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AgBalance TM From sustainability assessment to continuous improvement Markus Frank, BASF SE OECD BIAC Workshop, Paris / Apr 24, 2013

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AgBalanceTM

From sustainability assessment to continuous

improvement

Markus Frank, BASF SE

OECD BIAC Workshop, Paris / Apr 24, 2013

Sustainability in agriculture

Creating value in various agri-food value chains

2

Off the farm

production

and working

funds

Agricultural

production Consumer Processing

End consumer

industries Retail

Sustainable production

as a consumers

expectation and value

driver

Value chains respond to

sustainability need

Translation into market

dynamics

Ingredients

Sustainability in Agriculture

Philosophy of AgBalance

Sustainability is an imperative

and thus brand relevant in the

agri-food value chain

Managing sustainability is a

source of innovation,

differentiation and therefore

business opportunities

Sustainability is a journey, not

a destination – continuous

improvement as an ongoing

effort

You can only manage what you have measured

4

AgBalance Method Development

Measure sustainability in agriculture

Eco-Efficiency

Sustainable

Agriculture

Holistic method for life cycle

assessment in agricultural and

food value chain production

processes

Helps to make informed

decisions on how to manage

improvement

Independent assurance of

functionality and coherence

received by

AgBalance™

5

The Engine Room of AgBalance

Entire Value Chain in the Focus

Prechain Agriculture Downchain

AgBalance

Life Cycle

Assessment (ISO 14040-44)

Social Impact

Assessment (UNEP-SETAC)

Ag-specific

Indicators (Biodiversity, Soil,

Land use)

Total Life Cycle

Costs

6

Comprehensive data as

a profound basis for clear

statements

SUSTAINABILITY SCORE

Society

Economy

Ecology + -

Dimensions

Water use

Biodiversity

Land use

Soil Energy

consumption

Emissions

Macro

economic

Fixed costs

Variable

costs

Consumer

Local &

national

community

International

community

Future

generation

Farmer/

Entrepreneur

Resource

consumption

Eco-toxicity

potential

Categories Subsidies

Maintenance/

General repair

GVP

Farm profits

Seed

Soil preparation

Insurances Labour

Investment

Crop protection

Fertilization

Machinery

Deprecations

Soil compaction

Soil erosion

Eco-Toxicity Farming intensity

Crop rotation

Potential for

intermixing

Renewable

Energy

Greenhouse

gases

Acidification

potential

Ozone depletion

potential

Photochem.

ozone creation

potential

Water emissions

Solid waste

Assessed total

water use

State indicator

Agri-

environmental

schemes

Nutrients balance

Eco-Toxicity

potential

Abiotic resource

depletion

Non-renewable

Energy

Air emissions

Gender equality

Access to land

Residues

in feed & food

Unauthorized /

unlabeled GMO

Fair trade

Trainees

Social security

Association

membership

Professional

training

Imports from

developing

countries

Wages

Risk potential

Toxicity potential Integration

Wider economic

effects

N-surplus

Soil carbon

balance

Actual

Agricultural area

Assessed total

area (prechain)

Wages/salaries

(prechain and

downstream

chain)

Strikes and

lockouts

Functional

product

characteristics

Other risks Employment

Qualified

employees

Employees

Part time workers

Family support

R&D

Capital

investments

Foreign direct

investment

Child labour

Other fixed costs

Protected areas

Toxicity potential

(Farmer)

Indicators

Life Cycle Impact Assessment (LCIA)

Aggregation & Weighting

Factor Societal Factor Relevance Factor n Calculatio

Why do partners engage in AgBalance?

AgBalance is supposed to help them…

Increase their efficiency and therefore profitability

Differentiate from their competitors in the

marketplace

Better address their (customers„) customers„ needs

Increase the marketability of their produce

Build alliances along the value chain and with

important influencers, e.g. NGOs, political bodies

Bring their sustainability agenda to life

AgBalance Case study

Soya, Corn & Cotton Production in Brazil

8

Cerrado Biome

AgBalance™ Objectives & Reference:

Understand the sustainability drivers in the

soya, cotton and corn production chains,

identify best practices & areas for

improvement.

Functional Unit: 1 average cultivated hectare in

two farms, Panorama (BA) and Planalto (MS),

taking the 2009/10 crop year as a basis.

Processing Retailer Disposal

8

Off-farm

production of

Preparation

Input

Cultivation Harvesting Storage/

Transport

Processing Retailer Disposal

These life cycle steps are not considered,

since they are equal for all alternatives

Planalto farm, MS

Panorama farm, BA

Sustainability Performance

Single Score & Dimensions

9

Planalto: better general performance in

the three dimensions

Panorama: better performance in a few

individual indicators, e.g. professional

training, integration of disabled people

and conservation areas

Focus should be on the optimization of

the environmental dimension in

Panorama

Panorama (BA)

Planalto (MS)

AgBalance™

From highly aggregated single score to detailed information

~ 40 %

10

Fertilizer

Fertilizer production and use of fertilizers

represent high environmental burden

Planalto is more efficient in the use of

nutrients, especially phosphorus

Pesticides

More cotton production at Panorama

requires more pesticide use

Organophosphate insecticides comprise only

2 % of total pesticide volume but result in

approx. 70% of environmental impact (i.e.

ecotoxicity potential)

Panorama (BA)

Planalto (MS)

Sustainability Performance

Environmental Dimension

AgBalance™

11

Biodiversity

Panorama has 25.3% agro-forests, Planalto

has 22.8%;

Panorama: worse on-field ecotox footprint,

mainly due to the use of organophosphate

insecticides in cotton production

Soil

Planalto shows a lower risk in erosion related

to the lower percentage of sand (21%

against 71%), and higher percentage of no

till. Panorama (BA)

Planalto (MS)

Sustainability Performance

Environmental Dimension cont‟d

AgBalance™

Scenario Analysis

Predicted impact of improvement strategies

12

Adaptation of fertilizer regime without

loss of productivity

Adaptation of the fertilizer regime to

establish nutrient balance would result

in savings of:

14,811,595 kWh (energy equivalent

to the consumption of 2,073

households/yr.)

7,990 tons CO2e (equivalent to 1

truck (14 t) travelling ~ 150 times

around the globe)

AgBalance™

Change in the transportation mode

logitcislogitsilogistic

Switch from road to rail transport could

at Panorama result in environmental

and social benefits:

Saving 2,808 tons CO2e

(equivalent to 1 truck (14 t) driving

~ 53 times around the globe)

26% reduction in transport

accidents

Scenario analysis as a guardrail for continuous improvement

Conclusions & Caveats

13

AgBalance™

AgBalance™ was designed to assess

sustainability in the entire agri-food value chain

and to give guidance for improvement programs

Tradeoffs and decision making in their light are

the focus of AgBalance™

Transparency and stakeholder engagement are

critical – highlight the limitations of the methods

To pave the way for a “Green Growth”, intense

collaboration along the value chain is necessary