Who Bears the Burden of Making Agriculture More Sustainable?
Part of the “Sustainability at Scale” series sponsored by Marrone Bio Innovations
All of us have a stake in ensuring a sustainable food supply. Consumers increasingly want to have a say in how their food is produced, but some seem to assume the burden of proof falls completely on the farmer.
Imagine you’re a dairy farmer.
You purchase your feed products from other local farmers and feed suppliers. You sell the milk to be made into yogurt at a plant not too far away.
That plant is owned by a company who’s customers’ preferences have changed. Many of those customers now want to know how the crops were grown, what inputs were used to grow the crops, how the animals were treated, and what the overall impact was of the production of the milk that went into that yogurt.
In some cases, the customer wants to dictate these terms. They may even threaten to buy other yogurt if these concerns are not addressed to their satisfaction.
Are they still going to eat yogurt? Yes.
Will they pay more for this information? Some will, but most will not.
So, who bears the burden of these changes?
Even if you, as a producer, are operating at a very sustainable level with all of your practices, it costs money to regularly monitor and verify this information.
You might be put in a situation where you need to dictate changes in practices to your feed suppliers. Chances are that won’t go over too well, so you might be forced to find new suppliers. Regardless, your suppliers are going to want a premium for these special terms.
Can you pass that premium on to your milk buyer? Can they pass a premium on to the consumer?
This is the question I wanted to answer:
Who bears the burden of making agriculture more sustainable?
I asked these questions to Ryan Sirolli, Director of Agriculture at Dannone North America. Ryan’s company produces popular brands of dairy products such as Dannon, Oikos, and Danimals. You can catch my full interview with Ryan on the “Future of Agriculture” Podcast here:
Dannone North America sources a significant amount of their milk supply directly from dairies through a cost plus arrangement. Meaning, they set a price that takes into consideration the cost of production as well as a “fair and stable” margin for the producer.
Realistically, the producer may not make as big of margins when dairy economics are favorable, but in tough times (low milk prices and high inputs), both the producer and food company shoulder the economic burden.
“And by doing that we create essentially a true partnership with many of our dairy producers”, Sirolli explains. “It’s very transparent, it’s very open and it is very partnership-based. And so we already have that level of trust; that level of partnership mentality.”
He goes on to explain how this comes in handy when consumer preferences change:
“So that when we want to try something new; if we want to explore non-GMO, if we want to explore soil health. We don’t just do it, we go to our producers first. We sit down with our dairy farmers and we say ‘you know this is something we are exploring…we think our consumers care, what do you think? How would we do it? Are you on board with it?’ And through that the vast majority of the time they are usually willing to try things with us right or help craft where we go.”
This level of collaboration allows for costs of changes in consumer preferences to be shared all along the value chain from producer to consumer. So whether the changes are related to animal welfare, inputs, or soil health, it’s not only up to the farmer to make the changes and absorb the costs.
“It’s not us just approaching a farmer who has never worked with us before or knows nothing about what we do and is just looking to transact, but rather its part of the bigger picture about how we source milk, the brands that they touch and their interest in being part of this bigger partnership of what we do.” — Ryan Sirolli
Many large producers are able to grow much of their own feed and have an easier time adapting to some of these changes. Some critics say that these types of partnerships encourage consolidation in the industry and make it more difficult for smaller producers to sustain themselves. There are also concerns about giving up too much management influence to large corporations. (Watertown Daily Times)
If true, the argument could be made that these environmental sustainability efforts could come at the cost of economic sustainability for small producers. Is this true sustainability? You’d have a hard time convincing the small multi-generational dairy families.
But according to Sirolli, this is not just a fad. “Consumers aren’t backing away from their desire to know more. I think you’ve got to create transparency if you want to create trust.”
This would imply that more food companies are going to move this direction of wanting to form partnerships directly with producers. They will want to know exactly where their ingredients are coming from and have a say in how they are produced.
The plus side is it does allow for a “shared burden” of who is accountable for agricultural sustainability efforts between producer, processor, and perhaps consumer. But will there be room for everyone?
“It is complex and it takes time” says Sirolli about their program. “But I think the more visibility we have and the more relationships we have and the more partnerships we can create, the greater the ability for us to really influence and be agile and nimble and truly differentiate our supply chain and then create real value for our consumers, for our farmers and for us in the process.”
The bottom line is that we all have vested interest in our food supply. There needs to be incentives and accountability at all levels, not just mandates on the farmer.
If you’re curious about where your food comes from, by all means follow that curiosity. But don’t blindly put the burden on producers to change their ways without both doing your research and sharing in the burden of change.
Check out my full interview with Ryan Sirolli, Director of Agriculture at Danone North America:
