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The Business of Sustainability

September 6, 2012
By: Jeanne Bernick, Top Producer Editor
p32 The business of sustainability 1
Almond processor Dave Long hunts for sustainable ideas because they save money long-term.  
 
 

Agriculture embraces sustainability for its business sense

When Dave Long started growing almonds in the 1980s, sustainability was just another crazy California concept. A native of the San Fran-cisco Bay area, Long came to the almond industry seeking a tax shelter. He fell in love with farming’s way of life and the blossoming opportunities for the almond market. Today, his Hilltop Ranch, based in Merced County, is one of the top five almond processors in the nation.

As an outsider with extensive construction experience, it was easy for Long to find ways to improve energy efficiencies in ag production and processing. He started small, switching the lighting in his processing sheds to fluorescent bulbs. Next, he switched to hydrostatic fork lifts with computer-controlled engines and bought seven new semi trucks with Tier 3 engines that burn 10 gal. less fuel per day. His biggest project was installing a field of 58 solar panels, which generate 78% of the processing plant’s power and reduced his electrical cost from 14¢ per kW to 6¢ per kW. In addition, he received a $1.1 million rebate from the federal government and
a 15¢ per kW rebate for five years from his electric company. To further reduce power demand, Hilltop installed a 150-hp variable-speed electric motor air compressor that can drop to 15 hp or shut off completely when full capacity isn’t needed.

Long spent years systematically improving efficiencies because it made good business sense, not realizing that all along he was becoming more sustainable. He recently partnered with BASF’s new AgBalance program (see sidebar) to conduct a sustainability audit. After 300 man-hours devoted to documentation, it was determined that Hilltop Ranch had reduced its environmental impact by 30%. This is a number that Long’s almond buyers, Kraft and Whole Foods, like to hear.

"Sustainability is about the bottom line," Long says. "Whether it’s packaging, water, energy, land use, chemical use, or emissions, we have dared to challenge ourselves by examining our impact on the environment and the life cycle costs of our product."

Buyers Spur Sustainability. While rising costs for inputs, especially seed and expensive fertilizers, have been the initial drivers of sustainability practices, more top producers are embracing sustainability as a business decision.

p32 The business of sustainability 2

The 58 dual-axis solar panels on Hilltop Ranch produce 78% of its electric needs while processing a million pounds of almonds a week.


Companies that are able to communicate about sustainability and commitment with their stakeholders are more highly regarded, notes Nick Hamon, head of sustainability for Bayer CropScience North America. Sustainability is proliferating worldwide and food companies are cutting energy usage, water, waste and want in their supply chain.

Wal-Mart has developed a "sustainability index" for suppliers; Unilever now requires that 100% of its agri-cultural inputs be "sustainable;" and Kellogg is committing to a 15% reduction in carbon. There are also regulatory drivers, such as the European Union’s new renewable energy directive, Japan’s voluntary carbon laws and recently approved green marketing laws in the U.S.

"Everyone wants to be prepared for what the retailers need; the retailers get cues from consumers," notes Fred Luckey, chairman of Field to Market: The Keystone Alliance for Sustainable Agriculture. "The retailers I work with have very aggressive programs."

Tres Bailey of Wal-Mart says the sustainability movement is not intended to force suppliers to use environmental practices. "This is not meant to be the stick. This is meant to be the carrot approach," Bailey says. Wal-Mart recognizes that food producers have to make a profit. "Without economic viability for farmers, there is no food," he notes.

Unfortunately, most companies, both inside and out of agriculture, are not handling sustainability well, Hamon says. Why? "Because sustainability is complex and multidisciplinary, it needs new tools, it depends on partnerships and it’s hard to apply metrics to the concept," he explains.

This past spring, Bayer held an executive course on sustainability in agriculture to address these issues and identify ways to help grow ag businesses in a more sustainable way.

"If we do this well, there are a lot of business opportunities for all of us, whether you are a grower or a business, by reducing the cost of the supply chain," Hamon says.

No Room to Fail. With no more land being created, agriculture has no option but to become more sustainable in its production of food, feed and fuel. Adding further concern is climate change, of which agriculture is a victim. This year’s drought is a prime example.

"Three billion people were added to the world in the last 40 years, and they weren’t found in the European Union, Japan or the United States, but in poor countries," says Andreas Kreimeyer, member of the Board of Executive Directors of BASF, who spoke at a recent BASF Agricultural Solutions Media Summit. "They need food, water, mobility and hope," he notes.

As far as sustainable production goes, technology is the key, says Fred Below, University of Illinois professor of plant physiology. "Nutrient, fertilizer and crop pro-tection technology are all essential now," Below says. "The corn plant has potential to grow 450 bu. or 500 bu., and it is technology that will allow us to do that."

Kip Tom, of Tom Farms in Indiana, sees technology and sustainability working hand in hand. Superior technology improves weed and insect resistance and fertility management. "With variable-rate technology, we are using less nitrogen to produce a bushel of corn," Tom said at the BASF Summit. "We are pulling wired equipment across fields more efficiently. We are burning $4 fuel and overlapping zero, which makes a difference in emissions. We are buying tractors with Tier 4 motors."

As for irrigation, Tom says his family had always assumed the crop required 22" of water. Today, with new seed genetics, his farms produce 200-bu. corn with 12" of irrigation plus rainfall. "Most of these improvements have been driven by technology," he notes.

Of course, there are critics who don’t believe using technology will safely improve the world’s food supply, but Tom says farmers shouldn’t be afraid of the discussion. "We believe in all food systems, organic or conventional. If they don’t believe what we have is going to feed the growing global population, then ask them who is going to do it. Failure is not an option," he says.

Make It Work. The ag industry is developing tools and guidelines to help farmers gauge sustainability on the farm (see sidebar on page 33). Studies are showing improvements in ag benchmarks. "Sustainability should never be a burden," Luckey notes. "Investments should be affordable and profitable."

From the fluorescent lightbulbs to the solar panels, all of Hilltop Ranch’s sustainable practices have already paid for themselves, Long says. His hunt for the next efficiency continues. In fact, he’s awaiting a load of new solar panels that will be installed on the roof to power his office complex.

"My son jokes that our ultimate sustainability goal is to be completely off the grid," Long smiles. "Maybe we can make that happen."

 

 

 

 

Sustainability Efforts Across Agriculture

Field to Market has developed the Fieldprint Calculator, a free online tool that allows producers to analyze the outcomes of their management practices and compare them to broader-scale benchmarks (www.fieldtomarket.org).

The National Soybean Sustainability Initiative (NSSI) is developing a road map of soybean management systems that will help producers achieve verifiable sustainability outcomes (www.coolbean.com).

The Sustainability Consortium is working to standardize measurement and reporting of sustainable practices (www.sustainabilityconsortium.org).

The Innovation Center for U.S. Dairy is spearheading a program called Farm Energy Efficiency to reduce energy use and greenhouse gas emissions and improve profitability. Energy audits on 137 dairy farms since 2009 show savings per farm per year range from $2,000 to $18,000 (www.usdairy.com/sustainability).

Good Growing Link, a tool from Bayer CropScience, helps producers find ways to be more sustainable, respond to inquires about sustainability on their farm and promote themselves more effectively (www.goodgrowinglink.com).

AgBalance is a holistic method developed by BASF to assess on-farm sustainability, taking into account three dimensions—environment, society and economy—and more than 200 factors to give a consolidated sustainability score (www.agbalance.agro.basf.com).

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FEATURED IN: Top Producer - September 2012

 
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