Opening Up Opportunities for Growers in the Sustainable Ag Supply Chain

With new food labeling practices and evolving downstream partnerships, it might seem like the sustainable agriculture supply chain is more complicated than ever before.

But these trends are creating new value at the consumer level, and by adopting a few simple practices and documenting them properly, growers can make sure they are capturing their fair share of the profits.

In this episode of the Future. Faster, Tom and Sally discuss some of the different food labelling terms and what they really mean. Plus, they discuss real world examples of growers who are capitalizing on these trends and cite the real value on which they're collecting.

Then, they're joined by Jeff Peters, Director of Sustainable Agriculture Downstream Partnerships at Nutrien Ag Solutions, to elaborate on why downstream suppliers are interested in tracking sustainable practices at the farm level. He also outlines what types of opportunities this provides growers and how Nutrien Ag Solutions is delivering value to both groups.

Episode Transcript

Jeff Peters:

Right now, everything is really driven around safe, affordable, and abundant food. But the markets of tomorrow are going to be more around not just what we produce, but how we produce it.

Dusty Weis:

Welcome to the Future Faster, a sustainable agriculture podcast by Nutrien Ag Solutions with our very own Tom Daniel, director of retail, sustainable Ag and Dr. Sally, Flis, senior manager, sustainability field. This is your opportunity to learn about the next horizon in sustainable agriculture for growers, for partners or the planet. To us, sits not about changing what's always worked. It's about continuing to do the little things that make a big impact. On this week's episode, Jeff Peters, director of Sustainable Agriculture Downstream Partnerships joins us to elaborate on why downstream suppliers are interested in tracking sustainable practices at the farm level. What types of opportunities this provides growers and how Nutrien Ag Solutions is delivering value to both parties.

Dusty Weis:

But if you haven't yet make sure you're subscribed to this podcast in your favorite app. Also make sure you follow Nutrien Ag Solutions on Facebook and Instagram. I'm Dusty Weis. And it's time once again, to introduce Tom Daniel and Sally Flis. And Tom and Sally, the Future Faster is a sustainable ag podcast, but there are a whole lot of terms in labels that attached to that sustainable ag moniker as well. So what are some of the key things we ought to be keeping in mind as far as all that goes?

Sally Flis:

Yeah Dusty, it does see there's a lot of them we hear about all the time. Some of them from labels that we read, when we're out in the store, some of them in popular press or in the news about what are growers doing or what do people think growers need to be doing in order to be more sustainable in their practices. And a lot of times that ties into that carbon piece that we focused on so much in the first group episodes here, but really want to take a little bit higher viewpoint today and talk about sustainability and sustainable ag. Tom, I know some of the ones that we talk about a lot and hear about a lot are regenerative ag, of course, organic is out there, non-GMO sustainably sourced. What are some of the ones that you've found, I guess frustrating as part of my problem with it, because there's so many different definitions and terms out there, but people tend to use them interchangeably.

Tom Daniel:

Sally, one the things that I've seen too, is most of these are marketing labels, I guess, is what we would call them, right? So there are things that the different companies are trying to differentiate their products on the consumer shelf. And they're doing that by tagging their products with different what we would call sustainability labeling. So regenerative ag is one of the keys that's being used right now. And if you try to look up a definition of regenerative ag, it really depends on the company using the term, what they actually defined it at. So in some situations, regenerative ag and how we would look at it is really about resources of soil, water, and air, and how we're making improvements to those. But as we look at other definitions of regenerative ag, it's actually talking about including livestock in the rotational process on a particular farm or acre. So, it's really different based upon the different companies, but other terms that we see in the marketplace today too, organic became a significant part of marketing of different companies, even non GMO's are something that's being termed as sustainably sourced.

Tom Daniel:

I talked to a grower in California probably two months ago, and we discussed how he was doing labeling and his sustainability label for his tomatoes was completely tied, more around sustainability of his labor force and how he was managing his labor on the farm. That was more the discussion around sustainability. So really, to be honest with you, Sally, we talk about confusion and carbon in some of our previous discussions. There's a lot of confusion around the labeling and things on sustainability. In your opinion, though, sustainability or sustainable ag, it really needs to have one centralized focused. Is it not?

