Every producer who has ever attended a conference around the theme of sustainable crop or livestock production wants to hear one simple thing: How does he get a premium for tracking sustainability metrics and producing a product that marketers are supposed to be clamoring for?
The answer is a bad-news good-news sort of thing. The bad news? Currently, there are no predictable sustainability premiums tied to crops or livestock. The good news? Positioning an operation to meet sustainability parameters puts a producer in a good bargaining position when a company does want to source "sustainably produced." A good example is a program where Wrangler developed a denim product line using sustainably grown cotton called the Wrangler Rooted Collection.
In addition to serving these growing, niche-type buyers, sustainability research is helping develop and refine production metrics around soil and water quality that can make operations more financially solid, increasing the odds an operation survives to reach the next generation and even the next.
DIVIDENDS BUT NOT MARKETS
Tim Smith has not seen a market advantage with sustainability, but the Iowa corn and soybean producer believes the tenets around sustainability have dividends.
A lifelong farmer, Smith emphasized conservation throughout his career and believes metrics available today through Field to Market (FTM) help farmers show the positive impact they are already making through their chosen production practices.
"I've worked the same farm my whole life," Smith says. "Back in 2011, I got involved with the idea of using cover crops and changing over to no-till. About a year later, I started working with the Field to Market Fieldprint Calculator. It's been an ongoing process since then, and we've seen measurable progress."
Despite significant gains in soil retention and water quality, Smith says he's yet to be able to fully connect to the corporate side of sustainability, where there might be market opportunities for individual farms.
"I understand food companies and consumers want more sustainability accountability from those of us in agriculture," he says. "The reality is that most people in my area aren't thinking about the end user. Most grain from this part of the world goes to livestock or ethanol."
The closest farmers in his area have come to a sustainability market involves contracts for soybean production with Unilever, a company that produces Hellmann's mayonnaise. Smith adds some of those contracted acres are now calling for cover crops.
"They want something they can call sustainable, but I don't think the bar is high enough yet," he notes. "Companies want to get acres for the least amount of cost and effort, and be able to call their product sustainable. That's where FTM comes in. They are setting a standard where you measure metrics that help define whether you are or you aren't making progress as a sustainable operation."
Smith believes the understanding of soil and nitrate loss coming from metrics will have a long-term payoff for agriculture. "People ask me if conservation pays," he says. "We aren't getting something from the end user necessarily, but for me, one of the main goals is to save the soil on my farm. Land here is pretty level, and most would not consider erosion a serious problem. But, in recent years, we've had intensive rainfall in terms of quantity and frequency, and that takes a toll on the land. By using these practices and the Fieldprint Calculator, I know I'm preventing my soil from eroding away, and I'm improving water quality. We also have seen a wildlife benefit. It's hard to put a price tag on that."
Alabama's Newby family is part of a pioneering group of farmers across the country who have been able to tie commodity sales to a sustainable production emphasis.
A seventh-generation cotton operation, their farm is based at Athens and boasts a conservation tillage and rotation program that goes back more than 25 years. Jerry Allen Newby says the rolling land in this area necessitated the use of these practices to reduce soil erosion and maximize efficiency.
Today, the family averages about 3,000 acres of cotton in rotation with wheat, beans and corn. It also grows hay and raises cattle. A cover crop of wheat and a rye mix is standard across most acres. The family entered into a program with Wrangler, a brand owned by VF Corp., to sell cotton that met certain sustainability parameters for a new line of denim. VF wanted product from producers who did three things: used conservation tillage, planted cover crops and rotated at least three different crops over five years in one field.
Roian Atwood, director of sustainability at Wrangler, in Greensboro, North Carolina, says: "From our perspective, cotton growers using these three practices define what sustainable cotton looks like in the most impactful ways."
The first year the Newbys participated in the program, they sold Wrangler 40,000 pounds of cotton. Allen notes they didn't receive premiums for that cotton, but as long as programs like this don't require him to alter management, he sees a value in market building.
"The premium we receive is publicity for the industry," he says. "From that, we hope demand goes up. That helps everyone. If parameters changed, and we had to spend more to stay within a set of sustainability guidelines, then I think we'd expect a premium."
GLOBAL GOALS IN BEEF
Sustainability isn't just for row-crop growers. Cattle producers are a big part of the sustainability trend. In some cases, they are seeing measurable financial returns.
In Canada, a system was established to pay premiums to producers meeting beef-sustainability label parameters. That push came as McDonald's launched an Angus burger carrying Canada's sustainability logo.
The same concept may one day come to the U.S. market. But, it seems unlikely premiums will be associated with the program. At the 2018 Global Roundtable sustainability meeting, in Kilkenny, Ireland, Townsend Bailey, director of supply chain sustainability for McDonald's USA, and Keith Kenny, global vice president of sustainability for the corporation, noted Canada's premiums have been tied to its pioneering status.
Also, Canada's sustainable-beef system is quite different from the one in the U.S. because it is an audited program, which U.S. producers have made clear they don't want.
Bailey said at that meeting there didn't appear to be "an appetite for certification in the U.S.," adding, "we don't want to mandate any specific practices. We want to make sure there is enough flexibility for producers and help provide tools and resources to implement a program."
Copyright 2020 DTN/The Progressive Farmer. All rights reserved.