This article series is sponsored by Smithfield Foods and produced by the TriplePundit editorial team.
While the discussion around climate change often focuses on the two primary sources of global greenhouse gas (GHG) emissions—power generation and transportation—agriculture is also a key driver. The food and agriculture industry represents between 10 and 12 percent of global GHGs, according to the Intergovernmental Panel on Climate Change, and the U.N. Food and Agriculture Organization estimates that emissions in the segment are growing.
Smithfield Foods is a major player in global agriculture. It is the world’s largest pork processor and hog producer, with sales exceeding $15 billion in 2018. The company’s supply chain includes numerous farms across the United States and Europe, and it has customers in 44 countries on every continent.
With that much scale and scope, Smithfield is in a unique position to have a broad sustainability impact—and it says it’s making significant progress on this front. In February, for example, the company announced a major milestone: sourcing 80 percent of the grain used in its animal feed from suppliers who use more sustainable farming practices. Grain production is the first step of Smithfield’s vertically integrated supply chain and accounts for 15 to 20 percent of the company’s GHG emissions. “This was a meaningful early step aimed at our own supply chain, and a first in our industry,” said Stewart Leeth, vice president of regulatory affairs and chief sustainability officer for Smithfield.
This effort started five years ago through conversations with Walmart and the nonprofit Environmental Defense Fund (EDF), Leeth said. Together, the three organizations highlighted fertilizer use on grain fields as an area where they could have a meaningful, positive environmental impact. “The issue there is that over-application of fertilizer creates runoff to surface waters and results in air emissions, so EDF was keenly interested in trying to find out ways to address that,” Leeth told Triple Pundit.
Fertilizer overuse has been a well-known problem for years, responsible for harmful impact on soil, health and the environment. But addressing fertilizer use in the grain supply chain is not a low-hanging-fruit type of task. Smithfield sources grain from hundreds of farms across the country, and reducing fertilizer use meant working with each of those farmers on education, technology training and proper management.
To help its suppliers adopt more sustainable practices, Smithfield hired on-staff agronomists to travel to farms and demonstrate strategies for responsible fertilizer use. The company also gave farmers access to new technological tools—such as Adapt-N, a nitrogen management solution, and others that help farmers manage on-farm conservation.
Smithfield has already worked to implement better conservation practices on about 560,000 acres of farmland in the U.S. Southeast and Midwest. In the end, this program benefits not just the environment, but also farmer well-being.
“For farmers, what it meant was less fertilizer use and less costs going into the field” Leeth said. “On the backside, if [farmers use] the soil conservation technology, they might have better yields next year.” Still, some farmers were reticent to do things in a new way. “That took time, to communicate and to build trust,” Leeth told us.
Achieving the 80 percent target is meaningful, exceeding Smithfield’s original goal of 75 percent, but it's just one step toward Smithfield's broader goal of reducing absolute greenhouse gas emissions by 25 percent by 2025 and cutting its total footprint by more than 4 million metric tons of CO2 equivalent. These long-term trajectories are driven by the company’s values and also, increasingly, market demands, Leeth said.
“Our sustainability platform is broad and covers a lot of areas—and necessarily so, because we are in the food industry, and people are interested today in how food is made,” he told us. “We’re heavily focused on environmental improvement.”
Along with efforts to improve the grain supply chain, Smithfield is looking to further cut emissions by turning manure methane emissions into biogas. The company is investing hundreds of millions to install methane capture technology on 90 percent of its hog finishing spaces in North Carolina, Utah, and Virginia, and nearly all in Missouri. With methane being 84 times more potent than carbon dioxide in terms of short-term warming potential, and farms a key source of these emissions, efforts like these could be vitally important to achieving short-term global climate goals.
There’s a bigger opportunity, too–pushing for broader, industry-wide change. As one of the largest companies in the agriculture and farming business, and with a broad and vertically integrated supply chain, Smithfield hopes to show the entire industry that sustainability is not only achievable, but also financially beneficial.
“We like to take leadership positions,” Leeth told us. “Other folks see that, and see it can be done, and it’s moving our industry in the right direction. If you have a big actor like us, showing the pathway to success, I think that inspires and encourages others to participate.”
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KEYWORDS: Triple Pundit, Smithfield Foods, NYSE:SFD, Stewart Leeth