Sally Flis:

It does Tom. I think others have said this on the podcast. Jeff Tarsi mentioned this. And when we were talking to him, there's got to be a positive environmental change with the practice outcomes. And then we can build on that. And part of that positive environmental change is also looking at, is it sustainable across the whole operation? So is it also sustainable for economics? Is it sustainable for labor needs, markets that are available to that grower, but really getting that positive environmental change is really a key part of whether or not we're moving along that continuous improvement pathway with growers or as our crop consultants work with people to figure out, are they getting to a more sustainable place through the practices that they're doing. Tom, a lot of this goes back to food labeling and what people want to see, consumers want to see in the grocery stores. I think we talk a lot about downstream partners and CPGs or consumer packaged good companies. What's kind of a definition that you use as we're looking for different downstream partners talking to different divisions and managers out in the field.

Tom Daniel:

Yeah. So downstream partners can make up a long lineage of different ones that have participated in that chain. So if you think about, I'll use a corn crop, for example, a downstream partner is anyone that touches that commodity product after it leaves the corn field. So it could be the grain elevator that receives it. It could be the processor that takes the commodity product and produces it into the next product. Or if it's a corn crop, it could be the animal livestock reduction group, that's actually taking the corn for feed in their livestock operations. And then we take it down to the consumer package group, which is we're taking the raw material, this meat and produce there for instance, meat products and processing it down into consumer products, that'll be placed on the shelf for the consumer. So it goes all the way down the group.

Tom Daniel:

When we say downstream, it's really downstream. After that commodities produce and how many places it touches before he gets to the consumer shelf. All of those are downstream partners. All of them are looking for opportunities in sustainability to create value at the consumer shelf. So let me ask you this, Sally, when we talk about sustainability labeling, and we talked about these downstream partners that are looking at that labeling as a revenue stream. The consumers, when they buy something that's labeled sustainability, they have a certain expectation of what that label means. And in many cases, some of those things are kind of muddled in the mix, as to exactly what the consumer is asking for or what the consumer is actually purchasing. What's your thoughts of that?

Sally Flis:

I would agree, Tom. I think there's some places where sustainability is really just did they grow out and measure, what growers are doing so they can report on it? Did they try and influence change? Are they doing something as in-depth, as tracking that product from the farm field to the shelf, along with all the practices and environmental metrics around it. So I think it's really vague, which makes it hard for all of us as consumers to figure out what it is that we're buying, but there's some strong offers out there and opportunities for growers to be able to capitalize on the practices that they're doing and get some competitive advantage in the marketplace, which we'll touch on a little bit in the next segment. But which ones have you seen or heard about as you've talked to growers in your geography up here in the Northeast?

Sally Flis:

It's the milk labeling, it's dairy stuff, it's non-GMO, a lot of local for us up here in the Northeast seems to be a strong one. So which ones have you kind of heard the most about as you've been out in the landscape in your part of the country?

Tom Daniel:

Yeah, the one, Sally, that really sticks out in my mind and we've had discussions around some of the rice products. So if you think about it, some of the products that are being directly purchased from the grower and then being processed in very few steps until it gets to the consumer shelf. So rice is a good example of that. So you've got different downstream partners, whether it began Anheuser Busch or different milling companies that are buying rice products and they're using those products directly into a final finished goods product. And in those cases, they see value in those labels. I was talking to one of the rice groups the other day, and they're seeing anywhere from 140 to 160% more value at the consumer shelf for rice products that are carrying some kind of sustainability branding.

Tom Daniel:

Now, those things are a great interest to us as far as Nutrien Ag Solutions and the growers we work with, because if that kind of value is being created consumer shelf, that value can be shared back to the grower. One of the big issues we've always talked about is how much data requirements and when we start talking about traceability, that even adds another layer of requirement for data, the growers are going to need to get paid for that grower data. And if the consumer's willing to pay for it and willing to say, I'm willing to put my money into a product that has certain labeling that I like, then the grower gets a chance to share in that. And Sally that's to me where the great value is going to be around sustainable labeling.

Sally Flis:

I would agree, Tom.

Tom Daniel:

Hey, I will ask you this question though. When we look at labeling, there's a lot of clutter around sustainability labeling in general today. What do you think the current market opportunities are going to be for that sustainable labeling in the future? Do you see this growing? I'm not sure that some of the terms like organic and non GMO and regenerative are going to stick, but I do believe consumers are continuing to ask and demand with their wallets, products that do have sustainability labeling.

