Drive for sustainability has to go both ways

Without a path to a return on investment for farmers, the drive for ever-increasing environmental sustainability in primary food production cannot succeed,” Tara McCarthy of Alltech has warned.

The company’s global vice-president of environmental, social and governance (ESG) was speaking on a panel on sustainable food sourcing at the Food Matters summit in Croke Park in Dublin.

The Irish Farmers Journal caught up with McCarthy afterwards to get a clearer picture of where she sees the challenges of improving sustainability and what needs to be done to improve progress.

“The first thing to say is that the conversation around sustainability is not an Irish conversation, it is a global one. Last year, Alltech did a piece of insight work which, among other things, looked at where the pressure for further sustainability was coming from. We found the three drivers there were Government policy, regulations and consumers.

“When we then looked at what the barriers are to doing more, we found that the view was that doing more was not rewarded in the current economic model,” McCarthy explained.

“There is a perception that doing more could lead to reduced profitability among farmers,” she said, adding that there also is nervousness about how sustainability performance is measured.

On the last point, McCarthy said that Ireland is already well ahead of many other countries when it comes to measurement.

“Ireland is in a very privileged position compared to many of its counterparts around the world when it comes to data. Having those carbon footprints at farm level, going back 10-plus years is a huge advantage.

“Nowadays, people around the world are speaking to the Irish system. I have recently attended an event in Rome and the marginal abatement cost curve (MACC) was spoken about, with people asking why doesn’t everyone have one of these to guide farmers on where to spend money?”

Turning back to the work Alltech did last year, McCarthy said that the insights from it should help give an opportunity to navigate the sustainability journey. She said that companies and regulators who are calling for more progress have to speak to the profitability or financial impact of measures in order to get them over the line.

Without that, she said, anything new will already be seen as a negative in farmers’ minds.

“The solution is to build models. If there is increased Government regulation, then the collection of the data required for that regulation has to be built into the system that is coming to farmers or your supply chain or consumers.

“As an industry we are looking at consumers and asking ourselves ‘what kind of claims do we want to make?’ If we want to say it is low-carbon beef or milk, or if the product is quality-assured, or biodiversity and nature-friendly. Whatever the definition that is being developed, how do we organise ourselves to know what we are doing?”

McCarthy emphasised that the solution to this problem involves having proof points for each claim that is being made, rather than having each part of the supply chain demand more from its suppliers.

“If you don’t build in the requirement or proof that you’re asking the farmer for, and the proof that you must give the farmer into your model, then you’re wasting everyone’s time,” she said.

“Too often, the starting point is a claim made to consumers. This then works back through the supply chain to end up as a demand from the farmer.”

McCarthy says that if, instead of placing a demand on farmers, there was a situation where farmers could be shown where they would gain resource efficiencies, where there would be knowledge transfers and, crucially, a return on investment, then there could be a model where everyone is winning.

“See it more as a railway track with two rails parallel to each other where both have to be in balance for the system to work,” she said. “There’s no point building a market if there is no product, and there is no point creating a product without a market.

“On one side, we can have the insights we’re gathering from the market. On the other side are the challenges we are hearing from our producers. How do we navigate solutions collectively that will allow a win-win and allow a differentiated opportunity to scale?”

She emphasised again that the return on investment for the farmers is key. If they don’t see that they are better off from engaging with the system, it will not be a success. “Putting the economics into the sustainability conversation is the only way we will scale it.”

The policy drive for improved environmental outcomes in the European Union remains firmly in force, but there are hints that the new Commission may take a different approach to getting towards its environmental goals.

Commission president Ursula von der Leyen recently said that farmers deserve a “fair and sufficient income” and to be provided with the “right incentives to help protect our nature”.

“Farmers and fishers give us the highest quality food in the world … and they deserve a level playing field and their hard work to be rewarded,” she told MEPs.

Economic realities

While that does sound like an acknowledgement of the economic realities of the sustainability push, it is still very much like a top-down approach to getting the outcomes required.

The twin-track solution suggested by McCarthy which would provide the balance needed for really sustainable “sustainability” outcomes may still be some distance away.