Sentinel whitepaper
Sustainable Agriculture:
Sowing the seeds for a better future
By: Emilye Pelow Corbett
Sustainable Investing Research Analyst
Sentinel Financial Services Company
March 2015
This article contains the current opinions of the author but not necessarily those of Sentinel Investments. The author’s opinions are subject to change without notice.
This article is distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and
should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information
contained herein has been obtained from sources believed to be reliable, but not guaranteed.
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Many definitions of sustainable agriculture exist, and are
constantly debated. At Sentinel, sustainable agriculture means
using farming practices that take the environment, human rights,
labor rights, animal rights and communities into consideration
when farming. We, as a world, are continuing to grow; by 2050
there will be over nine billion people on the planet.1 If we do not
study, educate, and change the way we grow and harvest food,
the implications will be great. In order to have sustainable food
systems to support the world’s growing population, we will need
sustainable agriculture. While this seems fairly straight forward,
the issues are complex.
To begin thinking about these issues, many fundamental questions need to be addressed, such as:
Does use of genetically modified organisms (GMOs) make sense? What is the role of agribusiness?
What are the impacts of land degradation? Do we need regional food systems? What is organic
farming and why does it matter?
Due to the intricacy of our food system, it is necessary for all stakeholders, including business,
farmers, governments, and non-profit organizations to come together to improve the agricultural
practices. It is not only businesses that directly engage in farming (from small family farms to
agribusiness), it is the food companies, health care companies, the pharmaceutical companies,
retail stores, and others that all directly or indirectly rely on agriculture.
Through this necessary period of change, risks are continuing to present themselves, and ignoring
them is not an option. By the same token, there are opportunities for companies, industries and
other stakeholders who are managing risks and creating innovative and responsible ways to make
the agriculture industry better and stronger. The need for effective food production, processing
and distribution has intensified. There is not one solution, but many, that are needed to fix the
problems. The issues discussed in this paper touch on the most general themes so as to gain an
understanding of how interwoven agriculture is in the environment, public health, and
economic spheres.
Challenges Associated with Agriculture
Agriculture is just one piece of the much broader food systems discussion. Sustainable food
systems reflect a structure and process that “create a close link between the producers and the
consumers of food, such that the health of people, place, planet & profit are optimally restored and
supported.”2 In sustainable food systems we need sustainable agriculture, and that is where some
of the challenges lie.
Environment and Natural Resources
Agriculture, the practice of farming, cultivating soil for crops and rearing of animals, is
environmentally intensive. To create a sustainable agriculture system, it is critical to understand
first the impacts of current agricultural practices on land, soil, water and in whole eco-systems.
“Today’s conventional or industrial agriculture is considered unsustainable because it is similarly
eroding natural resources faster than the environment can regenerate them and because it depends
heavily on resources that are nonrenewable (e.g., fossil fuels and fossil aquifers).”3 In other words,
current large scale agricultural practices contribute to the degradation of eco-systems.
1 United Nations Department of Economic and Social Affairs, Population Division. (2014). World Population
Prospects: The 2012 Revision, Methodology of the United Nations Population Estimates and Projections. New
York: United Nations.
2 Elena Pons, Maud-Alison Long, Raúl Pomares, “Promoting Sustainable Food Systems Through Impact Investing,”
The Springcreek Foundation (2012):4.
3 Leo Horrigan, Robert Lawrence, Polly Walker, “How Sustainable Agriculture Can Address the Environmental and
Human Health Harms of Industrial Agriculture,” Environmental Health Perspective, 110 (May 2002), 452.
2 Sustainable Agriculture: Sowing the seeds for a better future | Sentinel Investments
Eco-systems
There are many examples of eco-systems -- a pond, a forest, a grass-land. “The study of ecosystems
mainly consists of the study of certain processes that link the living, or biotic, components to the
non-living, or abiotic, components.”4 What we are observing is that crop, livestock and fisheries
are being affected by changes in eco-systems which are mainly a result of climate changes, drastic
change in water levels, and soil and land degradation.
