Efficiency is not the same as sustainability: where the E of ESG in agriculture is lacking

Editor’s Note: Ben Palen, director of sustainable consultancy Ag Management Partners, is a fifth-generation farmer with diverse experiences in many facets of agriculture in North America, Africa, and the Middle East.

The views expressed in this guest commentary are the author’s own and do not necessarily reflect those of AFN.

While the overall notion of sustainability in the agricultural context has been around for several years, it has only recently come into vogue. Everyone is on the bandwagon, and it seems that all facets of agriculture either claim to be sustainable with their practices, products, or services that will lead their users to the promised land.

Can all of these people be correct? Or, are all of them off base with their efforts? 

If one starts with the basic premise that sustainability means not depleting resources that are used in the production of a certain item, then agriculture has innate challenges. By and large, agriculture is based on the inconvenient truth of using finite resources to produce food. Arguably, many of the sustainability claims are based on smoke and mirrors because they do not address that fundamental metric. For instance, how is it sustainable to use nonrenewable water resources in parts of South America to grow produce that is then shipped to destinations thousands of miles away? 

The industry is rife with claims of sustainability ranging from enormous multi-national corporations to small, farmers’ market-focused growers. At the larger end of the scale, where corporations want to increasingly appeal to ESG (environment, social, and governance)-focused investors, this situation has caught the attention of the United State Securities and Exchange Commission (SEC), and similar regulatory agencies in Europe, as they address claims of greenwashing.

There are typically a few key ways of measuring so-called sustainability, or lack thereof, in agriculture: water use, carbon emissions, harmful activities, and inputs – think chemical use or soil disturbance – and biodiversity. But given the broad diversity of the industry that has many crop types, soil types, topographies, climates, and varying availability of certain inputs, there is no one size fits all approach to measuring, quantifying, or labeling if these things are sustainable or not.

Furthermore, assumptions are made that certain practices are innately more sustainable than others. Organic is a clear example here: I know of an Illinois organic farm with a carbon footprint three times greater than nearby farms using no-till and other progressive practices. 

Why a 15% reduction in water use is not sustainable 

Consider, for example, an almond grower in California. It is well known that California agriculture is facing water issues. Suppose that an almond grower reduces its water use by 15%-20%. Based on various “sustainability measures” that are in place today, the grower can expect to be labeled as “sustainable” using a third-party “audit.”

What has really taken place is an improvement in efficiency. The fundamental issue of using a depleting resource to grow a crop has not been addressed. At some point in the thought process about this topic, some sort of materiality standard might be useful. This would be similar, say, to what is considered material for purposes of disclosure to investors and regulators in the context of financial statements. But, here again, every grower is different in what we can refer to as his/her “resource profile.” Suppose one grower has enough water for 50 years of use at current rates; another grower is at 25 years. And suppose each grower uses similar efficiency measures. Is grower A sustainable, but not grower B? Therein lies the rub. 

Could a market-driven approach be more effective?

In the San Luis Valley, a high elevation region of Colorado, potatoes, and barley are the primary crops.   When the Valley was initially developed for irrigation decades ago, canals brought water from the nearby Rio Grande River to irrigate the fields using gravity flow. Center pivot irrigation became the primary means of irrigation in more recent times, and most of the water is pulled from irrigation wells drilled into an aquifer.

There have been significant declines in both the aquifer and river levels in recent years. Various proposals have been considered to deal with the issue of sustainable water use before harsh measures, such as shutting down wells, are put into place. (The state water engineer in Colorado has the legal authority to shut down wells).

The proposal now on the table from the water district regulator is market driven and geared to sustainable use. The way it works is that most parcels of land have decades-old ownership shares in canal companies that had taken water from the Rio Grande for years. Each share represents X acre-feet of water, with X varying from year to year based on snowpack. Generally, there are not enough acre-feet of water for most parcels to be self-sustaining based on the shares that they hold. The water district’s proposed regulation is that water pumped from an irrigation well must match, on a 1:1 basis, the water quantity associated with the canal shares for the pertinent parcel of farmland. In other words, use is intended to match the water flow in the river. Balance equals sustainability. This stabilizes the aquifer level, and it leaves enough water in the river to satisfy downstream users, and to help with replenishing the aquifer.  

The likely result of this approach is that some land will come out of irrigated production, and the water rights associated with such land will be available in the open market for lease or sale to others. The value of those rights may vary from year to year based on flow rates in the river. There will also be greater use of tech tools, such as soil moisture sensors so that users can make informed decisions about the amount and timing of crop water needs.  

Another example from the Texas Panhandle is a water budgeting system intended to help prolong the life of the Ogallala Aquifer in the area. Unlike the situation in Colorado, replenishment of water drawn from irrigation wells in Texas is unlikely other than in years when higher than normal rainfall over a wide area may cause a slight rise in water levels.    

The local water district allocates a certain amount of water – typically in acre-feet —  for the farmers to use. Meters are used to track usage, and any farmer who exceeds his/her allocation each year has to pay a significant amount of money, which essentially makes it financially unwise to over-pump. Unlike the San Luis Valley, there is no mechanism in place, or proposed, to allow the trading of water rights. Instead, the focus is on prolonging the life of the aquifer. The water district is highly transparent on that topic by means of checking static water levels of wells across the region each year, and then providing that data to the public.

In the Texas example, it would be fair to say that, strictly speaking, the approach is not sustainable. There will be a point in time, maybe 30-50 years from now, when it will likely become uneconomical, and environmentally unwise, to pump more water for irrigated farming in some parts of the area.  Ultimately, the approach is a blend of efficiency improvements and some measure of sustainability.   Farmers, and other third parties, can use data to make decisions relating to the use of the aquifer. Those decisions include less water-intensive crops, partial irrigation — the area does receive enough rainfall to allow for growing crops at profitable levels in most years — and the use of agtech tools for precise determinations of water use, and needs, by field.  

Both approaches reflect the reality of the many scenarios in agriculture where some measure of sustainability cannot be achieved without linking changed practices to the underlying resource, whether it be water, or some other input, such as fertilizer.

And what about nitrogen use?

Generally speaking, the production of most nitrogen fertilizers is based on the use of finite resources, and on a manufacturing process that emits about three tons of carbon for each ton of fertilizer that is made.   By using precision ag techniques, a farmer can reduce the use of nitrogen and achieve the same, or higher, yields, than previously. The upshot is that the life of the underlying resource is extended along with other ecosystem benefits to using less nitrogen, such as fewer algal blooms. Again, this is a mix of efficiency and sustainability, but there is a benchmark — in this case historical ratios for nitrogen use per unit of crop production — that can provide some guidance for investors, regulators, and consumers.

Efficiency is not true sustainability

In short, being more efficient with the use of resources, while a step in the right direction, does not solve the heart of the issue. The honest discussion of sustainability should be focused on the suitability of growing certain crops in certain locations and what crops we need to sustain life versus crops that we like because we can afford them to be shipped across the world.

While the agtech industry is developing some solutions, such as crop varieties that can grow on far less water and substitutes for synthetic fertilizers, most are not commercially proven yet and the road ahead is still precarious.

Instead of pushing thinly-supported sustainability claims that could mislead investors, consumers, and regulators, discussions should be framed around responsible practices, with references made to resource usage benchmarks that can demonstrate more than just good intentions. Not only could bad policy slow down the necessary transformation of the food system, but it could also prevent conversations around the awkward reality of global agriculture and food availability in the future from happening.