3 grower groups that are part of the Consortium: Dairy Management Inc., Cotton Inc., and TBL Commodities.
I’ve always believed its better to be "at the table, than on the menu." Well friends, the sustainability "dinner" is being planned. Now is definitely the time to help create the menu!