Climate
1,792
Methane from cattle enteric fermentation
672 Biomass burning
616 Rice production
413 Manure
410 Fertilizer production
369 Irrigation
158 Farm machinery
2,128
Nitrous oxide from fertilized soils
Sources of agricultural
greenhouse gases,
excluding land-use change
Agriculture is a major contributor of greenhouse gas (GHG) emissions, which are leading
to climate change. Emissions resulting from agriculture, both crop and livestock production,
grew from “4.7 billion tonnes of carbon dioxide equivalents (CO2 eg) in 2001 to over 5.3 billion
tonnes in 2011, a 14 percent increase.”5 The two largest sources of GHG emissions within
agriculture are “enteric fermentation when methane is produced by livestock during digestion and
released via belches”6 and the application of synthetic fertilizers.7 Reducing the impact of GHG
emissions on the environment is critical. Many studies suggest that curbing the amount of beef
consumed and substituting chicken or fish would effectively reduce the impact of GHG emissions,
as would the installation of methane capture devices for manure storage facilities.8 Additionally,
improved machinery efficiency and/or “clean” machinery would also be helpful in reducing GHG
emissions overall.
Water
Besides climate, another key issue is water use. 70% of fresh water withdrawn is for agriculture
use; up to 80% to 90% of that amount is consumed and not returned.9 As stated by Mai-Lan Ha
of the Pacific Institute, “tackling the water crisis will hinge upon addressing the issue of water and
agriculture.”10 Addressing a water footprint by use of analytical tools to allow the measurement
and management of water is needed. It is impossible to manage what is not measured. In order
to achieve the most effective management of water, support is required from governments to
uphold policy standards and laws, and from all business, including agribusiness and farmers, as
they create more innovative ways to conserve water. With the implementation of water efficiency
practices like reuse of water when possible, improved irrigation techniques and the execution of
water management systems, change can occur.
Land
Agriculture is dependent on land and sustainable agriculture is dependent on sustainable land
management (SLM). “Today, 37 percent of the planet’s landmass outside of Antarctica is used to
grow food—12 percent as croplands and 25 percent as grazing lands. When deserts, permanent ice,
and inland water bodies are excluded, the figure rises to just under 50 percent.”11 Therefore,
one of the most important aspects of SLM is this critical merger of agriculture and
environment through twin objectives: i) maintaining long term productivity of the ecosystem
functions (land, water, biodiversity) and ii) increasing productivity (quality, quantity and
diversity) of goods and services, and particularly safe and healthy food.
Source: World Business Council for
Sustainable Development
Increase in nutritional status since the 1960s;
developing countries still lag behind
Food supply (total calories per capita per day)
3,500
Developed countries
3,000
2,800
World
Threshold for national food security
2,500
Asia
South Asia
2,000
Sub-Saharan Africa
1,500
1961 1965 1970 1975 1980 1985 1990 1995 2000 2003
Source: The World Bank
To operationalize the sustained combination of these twin SLM objectives, it is essential to
understand drivers and causes of land degradation and to take into account issues of current
and emerging risks.12
4 University of Michigan, “The Concept of the Ecosystem,” October 31, 2008, 1.
5 “Agriculture’s greenhouse gas emissions on the rise,” Food and Agriculture Organization of the United Nations,
accessed February 18, 2015, http://www.fao.org/news/story/en/item/216137/icode/.
6 Ibid.
7 Ibid.
8 Food and Agriculture Organization of the United Nations. (2014). Agriculture, Forestry and Other Land Use
Emissions by Sources and Removals by Sinks. FAO: United Nations.
9 Tim Searchinger, Craig Hanson, Janet Ranganathan, et al, “The Great Balancing Act,” World Resources Institute,
May 2013, 2.
10“Up-scaling Sustainable Agriculture Initiatives on the Water Action Hub,” Pacific Institute, accessed February 18,
2015, http://pacinst.org/up-scaling-sustainable-agriculture-initiatives-on-the-water-action-hub/ .
11 Tim Searchinger, Craig Hanson, Janet Ranganathan, et al, “The Great Balancing Act,” World Resources Institute,
May 2013, 2.
