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Executive Perspectives

EXECUTIVE PERSPECTIVE: A Fortune 500 company driving agricultural sustainability

Tim Nixon

31 Jul 2018

31 July 2018

“We have made a public commitment to enroll 20 million acres by 2025 and are well on our way to achieving this goal. Also through the innovation work at Land O’Lakes SUSTAIN, we are working to think creatively about on-farm conservation solutions.”

Agriculture presents an enormous opportunity for sustainability.  Altogether, agriculture produces approximately 13% of global annual GHG emissions, and the impacts to air, soil and water are increasingly significant as a growing global population ramps up demand.  In this interview with Brad Oelmann, Chief Operating Officer of Fortune 500 company Land O’Lakes, Inc., we hear about an innovative and scalable program called Land O’Lakes SUSTAIN which encourages agricultural sustainability and drives long-term profitability.  Tim Nixon, Managing Editor, Thomson Reuters Sustainability.


Tim: Describe the primary business goal of Land O’Lakes SUSTAIN in the context of your business.

Brad: Land O’Lakes is a farmer-owned cooperative that has been in business for nearly 100 years, since 1921. With 2017 annual sales of $14 billion, we are also one of the nation’s largest companies, ranking 216 on the Fortune 500. That’s important to state at the outset because it gives you a sense of how we approach strategic business investments like Land O’Lakes SUSTAIN.

As a farmer-owned cooperative, we were founded to add value for our farmer members. Farmers inherently appreciate that managing risk and taking the long-term view is what keeps them on their farms season after season. Broadly speaking, our business goals for Land O’Lakes SUSTAIN coalesce around the idea that investing in sustainability makes smart business sense both for Land O’Lakes as a company and for farmers.

Tim: Please unpack how agricultural sustainability makes for smart business.

Brad: Through Land O’Lakes SUSTAIN, we are focused on the intersection between sustainability and business. First, we position farmers for success by providing them tools and resources to track progress and continuously improve on every acre they farm. That helps to drive improvements in water and air quality, which is good for the planet and also makes a farmer’s business resilient over the long term.

Through partnerships with large companies and retailers, Land O’Lakes SUSTAIN can also magnify this acre-by-acre concept across millions of acres of farmland. Companies can commit to sustainably produced products and, with the data and analytics that we offer through Land O’Lakes SUSTAIN, they have documentation to back up those claims to consumers—creating transparency and accountability throughout the food system.

Tim: How would a farmer finance new innovations to improve measurement and deliver better long term water, soil and air quality?

Brad: There is an innovation component to Land O’Lakes SUSTAIN that I want to be sure to touch on. An example of what I mean is Land O’Lakes SUSTAIN Innovation Financing. Installing critical sustainability infrastructure on-farm can be an expensive proposition – one that traditional banks are often unwilling or unable to finance. That leaves farmers with few options and keeps adoption rates for sustainable technologies relatively low.

Our team knew that there had to be a better way. We put our heads together and realized that we could underwrite these types of projects ourselves by working with our dairy cooperative members to finance large-scale conservation projects using their equity in the cooperative. This financing is dedicated specifically to large-scale sustainability projects that demonstrate a measurable, positive air, soil or water quality outcome. We are the first dairy cooperative to offer something like Innovation Financing. I think it’s an incredible example of the level of service and innovative thinking we’re able to offer partners in Land O’Lakes SUSTAIN.

Tim: What are the actual benefits you have seen already?

Brad: Because we are both a farmer-owned cooperative and a Fortune 500 company, Land O’Lakes can offer our partners a relationship with each step of the food supply chain, all under one roof. I want to start this answer by pointing out that a lot of what we are doing through Land O’Lakes SUSTAIN is lifting up the work that farmers are already doing and helping them to do it in an even better, more efficient and targeted way. Farmers are, in many ways, the original conservationists. They recognize the inherent value in what we have to offer in terms of practices, products and technologies, as well as the connection to companies and end consumers.

At the other end of the supply chain, we can advise companies on how to make sustainability commitments actionable, practical and aligned with what farmers are already doing – as well as pushing areas of innovation on-farm. Most importantly, we can tell them exactly how and where to partner with farmers in order to accomplish those goals. As you might imagine, that is attracting a lot of interest from companies who are looking for ways to make their sustainability commitments more impactful.

Tim: How big is the potential scale?

Brad: I can answer this question in several different ways. Broadly speaking, every day, American farmers make conservation decisions that impact 915 million U.S. acres – nearly half of the land in the continental United States. Land O’Lakes SUSTAIN gives us the ability to tap into the power of that direct connection that farmers have to the land. Land O’Lakes SUSTAIN also has major partnerships with retailers like Walmart on their Gigaton Challenge and CPGs like Campbell’s where we are piloting growing sustainable wheat with our farmers in Maryland for a favorite childhood snack – Goldfish. We’re also exploring partnerships with several other well-known food brands.

Tim: What are the scale-up plans/key milestones for the future?

Brad: Land O’Lakes SUSTAIN was recently honored on Fortune’s Change the World list, which I think is a good metric for the level of energy and excitement around this concept. Looking towards the future, we have several exciting things in the hopper in terms of company partnerships. On the farmer side, we are beta testing an on-farm “insights engine” that will help farmers collect data on what’s working, provide customized conservation recommendations based on field-by-field data and forecast a potential ROI for the farmer.

We have made a public commitment to enroll 20 million acres by 2025 and are well on our way to achieving this goal. Also through the innovation work at Land O’Lakes SUSTAIN, we are working to think creatively about on-farm conservation solutions. This includes innovative financing models like green bonds on working lands and the creation of an Innovation Financing Fund for our member-owners to utilize and execute sustainability practices on-farm.

Tim: What are the restraints on growth?

Brad: Broadly speaking, we’re impacted by anything that challenges the strength of the farm economy. That said, I believe that farmers are incredibly resilient and they are quick to test new opportunities that diversify their income streams and help them manage risk. In that sense, despite the challenges in the current farm economy, Land O’Lakes SUSTAIN is perfectly positioned to offer something to farmers of incredible value – a way to get credit for sustainability work they are already doing and implement new practices that make their farms more efficient.

Tim: How important are partnerships?

Brad: The Land O’Lakes SUSTAIN model hinges upon partnerships at both ends of the supply chain. As I mentioned, partnerships with individual farmers who are doing the actual acre-by-acre conservation work are part of the value that Land O’Lakes SUSTAIN offers to retailer and CPG partners. Take our partnership with Walmart that I mentioned earlier. In partnership with farmers, Land O’Lakes SUSTAIN will help Walmart to cut 10 million metric tons of greenhouse gas emissions from their supply chain by 2025 – the equivalent of the amount of greenhouse gases emitted every year from 2.1 million passenger vehicles in the United States.

Closer to home, earlier this year, we launched a first-of-its-kind public-private partnership to help improve water quality and address flooding and sedimentation in southern Minnesota. Through the partnership, farmers work with Land O’Lakes SUSTAIN to implement precision agricultural practices that address water quality issues. In turn, the farmers are rewarded with specially designated technical and financial assistance, and regulatory certainty from the Minnesota Department of Agriculture for ten years.

Tim: Could this model have global usefulness?

Brad: Yes, absolutely. Particularly in nations where agriculture is a driving economic force, I see a lot of potential for our business model, which is designed around rewarding and investing in on-farm conservation. Even closer to home, there is huge potential for Land O’Lakes SUSTAIN’s model to be applied to challenges at a regional or landscape level, for example to address water quality challenges in the Raccoon River watershed in Iowa or in the Great Lakes region.

 

 

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