Sustainability Watch - Smithfield Foods on new targets
Animal welfare remains "challenging" area, Leeth admits
Smithfield Foods, the US meat group, has set out a new tranche of goals on sustainability, building on targets it laid out in 2010. Ben Cooper spoke with Stewart Leeth, vice president of regulatory affairs and sustainability, about the company's progress over the past five years and the launch of the new targets.
Last month, US meat processor Smithfield Foods outlined a new set of targets on sustainability, reporting it had "surpassed or achieved" many of the previous goals set in 2010.
The last five years have been eventful for the business, notably including its 2013 sale to Chinese giant Shuanghui International, now renamed WH Group.
Over that time, Smithfield's sustainability journey has also developed, underlined by recently reported progress in areas such as animal care, environmental stewardship, employee and food safety and community investment.
While Smithfield reports on familiar sustainability metrics like carbon emissions and water efficiency, its previous and new targets reflect particular sustainability "hotspots" for a mass producer of meat which raises its own animals, such as animal welfare and employee safety.
"Animal care issues and how we treat animals are at the top for us," Smithfield's vice president of regulatory affairs and sustainability, Stewart Leeth, tells just-food.
This is seen in the pursuit of a goal to end use of gestation crates for pregnant sows. In 2014, 71.4% of Smithfield's company-owned farms housed pregnant sows in group systems, against 6.6% in 2010. Now, the company has committed to convert to group housing systems at all its US company-owned farms by the end of 2017, and on US contract farms and joint ventures worldwide by 2022.
Animal welfare carries both reputational and supply risks. The general unease about industrialised meat and poultry production, which even those who may not consciously avoid mass-produced meat will often feel, coupled with vocal campaigning from activists, place companies like Smithfield in delicate territory.
In spite of progress on issues such group housing of sows, Leeth says it remains a "challenging" area. "I don't think it's got any easier," Leeth says. "I think we still have the challenges particularly because of the interest and many divided views on how food is produced. We slaughter animals for food so if you don't like raising animals for food like that then you're going to take issue with the industry as a whole and with Smithfield because we're the biggest at what we do."
Other new commitments on animal welfare include certification of all its live animal transporters to Transport Quality Port (TQA) standards and annual reporting of antibiotic use.
The use of antibiotics speaks both to reputational and supply risks inherent in the business model of a company like Smithfield. The supply risks associated with unchecked disease speak for themselves. Meanwhile, the widespread use of antibiotics in industrialised farming has become an extremely controversial issue and is a particularly live debate at the moment, with growing concern over antimicrobial resistance (AMR) prompting recent moves from companies and regulators alike.
Meat processors therefore have to consider antibiotic use both from the point of view of animal stewardship and from a consumer health standpoint. Interestingly, with the dietary health debate now so squarely on carbohydrates and particularly sugar, meat producers are arguably less in the firing-line than might have been the case a few years ago. However, the debate over AMR has led to increased scrutiny.
Leeth agrees there is "a big focus" in terms of public attention on antibiotics, though he sees that as part of the broader trend towards greater concern about ingredients and "what goes into the food people are eating". He says concern over antibiotics has led to "a lot of finger-pointing" at the animal agriculture sector, but adds Smithfield took a "pretty aggressive" approach on following voluntary guidance on antibiotic use that was issued by the US Food and Drug Administration two years ago, reaching compliance "well ahead of time".
With staff handling dangerous machinery and large animals, employee safety is another key issue for Smithfield, reflected both in the recent five-year targets and in the new ones set last month. Leeth says the company is "proud of where we are after the first set of targets"- it reported a 5% reduction in 2014 in all incident rates over 2013 - but "there are challenges and that's why we're trying go one step further". For example, it has committed to reducing its "total incident frequency rate" and maintain levels below the general industry average.
Being a vertically-integrated industrialised meat producer carries specific and stern sustainability challenges but by definition integration gives Smithfield one significant advantage in terms of measuring and mitigating impacts and risks in their supply chain.
While food companies face a daunting task in measuring and mitigating environmental impacts across a wide range of agricultural raw materials, Smithfield has both visibility and control over its primary agricultural supply chain.
Aside from its own animals, the company's principal agricultural raw material is animal feed. As an example of work to reduce impacts from its feed supply chains, Leeth points to Smithfield's support of research into increasing sorghum cultivation in the south-eastern US. Expanding production of sorghum, a crop well suited to the region, would boost farmer incomes and reduce costs and environmental impacts of transporting feed from the Midwest.
In today's environment, anything a mass producer of meat can do to improve its carbon footprint is likely to be eagerly grasped, and once again reputational issues are partly at play. Concerns over the sustainability of rearing meat for protein are appreciated by a far larger proportion of consumers than would have been true 20 years ago. Mainstream consumers may not yet be dramatically altering their behaviour, as more environmentally conscious consumers have done, but they are undoubtedly more aware, leaving Smithfield and its peers with a battle to win hearts and minds.
Leeth says "in certain respects" it is winning the battle but he adds: "You certainly can't do it overnight and it takes a lot of time and building relationships."
One relationship Smithfield is building stands out. The company is working with the environmental group Environmental Defense Fund (EDF), focusing on fertiliser application in corn and soy destined for animal feed.
Leeth concedes EDF might be expected to take an "adverse" position, while Maggie Monast, a project manager for the not-for-profit, says the two organisations are "not exactly seen as two peas in a pod".
The collaboration, launched last year, stemmed from Walmart's call to suppliers using large quantities of commodity grain to find ways to reduce fertiliser loss on farms and thereby cut greenhouse gas emissions and water pollution, while also boosting yields and improving soil health.
Smithfield and EDF now conduct weekly meetings to assess progress towards the goal of having 75% of the processor's grain-sourcing acreage in the south-east US within the programme by 2018. EDF estimates the collaboration will ultimately reduce excess nitrogen fertiliser use on 450,000 acres of farmland.
Establishing such an unlikely partnership may well represent as notable an achievement as any target and underlines the development and maturing of Smithfield's sustainability mission over the past five years. In the face of the particular challenges posed by the mass production of meat, it is clear the Smithfield sustainability strategy launched a decade ago and the targets set in 2010 have been of great value, something arguably recognised by its new owner, WH Group.
Leeth says one of the factors that attracted WH Group to Smithfield was the "strong programmes we have in these areas, in environment and animal care and other things", adding the new owner has been "nothing but supportive" of the company's sustainability work.
It may be still too early to tell how the companies may influence on sustainability. The relationship is "very new", Leeth says, with Smithfield and WH Group "exchanging information and learning from each other". However, as WH Group is reviewing how it approaches CSR reporting as a company listed on the Hong Kong Stock Exchange, it would not be surprising to find the company looking to its new subsidiary for inspiration.
Moreover, that WH Group was attracted partly by Smithfield's sustainability strategy could speak to the increasing importance being attached to sustainability performance and credentials in the M&A field when selecting and evaluating acquisition targets.
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