12 “Sustainable Land Management,” Food and Agriculture Organization of the United Nations, accessed February
19, 2015, http://www.fao.org/nr/land/sustainable-land-management/en/.
Sustainable Agriculture: Sowing the seeds for a better future | Sentinel Investments
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The need for food and the need to feed a growing population are increasing. However, arable land
is limited. Therefore, how we produce, manufacture, distribute and sell food needs to change.
Producing more food without land expansion can be achieved by
1,792
Methane from cattle enteric fermentation
672 Biomass burning
616 Rice production
413 Manure
410 Fertilizer production
369 Irrigation
158 Farm machinery
Public Health
The health of the general public is a major factor connected to sustainable agriculture. There are
equally important challenges to overcome, the challenge of reducing obesity and malnutrition and
the challenge of increasing food security.
Nutrition
The two issues related to nutrition are at opposite ends of the spectrum. On one end, there
is obesity, on the other, malnutrition. Obesity has been a growing trend for close to a decade.
Worldwide obesity has doubled since 1980.14 Worldwide, 1.5 billion people are overweight
or obese.15
Although undernutrition is still common in developing countries (affecting about 800
million people worldwide), in affluent countries the main causes of death are associated with
overnutrition. In the United States, for example, the average adult male consumes 154% of the
recommended daily allowance (RDA) for protein (97 g vs. an RDA of 63 g), and the average
adult female consumes 127% of the RDA (63.5 g vs. an RDA of 50 g).16
A small portion of the world consumes a large amount of calories, making the gap between overand under- nutrition even larger. Malnutrition is correlated to poverty, and worldwide 805 million
people are chronically hungry due to extreme poverty.17 International Medical Corps reports that
global malnutrition has a higher death toll than HIV, tuberculosis and malaria combined.18
Food Security
Source: World Business Council for
Sustainable Development
Increase in nutritional status since the 1960s;
developing countries still lag behind
Food supply (total calories per capita per day)
3,500
Developed countries
3,000
2,800
World
Threshold for national food security
2,500
Asia
South Asia
2,000
Sub-Saharan Africa
1,500
1961 1965 1970 1975 1980 1985 1990 1995 2000 2003
Source: The World Bank
US organic food sales ($bn)
38.7
35.4
32.1
boosting yields through attentive crop management,
increasing the use of technology,
improving soil management and rotation practices, and
expanding resource-efficient crop or livestock production to land that is not used to
produce food.13
Responsible land use is at the heart of sustainable agriculture, and as such, minimizing land
degradation, rehabilitating degraded areas and ensuring the optimal use of land resources are
crucial if we are to meet the food needs for present and future generations.
Nitrous oxide from fertilized soils
Sources of agricultural
greenhouse gases,
excluding land-use change
2,128
•
•
•
•
42.0
Food security is defined as including both physical and economic access to goods that meet
people’s dietary needs.19 “Food security is a complex sustainable development issue linked to health
through malnutrition, but also to sustainable economic development, environment, and trade.”20
Food security has three important components that include food availability, food access and food
use. To address the public health concerns that are associated with nutrition, food systems, and by
extension agriculture, there are several responses, including:
•
shifting away from the current mainstream food supply by supporting more crops that have
nutrient rich foods, like fruits and vegetables;
•
providing farm incentives to farmers;
•
altering systems to allow for better access to affordable foods; and
•
acknowledgement from community, government, policy-makers, and business that access and
availability of nutritious food is a right not a privilege.
13 Tim Searchinger, Craig Hanson, Janet Ranganathan, et al, “The Great Balancing Act,” World Resources Institute,
May 2013, 10-13.
14“Obesity and overweight,” World Health Organization, accessed February 23, 2015, http://www.who.int/
mediacentre/factsheets/fs311/en/.
15 “Healthy and sustainable food systems are crucial to fight hunger and malnutrition,” Food and Agriculture
Organization of the United Nations, accessed February 23, 2015, http://www.fao.org/news/story/en/
item/212554/icode/.
