Sustainability: A Farm Managers Perspective

Paul D. Mitchell AAE 320: Farming Systems Management

Learning Goals
What companies and consumers are thinking How sustainability is typically defined


Basic terminology and concepts Examples and Initiatives Sustainability Standards

What farm mangers can expect

 

Sustainability has become mainstream

Companies advertize their greenness as a way to differentiate selves from competitors


Corporate Responsibility reports highlight social and environmental programs (links on class page) Why Sustainability is Now the Key Driver of Innovation Harvard Business Review (2009) (link on class page)

Focus on efficiency and innovation



Business that Pursue Sustainability: 5 Stages of Change

1. 2. 3. 4. 5.

Viewing Compliance as Opportunity Making Value Chains Sustainable Designing Sustainable Products and Services Developing New Business Models Creating Next-Practice Platforms

Corporate Agricultural Sustainability

Agriculture and Food are part of the corporate push for sustainability
  

Trends in Food Trends Most major food companies have announced sustainability programs McDonalds, Cargill, Unilever, WalMart, FritoLay, Sysco, Del Monte, Kettle Chips, etc.

Corporate Agricultural Sustainability in WI

Focus on energy and waste reduction FritoLays Beloit Plant
 

1st food manufacturing plant to achieve LEED gold Reduced natural gas 35%, electricity 20% and water 50% per pound of product since 2000 100% waste oil for biodiesel: saves 8 tons CO2 emissions/year Reduces gas and electricity by 20%, uses wind power Reuses 3.4 million gallons of water per year Removing paper layer in bag reduced material use 20%

Kettle Chips Beloit Plant (LEED gold plant)

   

Courtesy of J. Colquhuon, UW-Horticulture

Courtesy of J. Colquhuon, UW-Horticulture

source: kettlebrand.com

Commodity Groups
Most major commodity groups have sustainability programs
    

Innovation Center for U.S. Dairy National Corn Growers Association United Soybean Board National Potato Council Wisconsin State Cranberry Growers Association

Sustainability and WI Farms

Russet Potato Exchange/Wysocki Farms
 

Responsible Farming: list of Earth Actions Windmill on logo to sell potatoes

Crave Brothers Farmstead Cheese

 

Sustainable Story: Anaerobic manure digester, text story, news video, press release From cow pies to clear skies

Main Point
Sustainability is a big deal and becoming more so! Ag Sustainability used to be Alternative Ag
 

More mainstream now and becoming even more so It is now and will continue to impact farm operations

Look at how sustainability is defined and its drivers What can farm mangers can expect?

Agricultural Sustainability
Sustainable agriculture integrates three main goals environmental health, economic profitability, and social equity to meet the needs of the present without compromising the ability of future generations to meet their needs.
    

Stewardship of both natural and human resources Systems-based, interdisciplinary research and education Responsibility of all participants in the system More of a process or strategy than an accomplishment Tied to personal valueswhich leads to conflicts

People, Profits and Planet Triple Bottom Line

Practical Issues
People, Profits and Planet is the grand ideal, but issues remain to make it practical What do you measure and how?


Commonly see Life Cycle Analysis (LCA) as way to measure and summarize multiple environmental impacts

How do you implement or operationalize sustainability?



Do you use Practice-based Standards or Outcome-based Requirements?

Life Cycle Analysis/Assessment (LCA)

Framework to estimate environmental effects of products for sustainability assessment and measure progressHave you improved? Examine inputs and activities used to produce the product, then quantify impacts Examine the outputs created by making, using and disposing of the product, then quantify impacts Commonly focus on energy consumption, water use and waste generated, but can do more outputs (e.g., GHG/nitrous oxides)


Never much on Economics/Profit and Society/Community

General LCA Graphic

Source: http://www.ched-ccce.org/confchem/2010/Spring2010/P3-Haack_et_al.html

Agricultural LCAs
Ag Production: 90% of U.S. water use  83% of average U.S. household carbon footprint per year for food consumption is ag production  Food production & distribution = 17% of U.S. energy use  Shifting less than one day per weeks worth of calories from red meat and dairy products to chicken, fish, eggs, or a vegetable-based diet achieves more GHG reduction than buying all locally sourced food. UW Green Cheese Project: Cheese LCA http://fyi.uwex.edu/greencheese/ Potato and vegetable LCAs for processed vegetables from WI Many more need to be completed

Green Cheese LCA Graphic

Source: http://fyi.uwex.edu/greencheese/files/2011/04/10_Passos-Fonseca_GreenCheeseLCA-EnergyGHGIntegratedDairyBiofuelsWisconsin_ASABE.pdf

Implementation
How do you implement sustainability?
    

