Laura Sands, a consultant with Vela Environmental, spoke Wednesday at the DTN/The Progressive Farmer Ag Summit about the growing environmental traceability pressures farmers will face in the future. Those pressures are largely being driven by major retailers. Sands said farmers will have to begin thinking about issues such as sustainability risk management.
|Walmart wants to become more sustainable and is looking at fertilizer use to grow commodities used to produce the wares it sells. (Courtesy Walmart CC BY 2.0)
By Chris Clayton
DTN Ag Policy Editor
More farmers are going to be faced with documenting their environmental practices and reducing fertilizer usage when selling to certain markets.
Laura Sands, a consultant with Vela Environmental, spoke Wednesday at the DTN/The Progressive Farmer Ag Summit about the growing environmental traceability pressures farmers will face in the future. Those pressures are largely being driven by major retailers. Sands said farmers will have to begin thinking about issues such as sustainability risk management. She also noted Walmart is sending out questionnaires to suppliers asking for more information about environmental performance and sourcing of basic commodities.
"Right now, you might not be getting questions, but the people you sell to are having to answer these questions," Sands said.
Companies such as Unilever have vowed to ensure soybeans and soy oil are sustainably sourced. Parts of the U.S. dairy industry also want to reduce their carbon footprint by 25% by 2020.
Beyond fertilizer, water sustainability is another factor major food companies are starting to consider when sourcing grains and oilseeds.
Such supply-chain initiatives can have wide-ranging effects, particularly when the country's largest grocer, Walmart, is becoming more aggressive in sustainability efforts. Walmart announced in September it is requiring food companies that use commodity grains to develop a "fertilizer optimization plan." That plan should outline goals to reduce fertilizer usage. Walmart has a goal that the retailer and its suppliers will reduce fertilizer use on 14 million acres in the U.S. by 2020.
That 14-million-acre figure is based on a number of different pilot programs Walmart already is engaged in. Brittni Furrow, a senior manager for sustainability initiatives at Walmart, focuses specifically on the company's food and agriculture. In a phone interview, Furrow said Walmart began examining its supply chain and found nitrous oxide from fertilizer was one of the largest opportunities to lower overall emissions from suppliers.
"That is why it has been a real focal point for us over the last couple of years," Furrow said.
Working with commodities as a retailer is challenging because Walmart is so far removed from the farmers who make cropping decisions. The commodity supply chain also is largely untraceable. Walmart doesn't have a lot of direct conversations with farmers, but the retailer has worked to connect with regional and local experts whom farmers trust. Furrow acknowledged that reaching out to commodity farmers hasn't been easy.
"How we engage in that sector of the supply chain is the thing we really have to figure out," Furrow said.
Walmart actually has been exploring a number of different issues. Corn rose to the top, but a number of the beta projects touch on other practices as well. Furrow noted Walmart also is looking at issues such as water usage and no-till crop production.
"We're now looking at next year and how we can look at resilient sourcing across commodities," Furrow said.
Environmental Groups Push Retailer Changes
Walmart began its drive on fertilizer by working with groups such as Environmental Defense Fund. Jenny Ahlen works for EDF in Bentonville, Ark., where Walmart is headquartered. Ahlen said EDF and other groups pushed Walmart to examine its supply chain for environmental impacts. The chain had largely focused its efficiency and climate efforts on its individual stores up until that point.
"But they hadn't really addressed their supply chain, which is where we think 90% of their impact actually happens," Ahlen said.
Thus, Walmart set a goal to reduce 20 million tons of greenhouse gas emissions by 2015. In studying the issue, the company found fertilizer is a focal point because about 50% of Walmart sales come from food.
Nitrous oxide emissions from commodity corn stuck out because one ton of nitrous oxide is the equivalent of 300 tons of carbon dioxide. Agriculture accounts for nearly 70% of nitrous oxide emissions, according to EPA.
"When you look at food more closely, fertilizer, particularly nitrogen fertilizer, produces some really powerful greenhouse gases," Ahlen said.
Walmart works with the Sustainability Consortium to survey suppliers as well as Field to Market to look at ways farmers can reduce their environmental footprint.
Major Food Companies Stepping Up
In a similar vein, General Mills also is trying to cut its carbon footprint. The processor of breakfast cereal and other products determined two-thirds of its carbon footprint and 99% of its water usage is tied to raw materials.
"So working on sourcing is a really critical thing for us if we want to make sure our business model operates affordably," said Steve Peterson, head of sustainability sourcing for General Mills. Peterson spoke to DTN about General Mills' efforts in November.
General Mills has committed to be sustainably sourced on ten major commodities that represent more than 50% of global purchases. About half of those commodities come from larger commercial North American farmers — wheat, oats, dry mill corn, sugarbeets and dairy. The rest of those commodities come from small-scale farmers globally.
General Mills has been a member the agricultural industry group Field-to-Market since its inception and has helped develop the continuous improvement approach that General Mills is applying to those major commodities in the U.S. by 2020. "We're all in there together, including our customer, Walmart," said Peterson, who is now vice chairman of Field to Market's board.
Peterson said General Mills is looking for "the sweet spot" when it comes to reducing inputs on the farm level but not create a separate, segregated supply chain that would drive up costs for everyone. The goal is to demonstrate a baseline of inputs to produce a crop and improve from that baseline over time.
"That, in our mind, is enough to make a claim that whatever we source, or any other Field to Market member, would be deemed sustainable," Peterson said.
General Mills is starting its sustainability work with a select group of farmers in the Snake River Valley basin of Idaho. General Mills chose Idaho because that's the region most vertically integrated for commodity purchases.
It's the only place General Mills owns the grain elevators. General Mills selected a group of representative farmers throughout the valley. They then worked together to create a baseline for how the farmers grow their crops regarding inputs.
Working With Farmers
Over the last year, Walmart also has started to establish more relationships with major commodity groups to help spread the message to farmers. Walmart's sustainability team is talking with groups such as the National Corn Growers Association and participating in some of their events, as well as state soybean associations and some animal-agriculture associations.
"Specifically, the fertilizer piece has been a great learning opportunity for us," Furrow said. "Ultimately, what it comes down to is the fact that for farmers to move forward in that direction, you have to have that trusted resource, such as the agronomist, the crop advisers and working through some of the producer associations and NGOs."
Walmart wants to work with more suppliers and major brands to scale up these initiatives and make them more mainstream. That would include looking for ways to differentiate products on the shelf that may have some more efficient fertilizer inputs vs. a more standard product.
"We're definitely looking for new opportunities and finding ways to incentivize our suppliers to engage in these activities," Furrow said.
Chris Clayton can be reached at firstname.lastname@example.org.