16 Leo Horrigan, Robert Lawrence, Polly Walker, “How Sustainable Agriculture Can Address the Environmental and
Human Health Harms of Industrial Agriculture,” Environmental Health Perspective, 110 (May 2002), 449.
17“World Hunger falls, but 805 million still chronically undernourished,” Food and Agriculture Organization of the
United Nations, accessed February 23, 2015, http://www.fao.org/news/story/en/item/243839/icode/.
18 “Food for Malnourished Children,” International Medical Corps, accessed February 23, 2015, http://
internationalmedicalcorps.org/gifts/food#.VOtQZ-bF8V8.
19 “Food Security,” World Health Organization, Food Security, accessed February 23, 2015, http://www.who.int/
trade/glossary/story028/en/.
20 Ibid.
28.9
4 Sustainable
Agriculture: Sowing the seeds for a better future | Sentinel Investments
With the environmental and social implications noted above, combined with the complexity of
global politics and economies, and a growing population, the food security issues as well as over
nutrition and under nutrition, create a multifaceted public health challenge that requires a change
in the approach to current food systems and agricultural practices.
Economic
Agriculture plays a large role in the world’s economy. Over the past several decades, the economics
of agriculture have changed dramatically. In the most basic sense, agricultural economics refers
to the production of crops and livestock. Two of the main factors stressing the current agricultural
economic framework are farmworker equity (fair wages, safe working conditions, and professional
development opportunities21) and agribusiness.
While long-term viability
and profitability go hand
in hand, the pressure created
by the pursuit of profits is
cause for concern in the
agriculture industry.
While long-term viability and profitability go hand in hand, the pressure created by the pursuit of
profits is cause for concern in the agriculture industry. There are approximately two billion people
worldwide that work in the agriculture industry and most are considered poor. Small to mid-size
farmers can rarely survive on farm income alone. However, this need not be the case going forward.
Estimates show that if farmers in South Asia and sub-Saharan Africa could double their yields
in the next 20 years then this would translate into 400 million people lifting themselves out of
poverty.22 Changes of this scale would only occur, and be sustainable, if other social and economic
issues were addressed, like training on farming techniques, increasing use of machinery, improving
health and safety standards with use of fertilizer and other chemicals, and breaking down gender
barriers so women farmers could become a larger part of farming process.23
Changes would also need to occur in agribusiness, the large scale business of agriculture (crop
production, chemicals, farm machinery, seed supply, etc.) which continues to play a major role in
the industry. Critics of agribusiness state that the economies of scale are being manipulated and
thus create less opportunity for family farmers. Supporters of agribusiness state that having large
scale food production provides the ability for more food availability worldwide. “Gross domestic
product (GDP) growth in agriculture has been shown to be at least twice as effective in reducing
poverty as growth originating in other sectors.”24
Exploring Solutions
The complexity of current issues in the agriculture industry requires nothing short of a
multifaceted solution. Generally speaking, to create a sustainable agriculture model, we will need
to produce more food in a more responsible manner, taking the environment and social factors
into consideration. While there is no easy or quick way to complete this task, a variety of solutions
is identified below.
Genetically Modified Organisms
One of the most controversial food topics of the 21st century is genetically modified organisms
(GMOs). GMOs are hotly debated and for good reason. There are many aspects of this debate and
in order to appreciate the true implications of GMOs, it is important to understand the pros and
cons of their use.
Supporters of GMOs say that having the ability to provide seeds that are drought resistant or
insect repellent will allow for food to be grown in areas where farming was not possible before,
thus increasing the quantity and quality of food. Insects often cause food waste. One out of every
four calories produced is lost or wasted between farm and fork.25 Seeds that are made to be insect
repellent can lead to less spraying of chemicals which potentially then leads to less run-off of
chemicals into waterways.26 Seeds that are produced to grow bigger and more fruitful plants also
require land to be tilled less leading to lower GHG emissions.
21 Sustainalytics and Tellus Institute. (October 2012). Worker Equity in Food and Agriculture.
22 “Helping Poor Farmers, Changes Needed to Feed 1 Billion Hungry,” Bill & Melinda Gates Foundation, accessed
February 23, 2015, http://www.gatesfoundation.org/media-center/speeches/2012/02/bill-gates-ifad.