Sally Flis:

I agree, Tom. I think it's only going to keep growing and problem may change terms again, as they do market research to figure out what's the term that consumers like the best, but it goes back to what we talked about in our previous episode with Jack. It's that data piece, because that's going to be what drives the stronger claims that these consumer packaged good companies and downstream partners want to make is the data actually measured on farm of what practices growers are implementing. So that's still going to be a really strong component. It doesn't matter what words they decide to change it to. As the sustainability labeling, data is always going to play a really strong role in the ability of growers to participate and capitalize on these opportunities.

Tom Daniel:

Sally, we talk about the demand on the consumer level, but the question really comes down to, is there an economic reason that a grower would want to participate in those things? And to me, there's always a revenue stream that we look for on these downstream opportunities, but really the question comes down to, does it make sense for the farming operation plan in general? Is this something that makes sense, it's going to drive positive environmental outcomes on my own farm.

Sally Flis:

Yeah, exactly. It's got to be a part of your farming operation plan and it may start slow if you're a little bit later adopter, you may be earlier in that journey of sustainability. So you may start on a small acreage. I think we always recommend that. Try out these new practices on a smaller acreage to see how it fits. None of the payments, and I think you would agree with this, Tom, none of the payments we see out there across the landscape, whether it's just sustainability or it's actual verified carbon credits are enough to justify just paying for a new practice on the farm. So you've got to do that planning and evaluation of what really fits your farm for that environmental and economic return.

Dusty Weis:

And certainly the entire topic of supply chain is one that, A, it's been in the news a whole lot more than usual here lately, but B, there's a whole lot of different opportunities to dig up value for growers there. And we've got someone on deck, who's an expert in that whole category. We'll be talking to Jeff Peters, Nutrien Ag Solutions, director of sustainable agriculture, downstream partnerships. And that is coming up next here on the Future Faster. This is the Future Faster, a sustainable agriculture podcast by Nutrien Ag Solutions. I'm Dusty Weis along with Tom Daniel and Sally Flis. And we're joined now by Jeff Peters, director of sustainable agriculture downstream partnerships here at Nutrien Ag Solutions. Jeff, thank you for joining us today.

Jeff Peters:

Absolutely. And Dusty, it's great to be here today.

Dusty Weis:

Well, we appreciate you making the time. Jeff, tell us a little bit about your background.

Jeff Peters:

Yeah, it's really an incredible journey. I've been in the ag industry now a total of 27 years. I started off as an environmental fate scientist working under EPA registration guidelines studies to develop those for submissions. And I have done stints in marketing regulatory and the last 14 years, believe it or not have been working in the topic of sustainability. So 22 years with a large ag supplier, moved on to a consulting group with a digital technology known as Agrible, that was acquired about three years ago by Nutrien. And since then, I've still been serving the same role of director of sustainability with the emphasis on downstream partnerships. So what I actually do day-to-day, Dusty, is to work with downstream partners that are trying to characterize their supply chains relative to the topic of sustainability, to better understand whether there's opportunities for improvement and to be able to tell the story of sustainability.

Sally Flis:

Thanks for being here today. Jeff, glad to learn a little more and dive a little deeper into what are we doing with some of this data, that we've been talking about on the last four or five podcast episodes. Tom and I touched on it a little bit in our earlier conversation of kind of what our downstream partners, but could you throw us a definition too, of downstream partners and what you're looking for as you reach out, to make contacts and build relationships with downstream partners?

Jeff Peters:

Sure. Sally, so I guess first to set context is to understand a little bit more about the ag supply chain, right? And there's different segments. So we think about the upstream segment, that's really comprised of growers, that's comprised of ag suppliers and ag retailers such as Nutrien, and really that's around origination of a commodity such as grain, wheat, for example. And then you've got the middle segment and the middle segment is really around storing grain, so that your elevators, it's also around processing grain. So there's a lot of big processors out there, your ABC and D's of the world. And then finally it's to the downstream portion of that. And the downstream is really made up of apparel companies, consumer packaging good companies, the block and motor stores that you would recognize like the Walmarts and Targets of the world. And really the emphasis on the consumer packaging, good companies. They're really around the final processing, the packaging and the distribution to the ultimate user of that product, which will be the consumer.

