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Executive Perspectives

EXECUTIVE PERSPECTIVE: The urgent business of transforming agricultural production

08 Oct 2013

More than 50 % of all deforestation in tropical countries between the years 2000 and 2010 was caused by the production and global trade in a small number of agricultural commodities such as palm oil, soya and beef products. Many of the world’s largest companies are involved in the agricultural supply chains that use these ‘forest risk commodities’.  This includes the production or trade of agricultural commodities, agricultural inputs such as fossil fuels and minerals for fertilisers, and the manufacturing of the millions of food, feed and industrial products made from these commodities around the world. Approximately half of all packaged supermarket food contains palm oil and soya products, making it a problem that affects governments, the private sector and consumers around the world.

In contrast, the CSR commitments of numerous large corporations include policies to avoid contributing to deforestation and/or to phase in the sourcing of certified products. These are laudable goals, particularly when they are linked to timely implementation plans. But why have these initiatives not led to the radical reduction in deforestation rates that is needed, and what long term solutions and reforms could result in their permanent and long lasting protection?

It is, after all, imperative that forests are preserved not only for their intrinsic values but also for the value of the services they provide, such as helping avert the impacts of global climate change and providing food and water security . Every year ecosystem services worth US$ 2-4.5 trillion are lost due to deforestation and forest degradation[i], and the private sector through its forest risk commodities supply chains needs to take some of the responsibility.

What is lacking however, is widespread recognition that the way we currently produce food is unsustainable.

Aside from forest cover and associated biodiversity and natural capital loss, greenhouse gases from livestock and soil, pollution of waterways, the acidification of the oceans and the salination and erosion of soils are all problems of a food production system that in essence tries to control the environment it operates in rather than benefit from it.  The unprecedented loss of tropical forests for our ice creams, chocolate bars, steaks, leather shoes and copy paper is not the only indicator of a broken agricultural system. The production of chemical fertilisers for example is dependent on fossil fuels, and in the case of phosphorus, which cannot be produced synthetically and is vital for food production, researchers predict high-grade reserves may be depleted in 50-100 years.[ii]

There is an emerging consensus that fundamental changes to the way we produce food are needed to feed a population that will reach 9 billion people in 2050 in a sustainable manner. The International Assessment of Agricultural Knowledge, Science and Technology for Development (IAASTD), a major international research effort[iii], and the UK Government’s Foresight Report on the Future of Food and Farming[iv], agree that business as usual is no longer an option and a transition to a sustainable agricultural production system is imperative. What is needed might be nothing less than an overhaul of the way we produce food.

Given that the ecologically responsible use of technology and production methods is predicted to become crucially important, the private sector is well placed to drive innovation and invest in research and technologies that support this effort. ‘Ecological agriculture’, a whole-system approach to farming that balances environmental sustainability, social equity, and economic viability in the production of all agricultural products has been put forward as a viable and necessary solution. It has been shown that such a system can not only feed people, especially in areas where there are currently high rates of poverty and malnutrition, it also takes advantage of nature’s goods and services, nutrient cycling, and natural pest management, addressing many of the problems associated with the current industrial agricultural model.

The responsible use of new technologies is also likely to play an important part in this and could result in thriving business models similar to what has been achieved for renewable energy, which is now the fastest growing energy sector globally. At the same time, there is also growing pressure from consumers and regulatory bodies to develop transparent supply chains that use sustainable production methods and take into account the external costs of production, including the impacts on the environment. This makes it likely that the regulatory frameworks around forest risk commodities specifically will continue to tighten.

The cost to end deforestation and subsequently transition to a reform of the agricultural system is a daunting barrier, but one that also has to be put into perspective: the 500 largest companies in the world reported a combined profit of $1.5 trillion in 2012[v], while around $30 billion would be needed annually to halve greenhouse gas emissions caused by deforestation[vi].

Governments also have a key role to play in such a transition and its funding, but the private sector would do well to take a leadership role in urgently reducing deforestation linked to global commodities and to develop long-term opportunities that consider the need for fundamental changes in how we produce food, feed, fuel and fibre.

[i] TEEB Factsheet (2009). Council for the Pan-European Biological and Landscape Diversity Strategy. Fifth Intergovernmental Conference.

[ii] Phosphorus Research Initiative. 2013. http://phosphorusfutures.net/

[iii] For the report see http://www.unep.org/dewa/agassessment/reports/IAASTD/EN/Agriculture%20at%20a%20Crossroads_Global%20Report%20(English).pdf

[iv] Fore the report see  http://www.bis.gov.uk/assets/foresight/docs/food-and-farming/11-546-future-of-food-and-farming-report.pdf

[v] Huffington Post. (2013) Fortune Global 500: Top 10 Most Profitable Companies in The World.

[vi] Eliasch, J. (2008) Climate Change: Financing Global Forests. Eliasch Review

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