23 Ibid
24 “FAO’s role in investment in agriculture,” Food and Agriculture Organization of the United Nations, accessed
February 23, 2015, http://www.fao.org/investment-in-agriculture/en/.
25 Brian Lipinski, Craig Hanson, James Lomax, et al, “Reducing Food Loss and Waste,” World Resources Institute,
May 2013, 1-2.
26 “About Pesticides,” British Columbia Ministry of Agriculture, accessed February 23, 2015, http://www.al.gov.
bc.ca/pesticides/a_3.htm
Sustainable Agriculture: Sowing the seeds for a better future | Sentinel Investments
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Increase in nutritional status since the 1960s;
developing countries still lag behind
Food supply (total calories per capita per day)
3,500
Developed countries
3,000
2,800
World
Threshold for national food security
2,500
Asia
South Asia
2,000
Sub-Saharan Africa
1,500
1961 1965 1970 1975 1980 1985 1990 1995 2000 2003
Source: The World Bank
The opposite side of the debate also has compelling points, including the lack of knowledge around
the long term effects of GMOs, the effects of GMO use on the natural environment as well as on the
health of consumers. Other question include: What are the implications of introducing man-made
science into eco-systems? Is use of agroecology techniques, (the biological control of pests and
diseases) a better way? How does introducing GMOs affect insects, bees and other influential and
critical parts of agriculture and the food chain? And finally it has been suggested that use of GMOs
is in fact just a band-aid on a much larger issue, broken sustainable food systems.
Organic Farming
US organic food sales ($bn)
42.0
38.7
35.4
32.1
28.9
On the flip side of the GMO discussion is organic farming. As with the GMO debate, there are
both positive and negative sides to organic farming. On the positive side, organic farming uses
no chemicals allowing for less detrimental environmental impact and employs responsible land
use practices. Organic farming and the consumer support of organic food is a growing trend and
continues to gain market share. In 2010, the overall organic food market was 4% and it continues
to grow.27
Countering these benefits are such issues as food waste and the associated higher cost. While there
is re-use of food waste by composting, there is more general food waste due to destruction by
insects and other natural causes. Although this food is not totally wasted as it is typically used for
animal feed or composting, it is wasted in the sense the farmer cannot sell the food to make profit.
While organic farming has many positive aspects, the reality of every farm and farmer using
organic structure and techniques is far from achievable as it stands today. Support of organic
farmers and increasing trends show that this is an interest of consumers and as the support rises
over time, the ability to farm organically on a much larger scale seems more achievable.
2010
2011
2012
Source: statista.com
2013
2014 est
Regional Food Systems
Research suggests that stronger regional food systems would lead to better management of local
food resources.28 Locally grown food is the fastest growing segment in grocery in the US. Improved
regional food systems also support local economies. Even food companies like Wal-mart are
reaching out to local food vendors to sell products in mega-supermarkets. Wal-mart’s purpose
for this is two-fold: it provides a more “local” image for the corporation but it also provides its
customers with the ability to “shop local” even within an international store. Farmers’ markets
are also part of supporting regional food systems. Farmers’ markets nationwide have more than
quadrupled since the mid-90s.29 Regional food systems also support community and economic
development, job creation, and awareness of farming and local food systems.
As with each side of a debate, regional food systems have pros, listed above, but also cons. In a
regional food system there are limited quantities and variety of food. Many people are accustomed
to supermarket shopping and having the ability to have all types of food available throughout
the seasons. Also, even though food does not have to travel as far, price is often higher than if
purchased from a source that is outside the region. There is a price differential for many reasons,
including higher labor costs and smaller scale production.
Overall, strengthening regional food systems does provide many benefits and supports the creation
of a stronger and a more sustainable food system. Solely strengthening regional food systems does
not create an end all, be all solution, but it does provide one piece of the puzzle.
27“Organic Market Overview,” United States Department of Agriculture Economic Research Service, accessed
February 23, 2015, http://www.ers.usda.gov/topics/natural-resources-environment/organic-agriculture/organicmarket-overview.aspx.