What changes do you make? How do you measure success? Do you get credit for your efforts? Why bother? Personal values matter De gustibus no est disputandem Focus here on how affects farm management

Operationalizing Sustainability
Companies pushing suppliers for sustainable products so company can make claims to consumers to aid marketing Different companies have different methods and ways to ensure sustainability Currently a free for all with little structure to systems in place, but lots of demands
 

Farmers at ground zero in the middle of debate To sell in certain markets, need to be certified

Sustainability Certification
Create standards and certification system
 

Way to prove sustainability for marketing Fair Trade, Organic, Healthy Grown Comparable to GAP/GHP a few years ago Unified GAP/GHP now, like ISO 9000

Companies currently have individual systems

 

Sustainability standards: no consensus among companies and consumers, multiple systems

Sustainability Certification Examples

Cool Farm Tool
 

Unilever, plus Pepsico/FritoLay, Sysco, McCain, etc. CO2 emissions

Field to Market/Keystone Alliance Fieldprint Calculator for Soybeans/Corn/Wheat/Cotton



Five part radar plot: Land Use, Soil Loss, Water Use, Energy Use, and Climate Impact Primarily Pest Management, plus some Soil & Water Quality and Ecosystem Restoration

Healthy Grown Potatoes (Wisconsin)



Sustainability Certification Examples

Practice-based standards, not Outcome-based Focus almost exclusively on the Environment Where are the Economic and Social aspects? My Ideas of Practice Based Standards for Economic and Social Sustainability
 

Practices, not outcomes Not guarantee profitability

Economic Sustainability Standards: My Thoughts on Standards

Develop Production and Marketing Plans


Compare actual outcomes to plans ex post

Have Risk Management, Succession, Business Disaster Plans Track Costs and Revenues
 

Revenue and returns by crop, market, field Cost for various sustainability requirements Balance sheet, income statement, cash flow, financial ratios: how is your business doing?

Accounting system to track and create reports



Economic Sustainability Standards: My Thoughts on Questions/Issues

Use cost data to set premiums for the different sustainability practice on a menu


Feedback on how your costs compare Contribute data to Healthy Farms and receive a report that compares you to the group Privacy issues galore Data used against you in price negotiations Provide access to financial/managerial advice Training/continuing education requirements

Track how your farm is doing across years

  

Healthy Farms
 

Social Aspects in Sustainability Standards

More details exists than for Economic aspects, largely based on Fair Trade standards Focus on worker treatment, safety, benefits Nothing on farm family quality of life, safety, training, vacations, etc. Existing standards generally met if follow federal and state labor laws Social/Community Standards need more work

What farmers can expect

To complete paperwork and maintain records for sustainability certification
  

Focus on practice adoption: environment, economics and social aspects Data to support metrics (LCAs), on-farm audits Find a way to make money while doing so Dairy sanitation between 1900 to 1940 Pesticides between 1965 to 2005 Food Safety since mid-1990s

Agriculture has been through this before

  

Standard Development Initiatives

Agriculture should contribute to sustainability debate and standards development


 

Grower-driven standards based on economics and risk management that also demonstrate environmental and social responsibility Demonstrate agricultures benefit to rural communities Emphasize nutritional sustainability and environmental benefits and gains of agriculture

Standard Development Initiatives

Grower engagement is difficult given a lack of incentive to participate
 

More paperwork and traceability = more cost

Effect on industry? (cf. Food Safety Impacts)

Once benchmark is set, improvement may be required by companies (ratcheting)

Becomes new status quo for everyone

Return on investment? Price premium?

Implementation
How do you implement sustainability?
 

What changes do you make? Covered How do you measure success?

Much of the drive/push for sustainability from companies/shareholders & consumer groups
 

Do you get credit for your efforts? Why bother?

Do Consumers Understand Sustainability? (2010 International Food Information Council)

How much have you read or heard about the concept of sustainability in food production?
   

A Lot Some A Little Nothing At All

7% 20% 23% 50%

In 2007, the Nothing At All was 70%

Courtesy of J. Colquhuon, UW-Horticulture

Do Consumers Understand Sustainability? (Federal Trade Commission)

In recent years, businesses have increasingly used green marketing to capture consumers attention and move Americans toward a more environmentally friendly future. But what companies think green claims mean and what consumers really understand are sometimes two different things (FTC Chairman Jon Leibowitz) Updated Green Guides for advertiser product claims (FTC, Oct. 2010)
Courtesy of J. Colquhuon, UW-Horticulture

Will Consumers Pay for Sustainability? (2009 Deloitte/GMA survey)

95% of interviewed shoppers said that they would buy green, 22% actually did so. 54% consider sustainability in product selection 2% of shoppers committed to buying green

Courtesy of J. Colquhuon, UW-Horticulture

Will consumers pay for sustainability? (2009 Deloitte/GMA survey)

most shoppers would like green products to be price competitive. They often dont understand or buy into the rationale that a green product should be more expensive. Shoppers dont understand why a green product should cost more if it was manufactured with less packaging or it was transported less distance.
Courtesy of J. Colquhuon, UW-Horticulture

Sustainability: Consumers and Farmers

Latent demand for sustainability exists, but companies are struggling to deliver products
   

Price matters to consumers Sustainability not a value added characteristic Sustainability an expectation for farmers Provide sustainability to get access to markets

Sustainability and Farmers

How can farmers take advantage of these trends/demands for sustainability?
  

Consider it an Opportunity, not a Threat Innovation to develop new strategies, new alliances, new practices/technologies Find a way to use sustainably to make money

How do farmers participate in the creation and implementation of sustainability standards?



Get involved with grower organizations at local, state and national level and with ag universities

Summary
What companies and consumers are thinking


Overview company efforts and consumer surveys Terminology and concepts: 3 Spheres, LCAs Examples and Initiatives
Cool Farm Tool, Fieldprint Calculator

How sustainability is typically defined



What farm mangers can expect

 

Sustainability Standards
Healthy Grown