Tom Daniel:

So Jeff, when we talk about downstream suppliers and I know one of your roles is how do you create that linkage between the grower, our retail and the downstream suppliers, but in your work, what do you see as the opportunities working with these downstream suppliers?

Jeff Peters:

Well, most of the downstream companies now have set targets and goals over the course of the next 10 years. So by 2030, most of those companies have set science-based targets to improve on environmental outcomes. The challenge that most of these companies have to date, Tom, is that they really don't have that relationship and that knowledge of what happens on the farm. And that's really where Nutrien can connect the dots, so to speak, to enable that information and data to flow from the grower to the downstream partner, as well as we can help enable solutions that really meet the needs and the demand that downstream organization is striving for.

Tom Daniel:

That seems to be a driving thing in the marketplace today, especially on the consumer side of what they're asking for around sustainability. We've been discussing in some of our earlier podcasts especially, we're looking for those opportunities that the grower can participate in some of the value that's being created at the consumer shelf. What do you see as some of the popular opportunities being offered right now from downstream suppliers? What are some of the things that are asking for when it comes to grower based sustainability programs?

Jeff Peters:

Naturally, producers want to be incentivized for information that they share, right? That's their intellectual property. And they want to be compensated for that. As we look at the future of sustainability in other areas, right? There's going to be opportunities around the topic of traceability, such as identity, preserve, and segregation. Ecosystem service markets and there's a lot of organizations that are focused on that today, whether that's carbon or water quality or other efforts. So there's a lot of different areas that folks will focus on and how these are going to play out in the near future. It's really, really hard to say, we're looking for that catalyst or that driver out there in the marketplace, that's going to really have downstream companies and the other scale beyond what we've seen today, because the past 10 years we'll say Tom on sustainability, there's been a lot of efforts underway that were merely pilots and they were smaller focused just to prove out concepts here. But as we look at the next 10 years, it's really going to be about scale. And then what's it going to take to drive scale across the supply chain?

Sally Flis:

So Jeff, I'm guessing just like all the other carbon items we've talked about. Data is a strong driver of what growers can participate in and what these downstream partners are looking for. How is Nutrien tracking these programs and what are some of the measurements that we get out of the tracking programs that we're using?

Jeff Peters:

Absolutely. And that's a common question, Sally, as we talk with growers and others alike, really we are leveraging the Agrible platform. Agrible was developed, said five to seven years ago. It's a grower facing tool that allows us to capture information that addresses the topic of sustainability. But first and foremost, it's an agronomic tool. So we're basically killing two birds with one stone. We're providing growers with information that enabled their decision-making on a day-to-day basis on their farms. And that could mean looking at yield forecast, that could be looking at field workability, weather information. And by far, weather is one of the most important aspects that growers, they can't get enough of weather information because that impacts their farm and their field on a day-to-day basis. But the value of the data, especially from a grower perspective, you have to think of it as building a pedigree on the farm.

Jeff Peters:

And that pedigree is going to have value in the future as we talk about these marketplaces. Right now, everything is really driven around safe, affordable, and abundant food. It's what we produce, but the markets of tomorrow are going to be more around not just what we produce, but how we produce it. And having that information and the data to support that is going to be extremely important. And it will also provide market access for producers. So it's really important right now for growers to get engaged, to start building that pedigree, as we just mentioned, on the farm with that information that will enable them in the future marketplace, but also on making better and sound economic decisions.

Tom Daniel:

If I asked you this question, why do, I think you've answered this in a way, but why do downstream suppliers really even care about this? Why is sustainability or how the products are being produced on the farm? Why is that important to the downstream suppliers?

Jeff Peters:

Well, Tom, if you watch every evening on the news, you'll hear this, or you'll hear in social media, you hear the topics around climate change, right? And how organizations, how governments are actually addressing this topic. And it's first of mind for a lot of folks, also understanding that our global population is going from around 8 billion people to around nine and a half billion people. So with that, we have a finite number of natural resources, meaning soil, water, and air, and how do we manage those more efficiently and more effectively? So from a downstream perspective and from a pure business perspective, it's about ensuring resilience of the supply chains. It's making sure that they are mitigating risks as they look at the future. So that if you're sourcing in a geography that may have a natural resource constraint, and we'll say water, you're really going to consider how you work in that area and how you source in that area in the future, because you don't want anything that's going to chip into the bottom line, right?

