Corn buyers urged to support sustainability

Will Green is news editor of Supply Management
23 June 2014

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23 June 2014 | Will Green

Buyers of corn are being urged to encourage sustainability in the crop’s supply chain in the face of risks from climate change and higher prices.

In a report non-profit sustainability organisation Ceres said extreme weather events and water shortages were increasing price volatility in the US, the world’s largest producer of corn, and farmers need to be incentivised to “reduce risks, enhance yields and protect water sources”.

The report said corn prices had been “steadily rising” over the past 20 years, with prices hitting a record high in 2012 of $8 per bushel (£4.70) following a drought, though a record harvest in 2013 saw prices fall to $4 (£2.35) to $5 (£2.94) per bushel. “Despite recent drops in corn prices, many of the underlying drivers for high and volatile corn prices remain in place,” said the report.

The report recommends firms should:

 •    Draw up corporate policies for sourcing agricultural ingredients with time-bound goals around sustainability

 •    Integrate sustainability into supplier codes and contracts

 •    Support farmers to adjust practices

 •    Back government policies that address climate change

The report found 16 separate sectors, including fast food companies, fertiliser manufacturers and grocery retailers, depend on US corn, and in 2013 the top 45 firms in the corn value chain earned $1.7 trillion (£1 trillion) in revenue.

The report cited goals announced by Walmart and Coca-Cola around increasing efficiency and sustainability in their agricultural supply chains.

Report author Brooke Barton, water program director at Ceres, said: “Escalating corn production for our food, livestock and energy industries has put the corn sector on an unsustainable path, especially in regard to water quality and water use impacts and the growing ripples from climate change.

“Corn buyers have an important role in recognising this challenge and it’s encouraging that some are already trying to influence agricultural practices. Still, much more action is needed.”

The US corn market was worth $67 billion (£39.4 billion) in 2013/14 and the country is expected to remain the largest corn exporter, representing 35 to 40 per cent of total global exports, over the next 10 years.

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