Cargill’s Path to Transparency, Traceability, and Transformation
Consumers today are asking for more information about where their food is grown, how it’s produced, and how big companies like Cargill are working to transform the system for a more transparent value chain.
Sustainability is not a new concept to the Minneapolis-based Cargill. For decades, the more than 150-year-old company has focused on efficiency and the use of natural resources within its internal operations. It’s a journey a lot of companies started out on when it came to sustainability.
“We had sustainability practitioners throughout Cargill who were doing great work, but we really didn't have corporate-centered leadership or a corporate-level strategy around sustainability that went outside of our walls to address our overall footprint,” says Jill Kolling, leader of global sustainability at Cargill. “When I assumed my new role last December, I began building a team that would set strategies for specific areas – upstream and downstream – that make sense for our businesses across the entire company.”
Although the majority of what Cargill produces isn’t sold directly to the consumer, it does contribute to consumer-packaged goods and sells to retailers who are ultimately selling to a consumer such as sustainably sourced cocoa for Swiss chocolatier Lindt & Sprungli and Canadian beef for McDonald’s hamburgers. What that means is positioning itself so it is in a better place to help its partners meet consumer demands.
“We went through an assessment at the corporate level to define the areas where we think we should really lean in and make the most sense for our diverse portfolio,” she says. “These are also areas where we believe, given Cargill's scale and where we sit in the value chain, we can really make a difference and have influence. We work to align many of our activities with the United Nations Sustainable Development Goals, a popular framework used by many of our customers and external stakeholders,” says Kolling.
Greenhouse Gas. In January 2018, Cargill announced new corporate-level goals to reduce greenhouse gas emissions within its own operations, in line with the Paris Accord and science-based targets. “We're also working on what makes sense for a target outside of our walls. Many of our customers have made commitments within their supply chains and they are looking at Cargill to help them achieve those commitments,” explains Kolling.
Land Use. Most of the company’s work in land use is around eliminating deforestation in its supply chains by 2030. This requires targeted approaches in key supply chains such as palm oil, cocoa, and soy.
Water resources. “As an agriculture company, this makes sense for us. We look at it in a number of different ways,” she says. “In developing countries where we operate, we may look at it more around supplying access to safe drinking water. In other agricultural communities, we're looking at irrigation practices because we know agriculture, as some studies have shown, uses 70% of the water.”
Nutrient runoff. As one of the founding members of the Midwest Row Crop Collaborative, this initiative is a consortium of companies and conservation organizations who came together to work on the gulf hypoxia issue in the U.S.
Food waste. This is a hot topic with many of its customers and a key element to address global food security. It’s an area Cargill is currently looking at to determine how it can have an impact.
In order to deliver on the goals it has set forth, Cargill is working on various projects that incorporate technology to transform its supply chain.
“Eighty-five percent of the cocoa beans we source come directly from a farmer or a farmer cooperative. We work with more than 400,000 farmers across five origin countries who are predominantly small holder farmers,” she says.
In 2012, Cargill introduced its Cocoa Promise, which is in response to its customers' desire to source sustainable cocoa for its products and also addresses risks in the cocoa supply chain. There are both social risks like child labor and environmental risks like deforestation in these supply chains.
As part of its promise, the company set forth a number of goals and commitments. One of them is to have 100% traceable beans from the farm to its plants by 2030. Cargill also has an overall corporate commitment to eliminate deforestation in its agricultural supply chains such as cocoa by 2030. Technology is going to help it achieve these targets.
In the cocoa supply chain, there are three capabilities it has built to enable transparency: sustainability, material provenance, and financial traceability. Cargill is working with farmers in Ghana to implement all three.
On the Ground in Ghana
“In Ghana, we source cocoa beans from about 13,000 small holder farmers,” explains Kolling.
In 2014, it introduced digital monitoring and evaluation systems. This was put in place to monitor the sustainability impact, so it could credibly talk about the impact its programs were having on the ground.
“We use these systems to gather data like the farm’s location, the size of the farm, the age of the cocoa trees, and the fertilizer applications the farmer is using,” Kolling says. “We also collect social data about the family and who is working on the farm.”
This data allows Cargill to direct one-on-one education and agronomic advice to farmers, which it provides as part of its Cocoa Promise.
In 2015, it added GPS, so it could utilize satellite imagery. Through this imagery, Cargill was able to look at the farms in its supply chain and evaluate tree cover loss.
“We have looked at about 2.3 million hectares, and we're able to baseline what the supply chain looks like today. As a company, this helps us track progress toward our commitment to eliminate deforestation in our supply chains by 2030,” she explains.
