The Changing Winds for Agricultural Sustainability

The Changing Winds for Agricultural Sustainability

The Sustainable Agricultural Partnerships conference, hosted last week in San Francisco by American Business Conferences, represents a significant shift in the agricultural supply chain. In recent years, key industry players have finally caught onto the need for a sustainable overhaul of the U.S. food supply chain. At the Food Marketing Institute's 2009 Sustainability Summit, for example, large-scale retailers and suppliers warned of the dire implications for the food industry of feeding a population expected to double by 2050, a water supply that continues to shrink at a startling pace, a dwindling supply of seafood due to overfishing, and the skyrocketing costs of fossil fuels.

If last week's conference was any indication, the conversation among growers, processors, suppliers, and retailers has advanced significantly since then, as the industry comes to terms with these imminent realities. But the inertia of entrenched business practices, and a chain of suppliers that have traditionally remained isolated link-by-link, leaves certain core problems remaining to be solved.

In this light, the event's two-day program was decidedly ambitious. Deliberately reaching out to a multi-stakeholder crowd, both the audience and the speaker roster featured independent farmers and small-scale growers alongside corporate powerhouses like Nestle and Dole. This immediately shifted the dynamic of the conference, bringing a modicum of practically to the panels and ensuing discussions.

The underlying premise driving the programming focused on balancing the triple bottom line: people, planet, and profits. Kevin Rabinovitch, Director of Sustainability for Mars, Inc., laid out the challenge of addressing these three components in a complex industry with such a diverse supply chain.

"The agricultural system is not a factory," he said. "It's an open system" that necessarily requires a more complex approach in terms of metrics and systems design. With a program covering everything from systems implementation (LCA metrics, carbon trading, traceability), to specific-issue management (water conservation and toxicity, carbon sequestration, chemical toxicity, and more), SAP certainly covered a lot of ground in a very short period of time.

Cooperation vs. Competition

There are numerous ongoing attempts to address this complexity, and the common refrain of "what gets measured, gets managed" cropped up again and again. The struggle for this industry (as with many grappling with sustainability issues) is one of competition: how do otherwise competitive businesses come together to exchange the level of detail necessaryt o make truly informed decisions?

One project making significant progress in this area is the Stewardship Index for Specialty Crops, launched in 2008 and currently set to roll out its pilot program this year.

Developed through a multi-stakeholder process in an effort to provide common language and benchmarking tools, the Index is developing specific metrics for measuring sustainable outcomes throughout specialty agriculture. With 420 participants and 43 meetings over nine metric areas -- and a pilot program consisting of over 100 growers across 14 different crops -- the Stewardship Index might be the most striking example industry-wide data sharing yet. A similar effort, called Field to Market, is studying the impacts of commodity crops.

The information garnered from such projects is indispensable to making sustainable decisions along the supply chain, particularly when it comes to prioritization. But even more finite studies provide crucial input when it comes to decision-making.

A life cycle assessment of the supply chain by New Zealand's leading dairy co-op reveals, for example, that a whopping 85 percent of its greenhouse gas emissions occurs on the farm.

Against this backdrop, it's no wonder that the vast majority of the event's sessions addressed farm-specific practices such as water use, nitrogen efficiency, soil stewardship, and farmer engagement. As Mars' Kevin Rabinovitch pointed out, the agricultural industry has a unique advantage in its search for sustainability: with the right systems in place, agriculture actually has the ability to offset nearly all of its environmental impact through mitigation (using fewer resources, increasing efficiency, changing behaviors, etc. -- in other words, better farming).

Starting with the Farm

There's a pretty big dilemma that needs to be resolved before this optimism becomes practical reality. During a break-out session on how to engage farmers in the process of reducing greenhouse gases, Saskatchewan farmer John Bennett bluntly articulated what would become the driving tension throughout the conference: the small-scale farmer doesn't exactly work on the same field as the rest of his or her supply chain.

