Can the beef industry collaborate its way to sustainability?

Two Steps Forward

Can the beef industry collaborate its way to sustainability?

Last in a three-part series. Read Part 1: Exclusive: Inside McDonald's quest for sustainable beef. Part 2:  How a Big Mac becomes sustainable.

In November 2010, the Who’s Who of the global beef industry found their way to Denver, Colo. About 350 of them: ranchers, feeders, packers, processors, wholesalers, retailers, restaurateurs, academics, government officials and activists of all stripes. They came from North and South America, Europe, Australia and beyond. Their audacious goal: Determine if there was any common ground on which to define “sustainable beef.”

As Jason Clay put it: “It was more tense than a long-tailed cat in a roomful of rocking chairs.”

Clay, senior vice president, market transformation, at WWF, was a convener of the event, dubbed the Global Conference on Sustainable Beef. Joining Clay at the host table were executives from Cargill, Merck Animal Health, JBS, McDonald’s and Wal-Mart. Each company had a multi-billion-dollar stake in the future of beef.

“These were people who never thought they’d be in the same room together, much less have a conversation,” said Clay. But, he added, “Once the discussion started, it was a little bit easier and, I’d say, more respectful because the fireworks that people expected didn’t happen.”

The event spurred an industry-wide dialogue on what it meant, and what it would take, to produce sustainable beef. From that event came a global roundtable devoted to the subject, the outlines of a sustainability standard and enough confidence on the part of McDonald’s, the world’s largest fast-food company, to announce a commitment this week to purchase sustainable beef starting in 2016.

McDonald’s, along with the rest of the industry, had seen the writing on the barn wall: public health warnings against saturated fat; concerns about human immunity to antibiotics from residues of drugs used for cattle feed and therapy; protests against factory farming and animal cruelty; outbreaks of bovine spongiform encephalopathy, better known as mad cow disease; growing awareness of the water and energy intensiveness of producing beef, and the water and air pollution produced along the way; "Super Size Me," Meatless Mondays and more.

“One of the things that this whole group had in common was that their livelihoods were under attack,” says Michele Banik-Rake, McDonald’s director of sustainability, worldwide supply chain management. “They needed to find another way.”

Finding shared solutions

Despite the sense of urgency, finding shared solutions wasn’t an easy path. “The beef industry isn’t used to collaborating, and because there’s all those different steps, they’re all economically their own piece of the pie,” explained Jessica Droste Yagan, director of sustainable supply chain for McDonald’s U.S. operations. “There isn’t a long history of them coming together for a common purpose, or understanding what their common values are.”

And yet, that’s exactly what they were in Denver to do. The three-day event was filled with keynotes and two-hour workshops — breakouts on pasture management, carbon footprint measurement, animal health and welfare, people practices and the like.

There were a lot of moving parts to consider. The beef supply chain is a sprawling ecosystem of players. “Just look at the way the organizations are set up,” said Cameron Bruett, chief sustainability officer at JBS USA, the U.S. division of the world’s largest beef producer. “You have a cattlemen’s association. You have a cattle feeding association. You have a meat processing association. We have very rarely looked at ourselves as an integrated chain because we’re such a segregated industry.”

Moreover, Bruett told me, there were some strange bedfellows in the room. “The NGO community has not always partnered with those elements of the chain in a completely productive manner. To see WWF, the National Wildlife Federation and all these other NGOs sitting in the room with producers, packers, retailers, restaurants and having a constructive dialogue — they were putting the arrows back in the quiver and just having a discussion on how do we improve this.”

An early realization of the event is that many in the room felt they were already “sustainable.” Everybody was addressing something, such as pasture management techniques, engagement with rural communities and animal welfare. As is often the case when groups of companies get together — from any sector — each comes to the table with its own definition of sustainability, and of what success looks like.

“For a lot of cattlemen, beef is a way of life,” explained Bruett. “It’s not simply a business proposition for them. It’s an operation that’s been passed down from generations. They feel that they’re stewards of the land. They feel that they are the embodiment of sustainability. But once the cow leaves the farm gate, they have often felt their participation in the chain ends.”

Like the ranchers, most of those assembled in Denver hadn’t looked at the full spectrum of issues around sustainability and beef. “When you talk about sustainability with the beef industry, you’re talking about natural resources, land use, water, energy use,” said Bruett. “You’re talking about the natural biological process of the animal because they are ruminant, so they’re naturally going to produce methane. You’re dealing with row crops and how those crops are managed, particularly in environments where we’re feeding cattle grain the last 70 to 90 days of their life. Going up through the chain, you’re also dealing with the environmental footprint of the factories that are producing the animal.

“And then we’re getting more now into these boys’ side of the business,” he says, referring to the McDonald’s executives sitting in the room where we’re talking. “What happens to the ultimate disposition of the product, the food waste, how the product is packaged and presented to consumers.”

