Global food prices, which have been rising since 2012, may be ready for another hike.
In a report released on Thursday, Ceres, a sustainable business consortium based in Boston, Massachusetts, found that most food companies are not prepared to deal with the water risks that it expects will lead to higher water and food prices.
“We are coming to an end of cheap, plentiful water. Most of the food companies assume that water will remain cheap, and for investors that assumption is dangerous in terms of the companies’ long-term profitability,” said Brooke Barton, the report’s co-author and director of the Ceres water program. “We feel that most companies are not addressing these risks adequately.”
Illustration: Mountain people
Water is a major ingredient in food, from bacon to pizza: Growing crops and raising animals account for about 70 percent of the world’s water use, according to the UN Food and Agriculture Organization.
It takes 15,415 liters of water to produce a kilogram of beef , according to the Water Footprint Network, a Netherlands nonprofit that consults on water management and policy. A kilogram of pasta requires 1,850 liters of water.
Moreover, one-third of the food production takes place where water is becoming scarce , said the World Resources Institute, a Washington research group that studies water, food and energy.
Better water management plans by governments and businesses are needed, said the Ceres report, which ranked 37 companies on their water management.
Scores were based on how the companies track water use and implement conservation plans — and whether their efforts include only their own operations or also their suppliers — as well as what companies are doing to reduce water pollution from fertilizer runoffs and other farming and production processes.
Most of the companies scored poorly. On a scale of zero to 100, 31 companies ranked lower than 50.
Kraft Foods Group, the maker of Cool Whip and Oscar Mayer sandwich meat, scored a mere six points. Tyson Foods, the company behind Jimmy Dean sausage and Sara Lee desserts, got eight. Constellation Brands, supplier of many happy-hour staples such as Corona beer and Svedka vodka, and wine producers including Robert Mondavi Winery and Ravenswood received 24.
The bottom three scorers were Monster Beverage with 1 point, Pinnacle Foods with 1 point and Pilgrim’s Pride with 3 points. Meanwhile, Unilever scored the highest at 70, followed by 67 for Coca-Cola, 64 for Nestle and 57 for General Mills.
Ceres used publicly available data, such as corporate financial and sustainability reports, to make its assessments. Four of its member companies are ranked in the report: General Mills, PepsiCo, Coca-Cola and Brown Forman.
In many cases, companies included in the report are not tracking water use beyond their own operations, or are not tracking it well, Ceres said. That is a problem given that some of the top water uses come from their supply chains.
Most companies also do not have incentives in place — either internally or for their processors or farmers — for improving water conservation or reducing water pollution, the report said.
Kellogg chief sustainability officer Diane Holdorf praised the Ceres report for raising awareness about the challenges companies face and giving examples of practices worth emulating.
Kellogg, which scored 54, plans to do better, Holdorf said.
The company’s sustainability report for last year, issued last month, set new goals for 2020. The company is on track to meet its goal this year of reducing the amount of water it uses per tonne of food produced by 15 percent to 20 percent from 2005 levels.
The 2020 goals include working with farmers to use water and fertilizers more efficiently and protect their watersheds. In February, Kellogg announced several water conservation projects , including one slated to receive US$10 million in federal funding, on rice farms in Louisiana and wheat farms in Michigan.
“Water is an important issue for us and for the food and beverage sector,” Holdorf said. “I think all of us have plenty of work to do.”
Drink and snack makers scored the best for their water risk management plans: They tend to have more recognizable brands and are under more pressure from their customers to be good environmental stewards, Ceres said.
Some have already seen cuts in their sales and expansion plans because of dwindling or polluting water supplies, Barton said.
Drought punctuated by a short period of intense rain in California contributed to a 28 percent profit decline in a carrot farming division of Campbell Soup Co during the final quarter of last year. Last month, Coca-Cola abandoned a project to build a bottling plant in India after a battle from the local community over worries about depleting groundwater supplies.
Overall, packaged food and beverage companies fared better than meat and agricultural product companies such as Chiquita Brands, Archer Daniels Midland (ADM) and Fresh Del Monte.
Jackie Anderson, an ADM spokeswoman, declined to comment on the Ceres assessment, which gives the company a score of 10.
Most of the company’s processing plants that use high volumes of water are in regions where local water resources are not stressed, she said in an e-mail, adding that ADM surpassed its 2008-2018 goal of cutting water use 15 percent by meeting its target by the end of last year.
Meat producers face some of the highest water risk because meat production requires so much water. Among the six meat companies included in the report, Smithfield Foods received the highest score — and that is a paltry 33.
