Select beef producers may soon get paid for sustainability, something that has been a long-dangled carrot for farmers who have been told that auditing their farms will add value.
The recently launched Canadian Beef Sustainability Acceleration pilot, run through Cargill, Verified Beef Production Plus (VBP+) and beef tracker Beef InfoXchange Systems (BIXS), will pay credit back to participating farms during its minimum one-year tenure.
Virgil Lowe, VBP+ business manager, said the pilot hopes to establish a confirmed supply chain for sustainable beef and test the chain of custody system with which meat sourcing is tracked.
Participating farms must be audited through VBP+ before joining the pilot. Animals are tracked through BIXS to confirm they were raised and finished on VBP+ operations before being shipped and processed through Cargill. Meat is then sold to participating customers, who have agreed to fund the producer credit in exchange for access to verified sustainable beef. The pilot will then distribute credit back to the producer.
Major retailers McDonald’s and Swiss Chalet are the first to sign on with the pilot. Both restaurant chains have submitted a target volume of sustainably sourced beef based on the amount of meat they currently purchase from Cargill.
“This is proof that we do have dollars coming down the supply chain from end-users saying, ‘We will pay producers to do further VBP+ on-farm practices,’ and that’s extremely encouraging, I think, for our industry and for the whole sustainability initiative in general,” Lowe said.
Emily Murray, Cargill’s general manager for McDonald’s beef, compared the pilot to a Kickstarter campaign, where potential customers can fund a product they would like to see hit the market.
Cargill hopes to see more end-use customers join McDonald’s and Swiss Chalet. The company has reached out to their beef customer bases, including grocery stores, to gauge interest.
“There’s definitely other customers of our system that we believe might be interested in being able to talk about this sourcing from sustainable sources,” she said.
Open to expansion
VBP+ producers may be the first paid for their efforts on sustainability, but Murray says she hopes they will not be the last.
Cargill plans to align the pilot project’s standards with the incoming Canadian Roundtable for Sustainable Beef (CRSB) framework, expected later this year. The roundtable, which includes dozens of members ranging from producer groups and packing plants to retailers and researchers, is currently finalizing its sustainability guidelines for processors. The finished framework will include sustainability indicators for multiple points through the beef supply chain.
“Producers need to be audited to the CRSB standards that are being set and so, as the CRSB recognizes other auditing bodies, then we’d recognize those audits as well and as they recognize other chain of custody and tracking methods, we’re open to recognizing those too,” Murray said.
The Cargill employee also said she would be open to partner with other processors if a customer wanted to join the pilot, but did not buy meat from Cargill.
Logistics and hurdles
Lowe maintained that there is an ample supply of beef from audited farms, despite the ongoing transition from Verified Beef Production to VBP+. The previous program expanded its scope last year.
“I would encourage anyone who is VBP registered now to transition to VBP+ as soon as possible because the credits are only going to be available for VBP+ registered operations, not VBP operations,” Lowe said.
Already registered farmers must complete a new round of training to bring themselves up to date before changing over to VBP+. As of June, an estimated 1,000 producers were registered with both VBP and VBP+ combined.
The challenge, Lowe said, will come from a complex production cycle, which often includes multiple ownership changes that must now be tracked, along with the sustainability status of each farm an animal goes to.
“Our goal is just to get as many people as we can because I suspect the demand is going to outstrip the supply, at least in the near term, and the more people we can get signed on sooner, the more supply we will have,” he said.
The pilot is a leap of faith at this early stage, Murray admitted. The credit has been promised, but no dollar amount has been set, and Murray says those amounts will largely depend on the number of producers and end-use customers in the pilot.
“We’re really hoping to, in the next couple of weeks, lock down a couple of other customers. So, knowing how many different customers are going to be contributing over the same supply will help us give an indication of how much the credit will be,” she said. “The other aspect is how many producers are on board and carcass weights and efficiency gains and all these things that we’re going to be looking at.”
Murray added, however, that she has been impressed with both the producer interest and customer commitment to the program thus far.
“They’re willing to fund now to make a claim later,” she said. “They can’t say anything that’s third-party endorsed to the consumer today about the sustainability of their beef, but they’re paying for it anyway. That should reinforce the interest of our end-users in this kind of a program. Do you know if you’re going to get paid right now during the pilot? There is not a guarantee of the exact amount or how that will work, but if we don’t build a supply chain, then we won’t deliver anything to these customers who are saying they’re interested and then we’re setting ourselves up for defeat.”
The pilot will begin tracking cattle and beef volumes as of October, with the first payouts expected in early 2018.
Cargill hopes to evolve the pilot into a more permanent program, although Murray says the CRSB’s marketing guidelines, such as logo use, should come first.
“Once that’s done and we have a sense of what the standard is for the consumer side messaging, then we really understand what our North Star is and we really know what our customers are going to want and that’s when we can build a program,” she said. “As long as our customers are saying, ‘We want this,’ we will build a program around it.”