Precise, validated, and actionable data is key to the improved sustainability of animal protein production

In Brief

Primary feed and farm data, along with intelligent platforms are critical to enabling the sustainable transformation of animal protein production. Technology will empower all industry stakeholders with actionable, validated LCA data covering all major sources of animal protein to meet current and future regulatory, retailer and financial institution’s requirements for the improved environmental impact of animal protein.

Article

As the world’s population grows, demand for animal protein will continue to rise. To meet this demand sustainably, within planetary limits, will be a big challenge.

At dsm-firmenich we have been working for decades on food sustainability, especially with respect to animal proteins – it’s the basis of our purpose. We strongly believe in balanced, healthy nutrition with animal proteins being a highly nutritious and key part of a balanced, healthy diet. However, like other forms of food production livestock farming comes at a cost. This cost is increasingly evident, and is highly nuanced depending on farming methods, geography and animal species.? Nevertheless, the sustainability of mainstream animal production is under increasing scrutiny from the value chain, policy makers and associated stakeholders.? This means that continuing to operate as we have done in the past is not an option. All players involved in the production of animal protein need to be aware of the challenges we are facing.? We must work together to solve them – applying new thinking, new technologies, and new business models in order to create a more sustainable industry – protecting the planet, being socially responsible and economically viable.

We have seen several examples around the world showing that it is possible, that it can be done. From carbon neutral beef produced in Brazil without any deforestation to salmon produced in Norway with zero use?of finite marine ingredients and helping to reduce pressure on our over-fished oceans. From?huge and very traditional poultry and pork operators embracing sustainability measuring their impacts and setting up aggressive, publicly stated targets and actions to the largest fast-food chain in the world making a public commitment to zero deforestation and revolutionizing the relationship with their supply chain and civil society stakeholders to make it happen. From a small farm in Swaziland producing eggs to improve the nutrition and health?of thousands of orphan children in the country, to the largest grain traders and meatpackers in the world getting together to adopt a satellite monitoring system to monitor and reduce deforestation from happening in their supply chains in Brazil.? There are many initiatives and actions unfolding as we speak, based on new approaches to business, greater collaboration through the value chain and the greater use of technologies.

If the third agricultural revolution, known as the ‘Green Revolution’, brought significant productivity improvements in agriculture, the fourth agricultural revolution must, through precision technology, and digitalization, bring equitable advances in the sustainability of agricultural production. And the case for engaging all available technologies to improve the sustainability of animal protein production is an urgent priority given the estimates that animal farming accounts from 11% to 19% of all human derived GHG emissions and this is set to rise without systemic change to our food systems and farming practices. Feed alone is responsible for between 50% and 90% of the environmental footprints of animal proteins, similar to the weight it has on the cost of production.

Making this change responsibly and with transparency requires accurate, credible environmental footprint measurement of animal production and it goes beyond GHG emissions to include nitrogen and phosphorus pollution, soil quality, the use of water resources, land use, and impacts on biodiversity. It also requires the use of accurate and credible data that is based on validated life cycle assessment (LCA) processes, scrutinized global regulators, retailers and consumers and financial institutions.

A well run LCA qualifies, quantifies and pinpoints the environmental impacts along the animal protein value chain and allows for the evaluation of precise interventions to improve the farming process, reduce its environmental footprint, and make efficiency gains impacting the bottom line. Ultimately, it should enable operators, farmers and integrators to look at multiple farm comparisons, with benchmarks, or targets, identifying best practices, areas for improvement and investment in a targeted way. The good news is that there are publicaly available LCA methodologies allowing for that to happen that are science based and defined by well-respected multistakeholder initiatives such as FAO LEAP, IPCC, EUPEF, ISO standards for LCA, ISO14040/44, the Agri-footprint database and the GFLI (Global Feed LCA Institute) database. There are even specific guidelines for carbon foot printing for dairy provided by IDF (International Dairy Federation) and for beef provided by the GRSB (Global Roundtable for Sustainable Beef).

But these are very complex and sophisticated methodologies. Previously an LCA required external experts and was slow and expensive to produce results. The technology now exists in the form of a user-friendly, intelligent platform that has the functionality, speed and user-independence to enable animal protein producers to improve their environmental impact. In one platform, multiple ‘what if’ scenarios can be run instantly by operators to qualify and quantify the best technologies such as energy resources, manure & farm/emission management and feed formulations and additives across multiple species, from dairy, to aquaculture, to poultry, swine and beef. All industry stakeholders, be the ingredient suppliers, feed millers, farmers, integrators, processors, and retailers, can today view, understand and run footprint improvements prior to implementing and investing on changes at farm-level.

But for primary, granular and actionable environmental footprints be calculated, there is a key element needed: data. And in the case of animal proteins, mainly feed and farm data. Collaborative efforts to collect, anonymize, protect and share farm data will provide valuable insights and enable more informed decision-making.

However, it is crucial to remember that data alone is not the solution; it is simply a necessary means to an end to generate insights, which can drive positive sustainability impacts across supply chains. By accurately measuring and identifying the best methods for reducing the environmental footprints of feed and farm operations, enables industry players to know and improve the sustainability of animal protein production, allowing them to:

• Take ownership?of their footprint and not be judged on industry averages In a paper published by the FAO ‘Global Livestock Environmental Assessment Model (GLEAM) – GLEAM 2.0 – Assessment of greenhouse gas emissions and mitigation potential’ concluded that the estimation for mitigation is around 33 percent, or about 2.5 gigatonnes CO2-eq, with respect to the baseline scenario.
• Reduce the environmental footprint & business risk while enhancing the resilience & profitability of animal production. For example, the Gigaton initiative from Walmart and WWF is the first of its kind initiative that has the potential to mobilize its suppliers—the largest supply chain in the world—to avoid emitting one gigaton of carbon into the atmosphere by 2030.
• Engage their employees, creating a culture of purpose & sustainability in their business. For example, in a recent HP Workforce survey, 56 percent of respondents said “ignoring sustainability in the workplace is as bad as ignoring diversity and inclusion.” Forty percent said they would look for new jobs if their current employers did not engage in sustainable business practices, and 39 percent even said they would warn others of their company’s poor sustainability practices.
• Elevate their company & product brand and demonstrate leadership in sustainability Leading salmon producer and cooperation partner Bakkafrost, based in The Faroe Islands, was the development partner for the Sustell? salmon module and is one of the first to utilize Sustell? to model and reduce the environmental footprint of their salmon farming operations.
• Improving product value via sustainably branded products, and meeting the needs of discerning consumers (higher price points and brand loyalty) In a US Consumer Packaged Goods (CPG) study by the NYU Stern Center for Sustainable Business, Sustainable Market Share Index, July 2020, Sustainability-marketed products delivered 54.7% of CPG value growth (2015-19) despite being 16.1% of the category value and they grew 7.1 times faster than conventionally marketed products.
• Access sustainability linked finance with improved terms, increase the loyalty of their?customers, improve the value of their?products by improving ESG ratings and benefitting from various financial instruments (low cost of debt etc.), resulting in improved share and market value. The FAIRR Initiative is a collaborative investor network that raises awareness of the environmental, social and governance (ESG) risks and opportunities brought about by intensive livestock production. Each year it releases a global assessment of the largest 60 meat, dairy and farmed fish producers on material ESG risks. Globally, the average cost of capital for high ESG companies (6,16%) is -0.4%p lower than for low ESG companies (6.55%), reflecting lower risk (source: https://www.msci.com/www/blog-posts/esg-and-the-cost-of-capital/01726513589) Over the last decade high ESG ratings led to higher valuations (“price to book value”): +0.4 price multiple to book value (https://www.msci.com/www/blog-posts/esg-and-the-cost-of-capital/01726513589) Sustainable debt financing quintupled in the last 3 years to a volume of USD 1.500 bn, 44% in manufacturing (source: Bloomberg)
• Access regulatory benefits and avoid penalties, continuing freedom to operate (FTO) and compliance in an ever more stringent regulatory environment. According to the World Bank there are 68 direct carbon pricing instruments operating as of June 2022 in?46 national jurisdictions around the world. These comprise 36 carbon tax regimes and 32 emissions trading systems (ETS).
• Allows investors and the broader financial community to make comparisons and modelling scenarios to evaluate opportunities for the environmental and economic sustainability of potential investments. For example, Rabobank offers a price difference of up to 20 base points in some countries for sustainability-linked loans. Some banks consider providing higher interest rates for deposits depending on sustainability criteria.

While there is still a long way to go, there is a shared consensus that a sense of absolute urgency is necessary. The time has come to move beyond discussions and rhetoric and embark on taking meaningful action to scale. The time for action is now, and the industry – across full value chain – must rise to the occasion to shape a sustainable future for food and agriculture. Sustainability is a journey, not a destination.

The article was published by AFMA Matrix Quarterly Magazine Vol 32 No 04 Sept-Dec 2023 and it reflects what was presented by the author at the 2023 AFMA Forum in Sun City, South Africa. The magazine can be found HERE