Cargill’s Dilemma: Farmers versus Climate Science
For the past few years, Cargill Executive Chairman Greg Page has been walking a tightrope. On the one hand, he has been rather outspoken about the need to take climate change seriously, partnering with Michael Bloomberg and Hank Paulson on the “Risky Business” project and penning op-eds with headlines like, “Agriculture must engage in climate change discussion.” On the other, he has been steadfast in his refusal to discuss the causes of climate change, saying “he doesn’t know — or particularly care — whether human activity causes climate change.”
The demand for food will, of course, continue to increase as the world’s population approaches 9 billion. While over the last several decades the green revolution allowed farmers to realize high yields without increasing agricultural land use, climate change threatens these high yields. The geography of agricultural production will likely need to shift and agricultural land use may need to once again increase in order to keep pace with demand.
Given Cargill’s role in the global food supply chain, it’s not hard to understand why Page is concerned about climate change. As noted in “Risky Business,” crop yields may decrease in the United States by up to 20% within the next 25 years and some individual states may see their yields decrease by up to 70%. Cargill’s cocoa operations, acquired from rival ADM in late 2015, are particularly vulnerable to climate change. Supply has been hit hard by recent dry weather conditions in West Africa, and in September the company faced a two hundred thousand ton shortfall. Climate change is already affecting Cargill’s commodities trading and distributing businesses, and it looms large over its downstream businesses as well. Cargill’s biofuels, animal feed, and livestock units are also extremely sensitive to shocks to the food supply system.
Page’s reticence about man’s role in climate change is, at first glance, a bit harder to understand. If the company has already acknowledged the clear and present danger posed by climate change, why not take the extra step and acknowledge scientific consensus on its root cause? The answer, it would seem, is about managing relationships with farmers. According to Page, “there are a lot of people who think that the minute that they acknowledge causality, the role of government in their lives will increase…[G]etting them to…say that the primary cause of those changes was the behavior of them and their 7 billion compatriots — that’s a big leap.” With its farmers, Cargill has generally emphasized the need for adaptation and innovation in order to keep up with a changing climate. For example, Cargill’s encouraged farmers to embrace data analytics in order to conserve water due to the increase prevalence of drought conditions. They have not, however, explicitly encouraged farmers to reduce their carbon footprints.
Tacitly, the company does seem to acknowledge the connection between climate change and human activity and has taken a number of concrete steps forward. In 2014, Cargill signed the Indonesia Palm Oil Pledge to cease deforestation in the country as well as the New York Deforestation Pledge which committed the company to completely halt deforestation in its global supply chains by 2030. In 2015, the company was one of 13 to sign the White House’s American Business Act on Climate Pledge and commit to reducing carbon emissions by 6 billion tons by 2030. The company has also developed internal targets for water and energy conservation as well as increased investment in renewable energy.
It is an open question whether or not Page and Cargill can continue to walk this fine line. By refusing to acknowledge the causes of global climate change explicitly, the company may be hurting its own credibility with the government leaders it needs to partner with on effective legal frameworks and sustainability targets. While Page is worried about moving too fast and alienating farmers, he may struggle to convince them that they have an important role to play in combating change if the company does not begin to speak more frankly about the nature of climate change. Convincing farmers that they need to be prepared to adapt to climate change is easy; convincing them that they have a proactive role to play in slowing climate change is hard. Cargill’s careful approach with farmers may indeed be sage, but they’re going to have to bring them around sooner rather than later.
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