In 2016, Cargill created a company in Ghana that allows it to buy directly from farmers and barcode the bags for traceability.
“These farmers bring their beans to central community warehouses to sell. At these warehouses, we digitally weigh the beans in front of the farmer. The beans are also checked for quality. Each bag of beans then receives a barcode, which is specific to that farm. We now can trace that bag of beans to the farm where it was grown.”
Once the price is established for the beans, the payment to the farmer is done electronically using a mobile payment system implemented by Cargill.
In 2017, Cargill helped the co-ops implement digital systems to track the buying, selling, and transporting of the beans. Prior to this, most co-ops were using pen and paper to track their transactions. This technology is bringing them into the digital age.
“The addition of these technology capabilities helped us reach those second two capabilities: material provenance and financial traceability,” Kolling says. “Interestingly, the mobile payment system has increased safety and security in these supply chains because our employees and the farmers aren’t carrying cash.”
Investment in the Community
Since these registered farmers are selling certified sustainable cocoa beans, they receive a premium for their product. Half of that premium Cargill pays goes directly to the farmer. The other half goes to the community itself.
“By giving money to the community, it helps support education and empowers women. This enables children to go to school and reduces the risk of child labor in our cocoa supply chains,” she explains.
While tracing the cocoa bean was driven by risk mitigation and developing a trusted partnership with its suppliers and the companies Cargill was selling to, another project around turkey was a consumer-driven initiative.
Last Thanksgiving, when consumers in select Texas markets bought a Honeysuckle White turkey, it included a tag with a code. You could either text or enter that code at honeysucklewhite.com to learn the farm’s location, read the family farm’s story, see photos of the farm, and read a message from the farmer. The pilot used a blockchain-based solution enabled by Cargill.
The project, says Kolling, was based on various studies Cargill had done. The following information was gleaned from those studies.
• In 2014, the brand found 44% of turkey consumers think it is important for companies to be transparent in their practices.
• Studies in 2016 revealed 73% of consumers feel positively about companies that are transparent about where and how their products are made, grown or raised; and more than half of consumers consider farmers one of the most trusted sources on food-related issues.
• In 2017, the Honeysuckle White brand held consumer focus groups that confirmed consumers feel good about buying turkey raised by family farmers.
“Cargill’s turkey supply chain consists of 700 independent turkey growers,” says Kolling. “We partnered with a small group of family farmers in Texas for this project.”
While some farmers were eager to sign up, others were more hesitant.
“We learned some interesting things through this project,” she says. “There were a lot of farmers who said, ‘Sign me up. This is cool, and we want to be a part of it.’ Farmers from cultures where privacy is incredibly important said they did not want to participate because they did not want people driving by or up to their farm. We realized with projects like this, there are a lot of other considerations you have to think about.”
While Cargill is making great strides to achieve the traceability and transparency goals it has set forth, it is also acutely aware of the challenges farmers face when adopting technology.
“There are a number of innovative ideas coming from ag tech start-ups,” Kolling says. “However, what everyone has to understand is that we can’t push these technologies on farmers. Just like we have to bring the consumer along in the journey, we have to take the same approach with farmers. We have to help them understand how ag tech can truly benefit their business.”
One way the company is doing that is through the Central Nebraska Irrigation Project. The vast majority of the water used in beef production is in irrigating the crops these animals ultimately consume. Through a collaboration with Nestle Purina and The Nature Conservancy, this three-year water project aims to improve sustainability of the beef supply chain by equipping Nebraska farmers with cutting-edge technology for irrigation sensing.
“By using smart technology in row-crop irrigation, this program could help save 2.4 billion gallons of irrigation water over three years, which is equivalent to supplying roughly 7,200 households over that time period,” explains Hannah Birge, water and agriculture program manager at The Nature Conservancy. “The reduction of pumping also means less energy used and less labor expense for farmers.”
These farmers will have access to IoT technology on sprinklers and smart weather sensors for free from Arable Labs to use in fields to remotely control their irrigation units, which enables them to precisely manage irrigation through their smartphones. This technology not only optimizes irrigation, but also saves farmers from intensive manual assessments of their fields.
“Because we recognize farmers aren’t always necessarily able to adopt or assume the risk in adopting new technologies, we’re de-risking that adoption by putting it in their hands for free. What we ask in return is that the farmers try the technology and share the results with neighboring farmers, because we know farmers like to learn from other farmers,” says Kolling. “We rely on farmers to sell us their crops and commodities, and we need to partner with them to help them adopt sustainable practices in the supply chain.”