Kathleen Kirkham, a spokeswoman for Smithfield, which makes bacon and sausages, said in an e-mail that the company has already exceeded its goal for this year of reducing water use by 10 percent, from 2008 levels, per 100 pounds (45.4kg) of product produced, and plans to set new goals.
Tyson spokesman Dan Fogleman wrote that the report did not take into account some of the new technologies the company has been using to conserve and reuse water, leading to a 14.7 percent cut in the amount of water used per kilogram of finished product “over the past several years.”
He said the report also “mischaracterized” the company’s North American wastewater discharge as pollution.
“The water we release back into the environment has been though a government-permitted treatment process,” he said.
Barton said she did consider the water saving technologies in her assessment, but Tyson lost points for not having a publicly stated water reduction goal.
Ceres’ evaluation — which did not address the regulatory compliance of wastewater discharge — was based on the most recent public data reported to the US Environmental Protection Agency, according to which Tyson was responsible for the largest wastewater discharge in the US, she said.
“Those discharges are permitted, but are still labeled by the US government as a form of pollution,” Barton said.
Some of the companies declined to comment on the report — such as Hormel Foods and Constellation Brands — or did not respond to requests for comments by press time.
Ceres also highlighted examples of strong water management policies. For example, Campbell Soup, Dean Foods, Molson Coors and Unilever offer executives financial incentives for achieving water management goals.
Coca-Cola, General Mills, Kellogg, Nestle and Unilever have deadline-driven goals to expand sustainable water management practices, which range from planting cover crops to reduce water runoffs and soil erosion to capturing and storing rainfall, across the majority of their suppliers.
The report also recommends several things the industry can do to improve.
While some companies require reporting from their suppliers, it is not clear how they use the data to make better purchasing decisions or to help their suppliers improve. Creating new standards for reporting and data collection could help reduce the amount of time farmers and other suppliers need to spend filling out surveys and could lead to industrywide solutions.
Ceres recommends that companies work more closely with their suppliers, including farmers, to collect good data, secure water supplies and conserve more. Businesses should also support watershed protection and report water risks regularly to their board of directors and shareholders, the group said.
Meanwhile, investors who want to include water risks in their financial analyses should demand more comprehensive water use reporting from their portfolio companies and make investment decisions accordingly, Ceres said.
According to the report, they should consider three key factors: how much water is needed, how secure the water supply is and how the management deal with water scarcity, pollution and other related risks.
“Right now, a lot of what we are producing is linked to the fact that water is free,” Barton said. “We will see a shift.”
Ucilia Wang is a California-based freelance journalist who writes about technology and the environment.
A gap appears to be emerging between Washington’s foreign policy elites and the broader American public on how the United States should respond to China’s rise. From my vantage working at a think tank in Washington, DC, and through regular travel around the United States, I increasingly experience two distinct discussions. This divergence — between America’s elite hawkishness and public caution — may become one of the least appreciated and most consequential external factors influencing Taiwan’s security environment in the years ahead. Within the American policy community, the dominant view of China has grown unmistakably tough. Many members of Congress, as
After declaring Iran’s military “gone,” US President Donald Trump appealed to the UK, France, Japan and South Korea — as well as China, Iran’s strategic partner — to send minesweepers and naval forces to reopen the Strait of Hormuz. When allies balked, the request turned into a warning: NATO would face “a very bad” future if it refused. The prevailing wisdom is that Trump faces a credibility problem: having spent years insulting allies, he finds they would not rally when he needs them. That is true, but superficial, as though a structural collapse could be caused by wounded feelings. Something
Former Taipei mayor and Taiwan People’s Party (TPP) founding chairman Ko Wen-je (柯文哲) was sentenced to 17 years in prison on Thursday, making headlines across major media. However, another case linked to the TPP — the indictment of Chinese immigrant Xu Chunying (徐春鶯) for alleged violations of the Anti-Infiltration Act (反滲透法) on Tuesday — has also stirred up heated discussions. Born in Shanghai, Xu became a resident of Taiwan through marriage in 1993. Currently the director of the Taiwan New Immigrant Development Association, she was elected to serve as legislator-at-large for the TPP in 2023, but was later charged with involvement
Out of 64 participating universities in this year’s Stars Program — through which schools directly recommend their top students to universities for admission — only 19 filled their admissions quotas. There were 922 vacancies, down more than 200 from last year; top universities had 37 unfilled places, 40 fewer than last year. The original purpose of the Stars Program was to expand admissions to a wider range of students. However, certain departments at elite universities that failed to meet their admissions quotas are not improving. Vacancies at top universities are linked to students’ program preferences on their applications, but inappropriate admission
RSS