Jeff Peters:

So again, it's how efficiently, how effectively these supply chains are managing risk. It's also about compliance because you have a lot of organizations out there such as Walmart. And we'll talk about the Gigaton project that are really striving to reduce emissions overall. And then you have ESG compliance, which is really looking at how organizations are greening their supply chains and being able to communicate this story with defensible information. And then finally they see sustainability as a brand asset. And there's very few that I've seen to date that have accomplished this, but understanding that there is marketing potential for companies that are able to bring these products to market.

Sally Flis:

Jeff, you mentioned a bunch of different programs there, the Walmart's Gigaton challenge, ESG reporting. We talk a lot about the reporting required for the carbon market piece. What metrics are these companies looking for when they want to get that grower data and how do they use that data? Because I know we get pushback from the field as we talk to them, who's going to see my data, what are they going to do with it? How are they going to use it? What are you hearing from the consumer packaged goods side or the downstream partner side as to what are the metrics they're looking for and how do they want to use them going forward?

Jeff Peters:

Sally, there's not a one size fits all with that particular question, to be quite honest with you, each organization has different areas of emphasis or focus. There have been a number of standard organizations around that have been there for at least a decade. I'll say, Field to Market as one of those cool farm alliance that have developed sustainability metrics that have been endorsed now by the industry and is inclusive of downstream partners, USDA non-profit organizations, as well as the entire ag supply chain that would be inclusive of ag suppliers, ag retailers, and others. So there's generally a number of quantifiable metrics that they look at. But again, we'll come back to soil, water and air. Soil conservation, as one of those that really lead indicator for a lot of organizations to date and soil health in particular. So as we look at that, as we look at soul quality, as we talk about the topic of carbon, how do we enable that. Water conservation is another one.

Jeff Peters:

So if you understand US agriculture there, at least for corn, there's over 10 million acres of irrigated corn out there. How do we use that water more efficiently, right? So at the end of the day, the organizations are looking at efficiency and how do we continue to do it better? And to be quite honest with you guys, if we think about agriculture and the multi-generations that have been farming, it's always been about doing it better. If they weren't doing it better, they wouldn't be in business right now. So it's communicating the stories with quantifiable metrics of what growers are doing today. And then how do we assist those growers as Nutrien on doing it better tomorrow?

Sally Flis:

And I guess the follow up there is, who gets to see the grower data. Growers are always concerned about who's seeing their data and where it's going. How do the downstream partners that we work with, look at the data. Are they looking at individual fields? So they get right down into it with individual growers. How are they looking to tell that story?

Jeff Peters:

It's really dependent on the program and the project. We do offer a number of projects out there right now that are simply measurement. So we're trying to baseline a given supply shed area to understand how those producers are doing on those environmental outcome metrics. In that case, the information is aggregated and anonymous. So any downstream partner would only be seeing that level of information. It's never down to a farm level. It's never down to a fill level and it's always anonymized data. There are other programs out there that we offer that may be around carbon, where fill level information may be shared with that. But again, grow data privacy is always first and foremost for Nutrien, and it's all about choice with the grower. We're being very transparent of how that information is being used, how it will be shared and making growers aware of that.

Tom Daniel:

So, Jeff, one question I would have, if I had a grower today that said, Hey, I'm interested in maybe what Nutrien working on with some of the downstream processors or some different groups in the marketplace. What would be your recommendation to that grower? How could he find out more information about some of these projects?

Jeff Peters:

Yeah, probably first would be to reach out to your local retail and work back through our network. We do have regional leads, Tom, that are helping to guide our local branches and divisions through this topic of sustainability and then just setting up an Agrible account. And then we will do a lot of the heavy lift for you, what we actually do is if we find a match with a downstream partner in a given geography for a given crop, we'll be able to reach out to that grower and the system in the process of onboarding and letting them know what the opportunity might be. And if they qualify and if they're interested, we'll sign them up.

Tom Daniel:

If I was at downstream processor today, Jeff, why would I look to Nutrien as being a valuable source in that value chain, from the grower all the way to the consumer shelf. Where is our fit in that place?

