The Emerging Edge for Sustainable Sourcing: Lessons from Food Companies

The views presented in these blogs are those of the authors.

Ten years ago a senior vice-president of one of the world’s largest food brands said, “We just don’t have sustainability on our radar yet.” Now, most food companies have a sustainability profile and a number of them have made a commitment to sustainably sourcing agricultural materials.

The emerging challenge for food and beverage companies is how to ensure that sourcing is responsible and sustainable. When a group of sustainable sourcing heads at major companies got together in early 2014, they divided these programs between those that audit compliance and those that provide incentives for continuous improvement. Some things have to be assured, like food safety and working conditions for labor. Soil improvement and biodiversity protection, on the other hand, are management areas less suited to compliance regimes and more suited to experimentation and shared learning and are extremely local in nature.

Leading food and beverage companies are discovering that continuous improvement in agriculture occurs in complex farm rotations across whole landscapes. The implications for sustainable sourcing are profound. Companies who are at the leading edge of sustainable sourcing are realizing that it is no longer just a question of a sustainable product, but rather it is about a sustainable farming system. To meet a sustainable sourcing commitment for one type of crop may not be possible without ensuring that all the crops in a rotation are farmed sustainably. This requires a new level of collaboration between companies and the farmers they source from.

Opportunities to test collective action at the landscape level are emerging providing valuable lessons.

Collective Action at the Landscape Level
Two key landscape level collaborations stand out as examples of this shift in company commitments to sustainable sourcing.

Skylark Project
In 2002, Heineken was searching for a way to procure sustainable barley from farmers in the Netherlands. The conclusion they reached was that sustainability couldn’t be limited to just one crop: it must cover the whole rotation plan. Barley farmers in the Netherlands frequently grow a rotation of potatoes, sugarbeets/carrots, and small grains. As a result, Heineken and their farmer suppliers recruited other participants to Skylark, including Cargill, CSM, Gebroeders Van Liere, Suikerunie, McCain, and Unilever. Companies and farmers work together to share skills, define sustainability objectives, set goals, and advise on agricultural topics.

The Skylark Foundation now has over 400 farmers and 25 supply chain partners participating. “Sustainable farming is a mentality. I think about it constantly,” says Aard Roboard, one of the founding farmers of the Initiative. “This is a great example of where farmers are deciding to farm sustainably and, with the help of the supply chain partners, are producing sustainably sourced products,” said Haaye Boostra, Sustainable Sourcing Development Manager Raw Materials at Heineken Global Supply Chain. “It’s a win-win situation for the complete supply chain—from farmer to consumer.”

Snake River Basin, Idaho
A few years ago, when Steve Peterson at General Mills decided to pilot sustainable wheat in the Snake River Basin of Idaho, he quickly learned that he needed to engage with wheat farmers about their whole rotation, which includes not only wheat but also potatoes, sugar beets, and sometimes barley. This engagement logically extended to companies that purchase the other products. Steve also turned to The Nature Conservancy, which has hydrologic expertise on the ground, and to the federal and state agencies engaged in water issues in the region. Over time, the General Mills initiative will help catalyze water and soil stewardship throughout the region, and all the players will be able to make a credible claim about sustainable production in the Snake River Basin.

Near Term and Emerging Opportunities
Informed by his work in the Snake River Basin, Peterson challenged his peers at the 2013 Sustainable Food Lab/SAI Platform Annual Meeting in Annapolis to collaborate. “If I’m paying for a water risk assessment in one of my key regions, and you’re sourcing from the same region, why don’t we share, save money, and work together with the farmers there?” Now the Food Lab and SAI Platform are jointly managing a collaboration initiated by Nestle, ABInbev, SABMiller, Unilever, Mars, and PepsiCo. These companies are identifying watersheds of mutual interest (by risk and sourcing importance), scoping mitigation projects, and developing a safe forum for sharing learning. The companies involved recognize that achieving basin level water sustainability is more than one company can solve on its own.

Another emerging opportunity is developing markets for “third crops” that might be integrated into the corn/soy rotations that dominate the American Midwest. Most Midwest farmers have slowly moved away from producing crops such as oats and wheat to farm an exclusive continuous corn or corn/soy rotation. Now researchers and farmers are learning that long-term crop yields are lower in systems lacking diverse rotations. In most cases, extended crop rotations agronomically out-perform low diversity systems. Extended crop rotations also offer many bioservices, including improved nutrient cycling by feeding the soil microbes for longer periods of time, reducing extreme soil temperatures, improving soil properties like bulk density which improves water infiltration, minimizing runoff and reducing the amount of fertilizer and herbicide required. Adding diversity to the rotation and creating a market for these third crops is one of the best ways to control costs, improve the bottom-line and increase yields of major cash crops in the US Midwest.

Hal Hamilton is Co-Director of Sustainable Food Lab and an AGree Advisory Committee member, and Elizabeth Reaves is a Program Associate at Sustainable Food Lab.This blog is adapted from the authors’ AGree Point of View Paper, Food and Beverage Company Sustainable Sourcing Initiatives in Farming Regions, which includes a wide range of case studies and recommendations for private and public sector action to enable successful sustainable sourcing initiatives.