28 National Sustainable Agriculture Coalition. (April 2010). Guide to USDA Funding for Local and Regional Food
Systems. Washington, DC.
29 “National Count of Farmers Market Directory Listing,” United States Department of Agriculture records,
accessed February 23, 2015, http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.
do?template=TemplateS&navID=WholesaleandFarmersMarkets&leftNav=WholesaleandFarmersMarkets
Wholesale&page=WFMFarmersMarketGrowth&description=Farmers%20Market%20Growth&acct=frmrdirmkt.
6 Sustainable Agriculture: Sowing the seeds for a better future | Sentinel Investments
Supporting Sustainable Agriculture
Sustainable agriculture is part of a larger movement toward sustainable development, which
recognizes that natural resources are finite, acknowledges limits on economic growth, and
encourages equity in resource allocation.30
Supporting sustainable agriculture takes many forms, from small local investments to large scale
policy initiatives. As the agriculture industry stands today, many large and influential businesses
control the direction of the entire industry. While it is not likely this will change in the near term,
what can influence a shift to more responsible and sustainable agricultural practices are the voices
of consumers, investors, and other stakeholders. These changes will be prompted and more likely,
if federal, state and global policies are improved. For example, a step in the right dirction was
the US 2014 Farm Bill, H.R.2642, which authorized $956 billion in spending over the next ten
years in areas such as food stamps, nutrition, crop insurance, conservation, commodity programs,
renewable energy, forestry and local and regional food systems.commodity programs, renewable
energy, forestry and local and regional food systems. 31
From an investment standpoint, there are many ways in which stakeholders can support
sustainable agriculture. These range from individual investments into land, research, and
farming techniques through community investment vehicles to microfinance loans, to investment
in publicly traded companies. In the latter case, the investment need not be only in agribusinesses
that have developed and / or adopted sustainable agricultural practices, but also in food producers,
retailers, and other companies that support sustainable agriculture and promote sustainable
food systems.
Sentinel’s Perspective
There is not one solution
and there is not one company,
person, country or policy that
will ensure that we meet the
needs of a growing
population.
The world needs agriculture to contribute to economic and social development. We need to close
the gap on the amount of food that is available today and what is needed in 2050. We can do this
by investing with companies that are acknowledging the risks associated with the current state of
agriculture and creating opportunities and innovative changes to sustainably feed our world.
At Sentinel, as sustainable investors, we seek out companies that are operating businesses with
integrity and responsible business practices. For us, investing in sustainable agriculture means
identifying companies that have adopted best in class practices, are spending research and
development dollars on innovative technologies that can decrease GHG emissions and improve
water use while farming, take a responsible approach to land management, and support fair labor
standards for its farmers and farm workers. It is also important to note that we do not divest from
companies that use GMOs, but rather encourage labeling of GMOs in products so that consumers
can make informed purchasing decisions. While our focus is on publicly-traded companies,
we believe that small, regional companies and organic farmers also play a major part in moving
sustainable agriculture forward. It is the collaboration of all segments of the industry that will
create and support a sustainable agriculture model and ultimately sustainable food systems
for the future.
There is not one solution and there is not one company, person, country or policy that will ensure
that we meet the needs of a growing population in a resource constrained world. Many things
have to change, from the pattern of behavior of consumers to the business practices of companies.
It starts with education: education of students, families, investors, business people, and
policymakers around the world. Understanding the major issues is a step in the right direction.
30 Leo Horrigan, Robert Lawrence, Polly Walker, “How Sustainable Agriculture Can Address the Environmental and Human Health Harms of Industrial Agriculture,” Environmental Health Perspective, 110 (May
2002), 452.do?template=TemplateS&navID=WholesaleandFarmersMarkets&leftNav=WholesaleandFarmersMarkets&page=WFMFarmersMarketGrowth&description=Farmers%20Market%20Growth&acct=frmrdirmkt.
31 Agricultural Act of 2014, 113th Congress, H.R.2642.
Sustainable Agriculture: Sowing the seeds for a better future | Sentinel Investments
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