CERES, a very reputable ngo founded 25 years ago as the Coalition for Environmentally Responsible Economies, has recently published a report which predicts a massive reduction in the availability of corn over the balance of this century as a result of the effects of global warming, unsustainable water use and inefficient and damaging fertilizer practices. The United States is the world’s largest producer of corn and corn is the largest crop produced in the US. Sixteen separate industry sectors—from fast food companies to fertilizer manufacturers to grocery retailers—depend on U.S. corn as a key ingredient of their products or as a market for their inputs and services. In 2013, the top 45 companies in the corn value chain earned $1.7 trillion in revenue.
The highly detailed corn value chain report, subtitled How Companies & Investors Can Cultivate Sustainability, make a series of recommendations:
- Companies that buy corn should develop a corporate policy that commits them to sourcing agricultural inputs that are grown in ways that reduce impacts to freshwater and the environment. These policies should be tied to measurable, time-bound goals.
- For companies not dealing directly with farmers (i.e. those buying grain from intermediary suppliers), priorities for reducing environmental risks in farming practices should be well communicated to suppliers and integrated into supplier codes and procurement contracts. Where possible, policies, metrics and data requests should be aligned with others in the industry.
- To enable improved sourcing practices, supply chain managers will need additional expertise on environmental risks in agriculture, and should be compensated against performance objectives that include reducing these risks.
- Companies should develop sourcing strategies that prioritize action in sourcing regions of higher risk, such as those associated with water stress, groundwater depletion and/or nutrient pollution.
- Companies should consider constructive participation in initiatives such as Field to Market that are providing U.S. corn growers with the tools, information and other resources to improve farming practices.
- Farmers should not be expected to change their practices without incentives and support from others in the value chain. Companies can help growers by providing direct agronomic assistance, performance guarantees and credit, as well as financial support to local and regional organizations that assist farmers.
- Corn has an inherently higher fertilizer and water use profile than many other crops. For sectors with a heavy reliance on corn such as meat and ethanol, substitute grains with a preferable environmental risk profile may already be available or their production can be encouraged by working with growers to select profitable alternatives.
- Government policies that mitigate climate change and encourage risk-reducing, environmentally beneficial farming practices and long-term land and water stewardship will lead to more stable commodity prices and resilient agricultural markets. Companies should ensure that their own policy positions, lobbying activities, and industry groups support legislation and regulation that advances those ends.
- Disclose to investors and stakeholders the company’s exposure to climate and water-related risks in its agricultural supply chain, as well strategies and progress toward mitigating these risks.
A summary and a link to the full report, registration required, are available at http://www.ceres.org/issues/water/agriculture/the-cost-of-corn