Sustainability by shitingting


A Farm Manager’s 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
   What farm mangers can expect
       Examples and Initiatives
       Sustainability Standards
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)
   Focus on efficiency and innovation
       “Why Sustainability is Now the Key Driver of
        Innovation” Harvard Business Review (2009)
        (link on class page)
Business that Pursue Sustainability:
5 Stages of Change
1.   Viewing Compliance as Opportunity
2.   Making Value Chains Sustainable
3.   Designing Sustainable Products and Services
4.   Developing New Business Models
5.   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
       McDonald’s, Cargill, Unilever, WalMart,
        FritoLay, Sysco, Del Monte, Kettle Chips, etc.
  Corporate Agricultural Sustainability in WI
        Focus on energy and waste reduction
        FritoLay’s 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
        Kettle Chips Beloit Plant (LEED gold plant)
             100% waste oil for biodiesel: saves 8 tons CO2
             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%
Courtesy of J. Colquhuon, UW-Horticulture
Courtesy of J. Colquhuon, UW-Horticulture   source:
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 it’s 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 values—which leads to conflicts
People, Profits
and Planet
Triple Bottom
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
       Do you use Practice-based Standards or Outcome-based
Life Cycle Analysis/Assessment (LCA)
   Framework to estimate environmental effects of
    products for sustainability assessment and measure
    progress—Have 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

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 week’s 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
   Potato and vegetable LCAs for processed vegetables from WI
   Many more need to be completed
 Green Cheese LCA Graphic

   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
   Companies currently have individual systems
       Comparable to GAP/GHP a few years ago
       Unified GAP/GHP now, like ISO 9000
   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
   Healthy Grown Potatoes (Wisconsin)
       Primarily Pest Management, plus some Soil & Water
        Quality and Ecosystem Restoration
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
   Accounting system to track and create reports
       Balance sheet, income statement, cash flow, financial
        ratios: how is your business doing?
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
   Track how your farm is doing across years
       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
   Healthy Farms
       Provide access to financial/managerial advice
       Training/continuing education requirements
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
   Agriculture has been through this before
       Dairy sanitation between 1900 to 1940
       Pesticides between 1965 to 2005
       Food Safety since mid-1990s
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 agriculture’s benefit to rural
       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?
   How do you implement sustainability?
       What changes do you make?
       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                         7%
             Some                          20%
             A Little                      23%
             Nothing At All                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
        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 don’t
         understand or buy into the rationale that a
         green product should be more expensive.
         Shoppers don’t 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
   What companies and consumers are thinking
       Overview company efforts and consumer surveys
   How sustainability is typically defined
       Terminology and concepts: 3 Spheres, LCAs
   What farm mangers can expect
       Examples and Initiatives
           Cool Farm Tool, Fieldprint Calculator
       Sustainability Standards
           Healthy Grown

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