The (cow) boys from Brazil

Bruett’s company, JBS, began in the 1950s as a small, family-owned farm. Its current CEO, Wesley Mendonça Batista, is the son of the founder. Although publicly traded, the family still has sway.

JBS has had ample experience with sustainability issues in its home country. Its sustainability initiatives, said Bruett, were “led by our headquarters in São Paulo, and it was based around a number of issues, but Amazon deforestation was certainly one of them. The Amazon is a cultural icon, and that culture needs to be protected. We source a lot of our product in areas around the Amazon. So, ensuring that we had a traceable system to ensure that we weren’t promoting deforestation was a priority for the family.”

Brazil is the world’s largest beef producer, measured by the number of commercial cattle — about 200 million head, slightly more cows than people. (India has more cows, but doesn’t slaughter as many due to religious restrictions.) The country’s beef producers started thinking about sustainable beef as early as 2007, said Daniel Boer, Latin America protein director for McDonald’s, who I met during a recent visit to São Paulo. It was at that time that Grupo de Trabalho da Pecuária Sustentável, the Brazilian Roundtable for Sustainable Beef, was formed. “The roundtable was created basically to release the pressure on the deforestation on the north of Brazil, the Amazon area,” says Boer. With growing pressure from activists and customers, “the industry created this roundtable to start to talk about sustainable beef.”

About 70 percent of Brazil’s beef stays in the country. The 30 percent that’s exported goes primarily to Europe. (The U.S. bans imports of Brazilian beef because of differences in vaccination for foot-and-mouth disease. Last month, however, the U.S. Agriculture Department proposed opening limited imports from Brazil.) About 96 percent of all Brazilian cows are entirely grass-fed throughout their lives.

Boer said that it’s taken a while for farmers to warm to the roundtable. “In the beginning when the roundtable was created in Brazil, we had a lot of pushback from the farmers because they stay in the field and they’d say, ‘You never come here. You don't know how to produce a cow, and you come here with a checklist and give it to me.’ It's easy to criticize and hard to produce. They told us, ‘We don't want one more rule. We are tired.’” Boer added, “We have really, really big conflicts inside the roundtable.” The roundtable has five sub-teams focusing on animal welfare, intensive agriculture techniques, pasture management and other issues.

The issues can be thorny. “Deforestation in Brazil is legal,” explained Boer. “And you have different biomes — the Amazon biome, the Pantanal biome — where you have different rules for deforestation. Inside the Amazon biome, for example, you can deforest 20 percent of your land by law. You should keep 80 percent of your land as a forest. But Greenpeace is pushing for zero deforestation.”

As the roundtable has continued its work, attitudes are changing. “We have a farmers association that saw the future," said Boer. "They saw that it will bring a benefit to them and they are really engaged. They realize that sustainability is important to promote Brazilian beef and have access to more customers.”

Boer pointed to a success story about a McDonald’s beef supplier in the Brazilian state of Mato Grosso, one of the principal cattle-producing areas, a few hundred miles northwest of where we were sitting in São Paulo. “You see a property with 80 percent of land conservation, with Indians living there, with the animals.”

“There’s a lot of work right now in Brazil to decouple beef production from deforestation,” explained WWF’s Clay. “The former governor of Mato Grosso has shown that in Brazil, you can double beef production and double soybean production on the land that’s already been cleared. You don’t have to clear any more land. It’s more about efficiency and what has come to be called sustainable intensification; it’s really just working the land more efficiently and producing more with less.”

Boer believes the world is ready to hear more sustainable beef stores, at least from his country. “I think in the next couple of years Brazil will start to speak loud about the work that we are doing here. We are prepared, and now I think the time has arrived to speak to the world and invite everybody to see our work. And everybody's really proud about that.”

Creating a global voice

The early work to reduce beef’s impact in Brazil, Australia, Europe and elsewhere created an obvious opportunity for McDonald’s and others: Leverage and propagate the good work already being done, and spur even more collaboration. “We got together with several folks and said, ‘Let’s create a forum where we can have an open, transparent dialogue for whoever may want to come and discuss this issue,’” said Bruett. “That includes agitators and people who don’t think we should consume beef. Invite them all to a global conference in Denver, and let’s identify the key issues that are impacting beef sustainability now and in the future.’”

One thing Bruett understood from the start was that “we wanted to avoid the mistake that I think a lot of the other global groups that are attempting to dialogue on this issue: It’ll just be corporations or just NGOs, and producers aren’t asked to participate. They’re asked to make changes on their operation, but they’re not asked to participate in the process. We weren’t going to make any progress unless the entire chain was involved in whatever we did.

“So, it couldn’t just be the McDonald’s and the JBSes of the world, and we’ll decree what sustainability means. It’s going to have to involve those who grow the animals, those that feed the animals, those that process the animals, those that consume the animals, and then those NGOs and environmental groups and social groups who have interests in the issues that pertain to that supply chain.”

