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February 11, 2010

Sustainable Opportunity

Dr. Jeff Dlott
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The start of a new decade presents an opportunity to look at where we’ve been and where we’re heading. In 1999, with recognition of the coming trends of limited natural resources, growing consumer interest in food purchases, and increasing input costs, SureHarvest was formed to support the agrifood supply chain as it innovated to take advantage of sustainability opportunities. Looking back over the decade, I realize that the predictions made then are now reality. The future is now.

Sustainability is well beyond a buzzword or trend. It is now a core business strategy among major agrifood companies. While Walmart is the most notable company asking its suppliers for social and environmental data, this is just the beginning. In 2010, a number of high-profile food companies will be asking their grower-suppliers to collect and report data on key metrics like water use, energy use, fertilizer use, etc.

When buyers look at their operations through a sustainability lens, they find business value. When Walmart, legendary for its attention to efficiency, turned the sustainability lens inward, they found opportunities to save money through improving energy efficiency, reducing waste, and improving employee engagement. This same story can be told and retold by food companies that supply to retail and foodservice — when they looked at their business from a sustainability perspective, they found opportunities for cost savings.

Now, your buyers and their buyers are asking, “Are there similar opportunities for my suppliers?” So, when your buyer calls and asks for data on your carbon footprint, water footprint, or waste-reduction plan, how should you respond? What does this new future of sustainability mean for you?

One reaction may be frustration at another buyer requirement with no promise for a higher price. Another might be, “Where do I find the time?” These are understandable reactions. Instead, consider these questions a great starting point to look internally and ask yourself, what’s in this for me?

What’s In It For You

As I see it, the opportunity is to increase internal efficiencies; after all, this is what you can control. Just as your buyers have looked internally and made changes to reduce energy, water, and waste, it is likely that you too will find opportunities to improve the bottom line through cost savings. If sustainability is viewed simply as compliance, you’ll be leaving money on the table. The first step is to measure and then to manage for continuous improvements over time. In an era of limited resources, the operating principle of “what gets measured, gets managed” takes on increasing importance. We’ve seen the payoff of proactive sustainability measurement, self-assessment, and benchmarking in our decade-long work with the California Sustainable Winegrowing Program:

• By replacing herbicides with permanent cover crops, Monterey Pacific Vineyards has reduced weed control and cultivation costs by 40%.
• Vino Farms found that by taking advantage of tax credits and purchasing their own delivery truck, they’ve begun to replace fossil fuels with biodiesel, leading to cost savings and better mileage.
• Instead of burning vine prunings, England Crest Vineyards turned an environmental liability into an asset by grinding prunings into a mulch and incorporating it into the soil.

Similar efforts are now underway by almond, pear, and other grower associations working proactively to optimize resources while minimizing farming’s environmental footprint.

Sustainability Metrics

What gets measured and how it’s measured are important questions. Now is a time to seek industry consensus on sustainability metrics so that all partners in the supply chain are comparing apples to apples when assessing sustainability performance. The Stewardship Index for Specialty Crops initiative is working to develop a common set of sustainability metrics for businesses in the specialty crop supply chain. For growers, these performance metrics will help measure efficiencies in water, energy, and nutrient usage, as well as pesticide usage and soil quality. For example, processing tomato growers in California will be measuring water usage per ton of crop produced to compare themselves against industry averages. With measurement, attention can be directed to finding innovative ways to optimize water use and thus, cost-saving opportunities.

Sustainability performance measurement and reporting will soon become an integral part of doing business. The opportunity is to get ahead of the curve and align with your supply chain partners to find value for your own operation. Sustainability begins with profitability, and there are financial rewards to be harvested.