Whereas storage facilities, processors, packagers, distributors, and retailers all have some control over the price of their product, allowing them additional control over their margins, the farmer does not. "I get about the same price for grain," said Bennett, "that I did 30 years ago." With no way to support profits through increased pricing structures, the farmer's only true profit source is through efficiencies -- reducing expenses by adjusting farming practices.

Bennett's solution was clear: "soil stewardship should be the method for assessing sustainable agriculture." By cultivating healthier soil, the farmer can (in order of specificity): Improve soil nutrient content, grow healthier plants, produce better yields, use fewer synthetic pesticides, herbicides and fertilizers, use less water, increase biodiversity, prevent erosion, and sequester carbon.

(As an aside, the rancher or dairy farmer's version of this might go something like: Improve soil nutrient content, grow healthier feed crops, raise healthier animals, use fewer antibiotics and synthetic hormones, prevent toxic effluent, reduce methane emissions, and sequester carbon.)

Although it's hard to argue with that kind of productivity, soil stewardship requires a supporting infrastructure. And infrastructure requires resources. And farmers, as Bennett so aptly pointed out, are often too busy trying to break even to invest heavily in infrastructure design and implementation.

It's a vicious catch-22 that cannot change without full supply chain participation. But as the conference's title suggests, the industry is starting to see an interesting thing happen: Larger suppliers, manufacturers, and retailers are stepping up. If the 2009 FMI conference served as a wake-up call, this week's Sustainable Agricultural Partnerships event may mark the shift toward a form of cooperation not seen before among these businesses.

Large Companies Reach Out

Manufacturers and retailers are are perhaps driven toward this cooperation by increasing pressure; these brands that inserted themselves between the consumer and the grower with little pushback are now facing a growing demand among consumers for better food and better disclosure. And because the consumer's point of contact is at the brand level, it's the retailer and manufacture that are being held responsible for what happens on the farm.

But unlike price controls (or, rather, because of them), sustainability can't be forced on the farmer -- s/he simply doesn't have the knowledge, or tools, or financial resources to make it happen to the degree it needs to. This is why efforts like the Stewardship Index for Specialty Crops are so vital; by pooling the resources of the entire supply chain, farmers gain access to measurement tools, pilot programs, information sharing, and other resources necessary to implement more sustainable practices on their own land.

Even outside of these industry-wide efforts (or, perhaps, as a result of them), larger food-based companies, such as Starbucks and Dole, are reaching out to their smaller supply chain partners. Several companies presented case studies demonstrating a truly unique spirit of what one speaker called "pre-competitive cooperation." Dole, for example, described its efforts to teach banana growers simple driving techniques, resulting in a 10 percent reduction in fuel consumption. The savings not only has an environmental benefit; it also helps Dole's banana growers increase their margins, creating stability in the supply chain.

The Challenge of Certification as a Marketing Tool

Or take the example of Burgerville, a mid-sized restaurant chain in the Pacific Northwest that brings the farmers who supply their seasonal fruits and meats into Burgerville restaurants to speak with guests about where their food comes from.

It was hard not to feel a twang at the heartstrings as companies told stories of small, independent farmers finally discovering a demand for regional, farm-grown products. Josh Dorf from Stone-Buhr Flour, a regional mill selling successfully at the mid-price point, showed a video replete with a farmer tearing up while discussing his grandchildren's future.

Sustainable food, the panel seemed to imply, holds a certain value to the consumer that commodity products simply can't. Clearly, farmers can and should take advantage of that value. Talk turned to certification labels and communicating about sustainability efforts with the consumer.

And then a farmer in the audience stood up. He described how his home state in Australia spent 10 years and millions of dollars to develop a more sustainable quality assurance system for grain producers, only to scrap it all when it became clear that manufacturers weren't willing to pay for the added cost of the program, despite farmers' willing participation. "You pay us, so you can stick your badge on our product," the farmer practically begged the panel, "and we'll do whatever you want. We're in business just like you." He was the only audience member who received a round of applause throughout the two-day event.