Coming out of the Denver meeting, the group took steps to form an organization — the Global Roundtable for Sustainable Beef, or GRSB. The group looked to similar efforts in other commodities — the Round Table on Responsible Soy and Roundtable on Sustainable Palm Oil, for example. But there were some big differences between beef, on the one hand, and soy and palm oil on the other. “Those commodities can only be grown in certain parts of the world in very temperate climates,” said Bruett, who serves as GRSB’s president along with his day job at JBS USA. “So their systems are very alike no matter where they are in the world. The difference between our group and some of these other roundtables is that their ultimate goal was to create a standard or a seal or something where you could say, ‘This is sustainable. This is not.’ That was never really our goal.”

Instead, he said, “we wanted to kind of chalk the boundary lines of what we thought sustainability meant, and empower people with the tools to improve their operations, improve their livelihood, improve their social performance to ultimately improve the whole value chain.”

GRSB began its life in early 2012, but took most of that year to get organized — the usual legal and governance stuff. Things really got going in 2013, as the roundtable hosted regional sustainability workshops in cattle-producing regions of the U.S. — in Billings, Mont.; Lubbock, Texas; and Omaha, Neb. — intended to expose participants to perspectives from various parts of the beef industry ecosystem. The workshops included field tours to cattle ranches, feedlots and packing and processing operations of the beef supply chain.

During the past year, the group also began digging into the Big Question: How do you define sustainable beef?

“Our idea was, let’s scope out five to 10 critical areas that we think no matter where you are in the world producing beef and no matter what part of the supply chain you’re involved in, you should be addressing these areas,” said Bruett. “And if you are addressing those areas in whatever manner is suitable for your area, you are on the path to continuous improvement. You are on the path to sustainability.”

The next step was to take a broad definition and empower regional areas to interpret how those principles and criteria make sense to that particular ecosystem, given the regulatory structure and social environment. The goal, said Bruett, was a system “where the entire chain had shared responsibility, shared ownership and wanted to help all of the segments perform better to ultimately improve the overall beef sustainability.”

The group identified six key principles, along with criteria that articulate the intent in each area. So, for example, a principle on practices that minimize negative impacts on air quality throughout the beef value chain might include criteria that relate specifically to reducing greenhouse gas emissions from farming operations.

GRSB members approved the draft principles and criteria document in mid-December and distributed it internally for comment. The plan is to revise the document based on comments, then issue a version for public comment in March. “We understand that’s going to generate a lot of interest, but I’m personally committed to making sure we look at each comment, respond to each one to see how we can improve that definition,” Bruett told me.

Following a final round of revisions, the document will be submitted to the GRSB membership for a vote in August, at the second Global Conference on Sustainable Beef, in São Paulo. “And then we’ll go about the business of applying that on a regional basis to drive on-the-ground improvement,” said Bruett. “At the end of the day, that’s what the roundtable is all about. If you just establish a definition and put it out on Wikipedia, what have you done?”

Sustainability for the masses?

So, will McDonald’s be able to drive this standard through its massive global supply chain? Bruett, for one, thinks the company stands a good chance.

“What some organizations will do is take a nebulous concept like sustainability and force it on the supply chain. I think because McDonald’s has such a good relationship with their suppliers, they’ve taken the opposite approach. Rather than viewing that big, nebulous concept and forcing it on a business, they look at it from the business view — how sustainability can make a business a superior performer. So rather than coming in with this checklist and saying, ‘Hey, Joe, you’ve got to do this, this and that, and then you’re sustainable, and then you can supply to us,’ it’s more of ‘How do we make your business a more profitable, more responsible entity that aligns with our core values?’ That will improve the entire chain.”

He continued, putting on his JBS hat. “McDonald’s is out on ranches, they’re out at feedlots, they’re in my packing houses. They’re trying to understand the drivers that make my business a success. Not all of my partners do that. There are other companies that simply will call and say, ‘Hey, Cameron, here is my sustainability worksheet. I need you to give me this information by Friday. It’s Thursday afternoon.’ And some of the questions that are asked reveal a fundamental misunderstanding of what I do, what makes me profitable, what makes me a viable business enterprise. It’s the antithesis of sustainability.”

Everyone I talked with for this series is quick to point out that it’s early days in the industry’s quest for sustainable beef. McDonald’s and other large beef buyers will face a long and likely arduous road to reach their sustainability goals — and even to determine what those goals should be. There are countless unknowns.

That reality doesn’t seem to worry Bob Langert, McDonald’s vice president, global sustainability, when I asked whether a fast-food company could become a key influencer in promoting sustainability to the masses. He sees his company’s quest for sustainable beef as a key part of the McDonald’s brand.

“Sustainability should not be some sort of niche, premium, extra-cost endeavor that’s for a very narrow segment of society that has enough means and wealth to purchase sustainability,” he responded. “The fact is, sustainability belongs in the masses.”

Last in a three-part series. Read Part 1: Exclusive: Inside McDonald's quest for sustainable beef. Part 2:  How a Big Mac becomes sustainable.

Photocollage of cow parts by GreenBiz Group