Jeff Peters:

Nutrien has a really natural fit as we talk about this because we have that one-on-one relationship with a grower. And if you look at our local agronomist of over 3,600, that spans the globe, and then we have over 2000 retail locations, we're provider of all things input related, as well as servicing growers financially through financial services and digital solutions. We are working side-by-side with that grower every day. And it's really, really critical for success for these downstream customers, that they have someone that has that local relationship. At the end of the day, success is through trust and collaboration. And if you look at the fundamentals of Nutrien in one Nutrien now, it's all about leadership. It's about collaboration. It's really about challenging ourselves, right? Of what this marketplace is going to look like in the future.

Jeff Peters:

And that fourth one that I just mentioned is trust. It's all about trust with the grower. And guys at the end of the day, we can't risk relationship, if we're not bringing solid offers to our producers and something that we know is going to benefit them, not just for this season, but it's also going to benefit them for the legacy of that farm and their kids farming in the future. So that legacy piece is really, really important Tom.

Sally Flis:

So, Jeff, you mentioned that each of these programs, as you're working with downstream partners, tends to be a little bit different to meet the need of those suppliers or partners downstream. We see the same thing in the field, where we're trying to meet the needs of growers across the wide landscape. As you mentioned, we have a pretty large footprint. So it's a lot of different stuff happening out in the field. When you talk to downstream partners, what's your discussion with them around how to approach implementing stuff. We see a lot of programs out there that just want to pay growers to do one or two individual practices. And I think we've discussed multiple times on here, Tom, that's really not the approach we want to take. We want to take a system level approach. So how do you guide that conversation with a company that may not have any contact with growers to, this needs to be about a system and not about just let's do one or two more practices?

Jeff Peters:

Yeah, it's really an education process. When we talk about sustainability, it's education across the whole supply chain, right? Growers are learning more about what this topic means and they're also sharing back what's possible. There's so many things that the growers are doing right today that we just need to communicate the story to the downstream. Systems level is absolutely where it's at, because we have to think about resiliency of those systems and look across not just that single crop, but that rotation an how many years out of five will that system actually work favorably for that producer. And as we talk about the topic of climate change, where we're going to see more incidents of flooding, where we may see more heat extremes, we have to make that system more resilient to really mitigate the highs and lows that these growers are going to see over the next one to three decades.

Jeff Peters:

Right? So system level is absolutely what we're talking about. Adaptive management, and adaptive management is really around the concept of being able to come up with a system level design, to manage it, to monitor it. And really it's a rinse, lather, repeat because we're constantly learning and a growers that same way. They're constantly learning how to optimize that operation. So to communicate that to downstream customers, it takes time. They have to understand it, the only way that you can really do it. And it's the same way with the growers, you got to prove it guys. It's great to talk about a lot of these topics, but really walking fields, seeing what it means, having the downstream partner engage with the grower at events, where they start learning together. That's how we move the curve here for the future. So it really is about engagement.

Jeff Peters:

And I know COVID has restricted a lot of our engagement here the last 16 to 18 months, and hopefully things are improving. And with that improvement and with these targets that a lot of these downstream customers have, I do see that we're going to get more momentum. We are going to be able to scale here in the next five to 10 years. And it's really exciting. We're seeing a transition of the marketplace and actually how growers will play a more pivotal role in the marketplace.

Dusty Weis:

Well, and certainly it's a great story to tell. And you talk about engagement. Certainly it's a story that we hope to tell again and again, in this podcast in many different ways, because there's a lot of value in these practices, not just from a sustainability perspective, but from a market perspective as well, with the tools that Nutrien Ag Solutions has laid out here, you've charted a course for growers to make sure that they're getting their fair share of that new value that's being created as well. So we just can't say enough about it, but Jeff Peters from Nutrien Ag Solutions. Thank you so much for joining us on this episode of the Future Faster.

Jeff Peters:

Thank you, Dusty.

Dusty Weis:

That is going to conclude this edition of the Future Faster, the pursuit of sustainable success with Nutrient Ag Solutions, new episodes arrive every other week. So make sure you subscribe on your favorite app and join us again soon. Visit futurefaster.com to learn more. The Future Faster podcast is brought to you by Nutrient Ag Solutions with executive producer Connor Irwin, editing by Doug Russell and production oversight by Larry Kilgore the third and produced by Podcamp Media, branded podcast production for businesses podcampmedia.com. For Nutrient Ag Solutions. Thanks for listening. I'm Dusty Weis.