Small Growers Take the Lead

This ongoing tension between the farmer as exploited link in the supply chain and the farmer as rugged success story was palpable throughout the conference, which is likely inevitable when you invite everyone to the table to share their experience.

What was, perhaps, most striking were the farmers who shared the stage with the Burgervilles and the Doles and the Deans. Although each represented a different approach, many have clearly found a way to not only take advantage of the changing landscape, but actually drive that change. Rather than worry about what strings their upstream supply chain is pulling, these men and women represented business models that, on the one hand, are a return to old-school independent farming and, on the other, are an adaptation of their modern corporate brethren.

Vertical Integration

Straus Family Creamery is a great example of what happens when a farmer also dons the hat of a business man. Taking a cue from large conglomerations, Straus controls multiple points of its own supply chain including both a dairy farm and a creamery that produces butter, ice cream, and other products from its own milk. This system gives the company far more control over its pricing, expenses, environmental impact and, ultimately, the quality of its product.

Speaking haltingly, with a hint of cantankerousness, Albert Straus discussed the pros and cons of using life cycle analysis tools for managing agricultural sustainability, pointing out that LCA reporting is often prohibitively expensive for a small operation. His solution is to play the guinea pig, offering up his dairy farm as a lab for researchers and industry experts. Because the company serves as both grower and processor, LCA data is much easier to collect.

The farm uses LCA -- along with its own agricultural expertise and common sense -- to focus on mitigation. Organic farming techniques help the dairy reduce its environmental impact throughout operations, often in surprising ways. Approximately 38 percent of a dairy's footprint, for example, comes from enteric emissions -- also known as cow burps. Feeding the Straus cows a controlled organic diet improves cow digestion, which minimizes cow burping, which in turn reduces greenhouse gases caused by the burps.

The control that a vertically integrated company brings may very well be the key to Straus' financial success; the company doesn't have to worry nearly so much about being beholden to large supplier price controls, since it provides the milk for its own creamery.

Producing a high-end, organic line of products differentiates the company's dairy from the rest on the grocery shelf -- and being able to set its own price points allows the company to turn a profit where other dairy farmers might struggle. But what about the notion that consumers only say they'll pay for organic, but ultimately refuse to pay a premium at the checkout counter? "Our customers don't price shop," said Straus, "and they don't switch brands."

Co-op Farming

Another approach for small farmers represented at last week's event was the co-op structure. Co-ops allow farmers to access ideas, strategies, and resources without fear of competition from their neighbor. They also give otherwise small growers the necessary leverage to negotiate with processors, manufacturers, and retailers on price.

On the surface it may seem counterintuitive that co-ops would appeal to larger retailers. Yet retailers recognize that if they are to meet consumer demand for traceable, sustainable product, the co-op system actually makes sense, as it ensures a more reliable and consistent supply.

This is particularly appealing to larger retailers, but even mid-size companies like Oregon's Burgerville restaurant chain, which sources all of its beef from a local ranchers co-op, recognize the value. And for companies with significant sourcing needs, it's arguably much easier to deal with a single co-op than a handful (or even hundreds) of independent producers with varying business skills.

Of course, these models are not without their own challenges. Vertical integration, for example, requires significant capital for start-up and expansion, while co-op farming relies on infrastructure and communication. And both models demand that farmers adopt a strict business-minded mentality that doesn't always come easily. But perhaps the best hope for the survival of the small farm in America is to adapt these types of business models -- and others -- to its own purposes, grafting them onto sustainable agricultural practices to provide the longevity our food system needs.

The Sustainable Agricultural Partnerships conference may be just a snapshot of what's possible -- and that snapshot certainly includes some polarization inherent in the conventional supply chain, as well as challenges to accurate data measurement and sharing -- but it nevertheless represents a hopeful shift in what remains a key industry for the American economy.

Jess Sand runs solo communications practice Roughstock Studios and is co-creator of Re-nourish.com, the design industry's first fully independent online toolkit for sustainable graphic design.

Photo CC-licensed by Robb North